AVD - Earnings call 3 2023 | American Vanguard Corporation

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Operator

[Audio Gap] conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Vice President of Investor Relations. Bill. you, Thank

begin. You may

William Kuser

you Vanguard's very everyone, thank Alicia. much, Quarter and American Third to X-month Well, Welcome, earnings review.

will American Johnson, the company's Our and answering your Officer. today be Operating Bob Wintemute, in Eric speakers Trogele, Mr. the Also CEO assisting of company's Officer. Vanguard; the David Chief questions, Mr. Chief Financial Mr. Chairman

assumptions Before in actual In uncertainties Such a company company's and that and the forward-looking information. in the today's information filings. and may on beginning, management's statements to by may SEC risks let's cause based conditions, policy, take a and could regulatory results variety to factors of expectations. moment reports for management call, include changes the our usual cautionary are weather and are reminder. current company's various detailed discuss Such estimates subject other pressures, from risks competitive differ are that and

best information With be of represent statements as this judgment forward-looking we said, that by Such date. over updated the turn the to All call Eric. necessarily not the company's will company.

Eric Wintemute

call Bill. our you for entire Hello, Thank is for This Vanguard for everyone. our sector. challenging joining and you, American a Thank time today.

Accordingly, us pressure will I what price believe conditions growing under stock strong been and profitability. our Slide short doing market long-term to has are take profitability current require want I we that per heavy calculated has of that competitors. to Our first about in as X, as to talk measures. improve our

design improvement digital take preparing transformation, to margin and are structural those review. initiatives, measures, cost including We

on full outlook. a discussion our and be will our year will After XXXX confident of give them. We targets I and are that by investors we these the measures, detail 'XX rewarded

to short, optimistic QX rebound about the In are upcoming year. expect and we in

to To First, profitability. however, a we background of necessary. into improve start, bit is are doing get what let's

X, dependent both a have on into XX business that past the we were largely essentially operations complexity. was you years, X our corn have then, will through centers. market. domestic including ago, X facilities Since R&D years and on we acquisitions, in as manufacturing grown grown predominantly and the Slide countries, size U.S. Over XX XX see

or have with pending increased or portfolio broad, access led balanced into have XX market our patents over than issued and developed more We a vegetables. and by XXX acquired countries product fruits

members, the a Due consultation leaders improving met operations over plan growth the of business drive owners. while look with at a executive to has our one crafted leverage. strengthen senior member, enterprise our a we improving Mark At to rapid our and a phase set to Gottschalk, period, process recommendations, who fully in our strong with Accordingly, management XX-week comprehensive in to quarter, second a Board out organizational senior designed to and operating support end, integrated the of with with our Bassett, evolutionary Board in management transformation design. To is day-to-day another take reached Pat Mark growth, Mark next access conclusion, to history along provided and operations open had with optimal that businesses, team. and of company a systems the our of of number our profits

announce follows. the have as implementation to plan we pleased begun are We of

department item we operating X, line First, as each a sales with on per level heads. Slide have the plan our and expenses reviewed of

to and and savings operating target have I efficiency. in a greater achieving We department profit our XXXX would given collectively add Further, on $XX operational driving gross internal million interest have when each achieved, margin to focused budget. that improvements

her and performance of these achieving assess the or We next will them make over each his these course manager responsible track upon measures, based year, targets. for the

lower expense of a These control, and debt factory expense. operating management, interest capital freight, efficiency, as and working variety greater and such parameters include reduced measures raws

Second, as transformation work business throughout At we see we business all and on the these processes. centers a have digital you present, X, have are our universal system implementing To imperative across will on and chosen data that standards. ERP centers centers XX to world. scalability, end, complete as integration we Slide the adaptive is that to globe. based QAD's of It end-to-end real-time drive across seamlessly provide standardization, choice

the Management be do our job have business more business need retained we and define to effectively? to sales marketing, process to chains, our climate, on markets, will face define resources you state the the business. enable operation, and priorities, efficient do improvement Kearney growth for processes, including a of business that owners us human meet QAD and with leaders global factory and vision, enable will processes are more meeting us us identify and throughout major supply Further, our align that Kearney and and volatile and future forecasts geopolitical asking, establish ambitions. to better needs consultant what to in an will streamline finance, This and the shifts. your To react of tools end, turn make help business They faster in and and to

operate, we to in gain an greatest are and and organizational how transformation X, operating turning we way are which how are structured, closely the leverage. we launching incentivized efficiencies best Third, we Slide evaluate to to

efforts, indicators collaboration turn functions will in and Shirin the CTO achieve The engine define for working to President a and more into team Vice and those resources performance businesses. business Senior and course efficient recommend To and that with We the the to requirements, hire recently internal That Resources, Human benchmark external to appropriate person, structural Chief end, search next will experienced process. of evaluate months, our various personnel growth. an current consultants, our results. and a hired over business staffing our the transform Through key is Transformation will Shirin performance we Khosravi, Officer. our align with organizational changes structure need will lead in of will transformation dedicated of leading capital XX

comments David on Next, XXXX performance. let's turn and year-to-date QX his our to for

David Johnson

Thank you, Eric.

on, moving will our afternoon. file XX-Q this we Before

our to in to decreased to that $XXX to by by year sales by our X% overall sales destocking last decline interest working the Moving decrease $XXX was as to Within million. which our million to managing company's compared for in with mainly rates, sales XX, line of decreased China-based a their suppliers generic in Slide markets herbicides, strained to from prior The total, to net working capital in and businesses $XX customers one X% exported premium sales year. multiple last third attributed levels our for the with the compared high X% quarter be XXXX, due regard South economy. and international and within performance of Central to sales $XX of America unavailability to our International sales, declined U.S. of million, low-cost can by in sales the of XX% products influence accounted year. million

destocking higher, sales margin from XXXX in the overall a sales, which include year. the from crop decline Dacthal profit as in costs, resulted XXXX ended is produced decrease Chinese higher Brazil XX% process, from we XX% The XXXX net by XXXX. XX sales global America. X unavailability months US gross compared for the sales slightly as generic for profit gross in decline cost XXXX $XX,XXX,XXX to XX, to in was in Slide manage manufacturing low-cost to same to products XX% in of Central XX% period due September and the increased gross of in $XX,XXX,XXX for same Turning and consequent of and business, This slightly through X% of of lower period the last to in of net pressure and in XX% a

offset On we inflation-related compared to shows higher to by year, product the system, XXXX costs Slide In expenses prior expenses, the the operating which registrations the expanded spending were financial for third reflecting year. quarter the travel our with reduced period same of period in as wages, in the and increased our quarter XX, lower incentive that related expenses legal line of and same of prior state experienced compensation to performance. SIMPAS Brazil,

debt rates. discussed, to see rates. income to debt slow a and increase the time average are COVID. down last markets significantly close The working now in decisions to as from As buying customer to on such stocks greater compared early pushing of the due back during $XX.X effectively safety from our in such you amounted pressure manufacturers participants of XX, business holding big purchasing factors as use Eric practice ourselves market as of as million as $X.X Key higher We operating compared as resetting XXXX primarily result to of as formed higher vigorously departing practices in expense as the possible, global capital QX escalation to year. result retailers interest back recorded of will a and last inventory are to to significant million now I distributors as practices, interest have interest higher year is management, to levels face to get such pre-pandemic both and buying Slide

this company in out, season. needs refill we As customer low start order XXXX/'XX has the inflection soon to channel of serve point logically inventory that markets levels serve is pointed extremely for to driving must to the

The to a entities in as deferred continue result of resulted XX% net result for From maintain a last for to income not losses benefit loss net entities, the assets. underlying level at low and these to tax this last million primarily XXX% attributable rate in valuation $X.X in which tax certain our allowances these reasons from change income a quarter their compared increased net of tax effective the purposes just as of year. All year. to did factors together against of described, perspective, incurred a tax $XXX,XXX profitability primarily Brazil, is

XX% for decreased sales XX, and profit you can that are On down of see XXXX, months X our gross the XX%. by Slide

from produced international months and decline America. Our the down in last to compared with lower period low-priced XX%, generic suffered the availability consistent a resulted of and destocking is XX effect and markets September Chinese comparable products overall our The Dacthal of while in herbicide in profit for X% X and year. premium in ended sales the the sales gross were reflecting our months sales global Central of X sales as South domestic reduction our

of expenses the wages start reduced, XXXX. We have in the during Operating experienced of at September to same support as higher the activities the travel were year increased since to increase infield associated XX, period R&D months activities of that growth inflation, international with compared related systems, flat operate sales strong XXXX, versus supporting due to an X legal our These expenses and offset by the product lower expenses as we well beyond. delivery registration expectations beneficial in our foreign compensation lower defense currencies to U.S. and expenses financial performance, for dollar. in as XXXX expenses, movements incentive and markets proprietary were in increases in

million $X.X of interest which to from Year-to-date million year's effective XX% elevated as capitals double average working debt by due more a levels, than significantly were interest that rates. result expense increased to $X.X increased last and rates

rate for due challenges, Our which September products, $XXX,XXX inventories Inventory well during from as of see increased from end a industry tax to unprecedented Slide income $XXX last significant compared at low as company than did underlying in Aztec the XX effective XX% the entities efforts. these in to premium year. logistics $XX.X our products a compared profitability, management of to X suffered million at that $XXX net last million year. On taxes. purposes, million quarters, year, last certain Dacthal. we the of has XXXX, our unavailability to primarily X can destocking some the losses income certain Furthermore, focus, XX% the reported of in offset and last more amounted at resulting but result incurred not tax as is income benefit Overall, to withholding you

during supply year, to Our in in the buy those these is all needs top This the challenges customers company unable were to and supply. for dealt market has logistics products XXXX/'XX regulatory season. with this and break position

We sales more graph normalizes. XX-month as of demand inventory shows believe able to normal percentage to we trailing inventory The as that be the expressed a levels reduce sales. will

I'd and to next of the to turn liquidity. cash subject like

depicted have have on over X you XX, years. risen interest are rates the past As Slide we and aware, sharply

about this to an mentioned, global ago to disruption, has of led our senior chain given has days by Eric financial market our of XX and these higher lenders As BMO rates, approached covenants. destocking expansion activity. In rise negotiate we adverse light conditions, supply

was senior secure group, includes the in farm that to September familiar the lending agricultural credit which to past, industry, a to credits the of our very acted banks facility As quickly runway are with through and and XXXX. give global supportive us amend

normal. than interest During higher percentage costs be X.X this period, will

before rates improves. end to the However, to our the be we lower performance as will financial revert able interest of period

period, shares duration will I revert million hand amendment back the that will We will our we and note that the be lender X.X schedule, the to stock. year. earlier for interest not group Once repurchase be support. to With however, the common lower we authorized of our share continued repurchasing we poised BMO the I will their thank execute for plan to board had Eric. that, this of

Eric Wintemute

Thank you, David.

release to fourth a our quarter. XX, see and we as in in we As in Slide the expect earnings mentioned rebound reflected

We first full and are production million Again, these year. be expect sales revenue sales the are shipments million, our Dacthal million between customers leading million. other soil margins to our and gross over market XX% our targeting complete for $XX and of corn light year to These operating supplying In will $XXX we Aztec, trends, and adjusted products begin at to and this on EBITDA of a we and expenses our between quarter. inventory. in week. strong XXXX XX%, $XXX channel with Similarly, lows of $XX Dacthal $XXX $XXX million, are and are conditions million between historic our insecticide, XX%

judgment further suspend for will year global impact. tax on our analysis full now of and We net in income

To about X% XX, a XX%. that those financial respect XX%, our we net QX decline our put peers a decline year-over-year. on in sales to XX%, previous publicly peers found perspective of about while down 'XX, with down we expect those to of Slide performance and X% respect our reviewed of and With depicted be peers sales net from while down were to set we X%. we for were averaged traded statements Extrapolating in about of to averaged slide, year-to-date, recent

want I 'XX, on initiatives. to give thoughts a turning growth few the Before to quick other

of may XX, has from to partnership appearing Symbiotics, key biological Brazil, release with on our to announced its yesterday Argentina, business Slide be have As collaborating expansion by China. Green which bring and noticed in markets press innovative Solutions and our will Ukraine, NewLeaf you an solutions we

growth research XXXX and expect us to products naturally of Solutions library, proven brings our best-in-class compared and in I NewLeaf development The addition note increase that 'XX. Solutions business its microbes. by also occurring we of that future will will Green microbial about of in proprietary NewLeaf Green as product sales offering capabilities, to years. XX% bolster

will in per XXX which units country several as units front, the we're largest be this upcoming SIMPAS December/January XX, growers delivering that in United SIMPAS by applied the we States the On planting planting. season. XX the upcoming SIMPAS in in Brazil, Slide of to utilized to anticipate be deliver the used solutions Further, of north will

close of certain about been outlook. channel industry, 'XX. note great with said, has Let's 'XX That indicated there have the optimism peers a some locations. on thoughts that our Within sense our of in headwinds I my inventory continued geographical

improvement the XX% same Bank Umpqua final X,XXX small and conducted respondents over the However, over of a profitability of during companies, expect expect half conditions. will Nearly at increased revenues XX% Granted, survey that according 'XX agricultural expect middle-market overall are on future in word unfold. nearly group improved by not how period. that and the surveys to of executives economic

is there we this Slide good reason However, optimism sharing for XX. have as in

First, economy with relatively stable is strong, the pricing. commodity farm

food, growers, important, procurement meet distribution and is shifted its time which demand use the channel of the and need although more they, Second, to inputs patterns closer has to unchanged. crop for

not higher-margin and we kept a pressure appeal destocking market Fourth, remains in Third, proprietary immune a range generic channel the that products have low. by to 'XX customers conditions. of of inventory the variable result whole, of feature their of of value our many as products, activity on our the products while

there growth for certain 'XX that to in XX% recent just preceding EBITDA sales we're of is planting have In a factors upon in full XX% has been short, adjusted sound. year and and while I to market season markets regions the of net XX% and in a growth 'XX. the X% shift discussed, order, recalibration sales timing the targeting in sales based activity Consequently,

definitive QX, A January measuring operator, update. to provide any on call you questions refining that, Alicia, getting of initiatives, 'XX further have. we'll over a our our note, be to and in more With after beyond, and a I'll the our turn holding sense performance may closing call outlook for a

Operator

first the question ROTH Instructions] from comes Our [Operator Rogers of line with Brandon Partners. Capital

Brandon B. Rogers

how interest progress. take This a into is progressing? Brandon this low service into you feel play? majority for expand is do Do it any at visibility And requirements I or on Jerry to you're again? get Rogers through inventories Capital. what around the the have purely ROTH destocking rates Sweeney had it questions And it? few do will of just Is you come to

Eric Wintemute

inventories, we of counter 'XX good 'XX. out ABI, hear visibility up regard of go maybe can Okay. the We typing. you question. have with to our channels. U.S., the can Good went mute and because retail in with Brandon, With is to in might versus your products were use levels. on what pretty And I actually start we that the which

you. I it's think

Brandon B. Rogers

Apologies.

Eric Wintemute

again, probably been No to know corn out. XX% Aztec that's and problem. insecticides down such, mentioned range. And Dacthal, we about XX%, our are we was as our low, that soil particularly in is normal X.X% extremely

had that's for we for a very over so year, sale We product haven't know low.

products, cotton again, As we have year much left a look channels. the it not we across and was decent our in do

there. were impact, initial I think did were along but herbicides where think inventory with up I do some the herbicide Nutrition. think inventories large we globally, we kind there purchases, I some That's have of the channel Our in have of issues

of amount low. our but little are We the across again, lines U.S., effect profit inventories vast have in the a there,

again they're triple seeing of XXX in low. to XXX we'll of coming up what business, --and ordering the to our outside in might go very maybe And we mentioned, we're what on let's okay. from in day, smaller non-crop they days. a distributors nice, we Brazil, they have seeing orders add say days U.S. probably each with XX that's be our but kind we just down basis. there We're but lots daily are orders. that are gone of or Seems to Their stocking orders to lot XX are as As inventories the need. a similar People just

just a it got demand normalized, As the we've more that long actual individual as then is use means orders. lot

I think our that comments some and still I'd Central is I there at probably of peers. globally, America. of look And South the think pressure in

seen We couple have oversupplied the lower channel. as of cost move goods through I that our last I in answered more challenge the to don't know if margin question. are your goods cycles or

Brandon B. Rogers

you then low and of just impacted that, Aztec Thank one off XXXX so inventory And the could ask I if for going that Dacthal color. more kind results.

XXXX. You XXXX? you this believe you Dacthal impact the do to position you that Can And are said for recoverable and is in quantify or have Aztec total for supply XXXX? in

Eric Wintemute

'XX available the a and have third available had had the this QX, on the We volume numbers. in the was had nothing we sales you maybe then $XX a 'XX $XX And $XX since the under size. we affected when range. zero But be that of million higher million we might did We Aztec for issue, on Dacthal we a our needed you at it and supply $XX the Dacthal number for Dacthal company look the it's definitely service be And range. million than a a to Aztec, the which third having year, in $X pretty in last last million are look to range. might because Normal were to $XX quarter million combined, channel in normalized is profitability $XX million, kind at more if the probably market just Those so big good or year. little XX% million quarter norm of season. margins. year's basically

Operator

Capital of Kapsch line comes Markets. with Loop question the next Chris Our from

Christopher Kapsch

for unique? margin of can don't your was this a the you few way a the structural from an and it a more mostly parse industry either exporting Just gross margins? and to you -- function curious it a Chinese generics XX%, know if is a the sense Or prices that? having buckets the nature? this of effect curious something on I'm of competitive more it, function degradation But parse therefore got lower? being have of to the conditions generally function pressures on XX% feel basis, purely you and I I in transient I've and a questions, compressing or volumes of, guess. year-over-year that aggressive Or just on is and your if but gross Any if was pressure cyclical

Eric Wintemute

Thanks, Chris.

higher-margin have products definitely with XX% that And that Brazil, yes, come were strong. more there mix from that oil of was average. they as due Norway, also. for holding from that high. Chinese on months chemistries pressure I we we we but have again, certainly generic have were, have range, margins we've affected are they unique $XX saw their don't strictly of are pressure us, pressures, I of the come then at was that put products have have let's products, to again down volume that And lot generic half the that at a spot to those sales product There plus about without They a there products, margin such, say, in margins looking X copper that as that a the And products driven the would as there. use in you look well. the our and products but a products. date, in that X that differential. Central is margins lot and they of that China. In a but you their and margins have America. and had looking kind has down of in we're strong on If Australia About about. got we're mean similar those greenhouse didn't that weighs do number look, million of then an were $XX those million copper is also, in generic the And we products our big by generics talked we from pretty the pressure,

the of That of kind is generic out Bob, being clear coming and see of channel upon maybe we based a what to there some region-by-region like big I it area are. inventory does cost in certainly, seem you again, China various have this but products of I pockets for channel, any It just think said, some would would there are recovery expect as inventory we look comment color. I on a think might and the stabilized. does inventories Europe It's don't areas, some not anticipate if degree. Asia us, or that

Ulrich Trogele

Chris. hi, Yes,

have described. the You a products got view there, with us described what positive the into especially channel XX% we've the over has a U.S. is pretty in he view business transparent for inventory good X going our realize is. of Eric to XXXX, that That's and on it. real

a positive We disruption have lot don't a light where any there, that's footprint geopolitical have exposure of very and a We have so for us. in Eurasia you disruption. trade some

Solutions new potentially in has business, to weeks. deals, come doing Green next few we're Eric the as Our launching here products, more mentioned, new

And as tool down Our that's there, the see yield results excited expanding. going to us. Brazil, Brazil SIMPAS area, spring. systems for a about market the is in great go access simply technology the In we're I'm because the

cycle are. different a than in they're know, we you As

results. We good expect

on the you then the in there going read down, the some some lot also And of because And of people really will we're inflation. different text our think front be in front, cautiously Brazil. channel, potential the a market but so see business I opportunities, downsizing, good simply Lots talent process into we're mean strengthen acquisition XXXX so Eric, the general, so higher the in good the there of us end in of I on we I'll sense. can to of market both a if think happening be you. going will for to we're doing the buying with the behavior that team because to and the it of is has reset optimistic I market in where And that. back necessary. hand things still is

Eric Wintemute

Chris?

Christopher Kapsch

EBITDA. I'm expectations curious midpoint a a the your for EBITDA for you the so is of on to indication EBITDA that -- range into the But improvement. thanks before by Yes. sales closer never a then to for year, behavior would that. call that if implied the color, million year. you XX%, but or and the the one XX%, in fourth backdrop quarter, growth quarter have next that's been strong next given expectations focused the is around on year if quarter on 'XX, preliminary reached But year you've where that's in on sort to then get use. about you'd next $XX if recovering curious time million Question want do progression the next visibility and I of reconcile then on quarter fourth for fourth of you against run I'm way. then the achieved of take imply growth rate the it million buyer $XX year, even say that $XX EBITDA fourth this

that feeds the that's a meet growth? you X, much this think, plan transformation of that? to into you a visibility for how day XX, expecting from confidence savings needs and not parse achieve run run full around And Maybe of rate. by happen XX% from You're EBITDA How could just I'm I plan. these much X numbers. the the sort wondering and January if options, just level expected the if transformation fourth that quarter what to what rate of

Eric Wintemute

lines those more see for periods, quarter in again our to put lead alone we all, last no in those very Again, X the last X October. got commitments, to strong emphasize October the OHP optimism getting can't our just saw on the really focus We our hit good fourth very be with having QX. X we team, in predict in quarters. not outlook strong our of taking in Mexico Aztec having not AMGUARD good to more you've our QX. I communicating quarter, numbers, pretty customers, estimates going biggest again, LatAm generally into Dacthal strong And occur, saw a Aztec, our in fourth to the and us that what but fact that's at for we that quarter for got quarters, for and may supply had quarter plans. say will problems and obviously, geopolitical we're doing We've understanding

of Moving year forward, we the that in areas of of them $XX effect course some kind X, be year. the 'XX would that phased the but million, number in be during and so full place the that the will are that we've in a January by see yes, there identified of will implemented

We also plan. we a have

have are we're the kind like as previous we're upon to And at for then January, team in is get measures our business our we're to what into that forecast, XXth half board outlook well year. what that shape place so how unfold, have can We the rate that with well, unit balance so going more tuning We're the get is we'll into now we we'll third least But the same we that really time as every year. be know kind we 'XX, up. outlook, how regards on to $XX that the are year that looks essentially how million, system. If on then a concerned, to on and measures by 'XX each that month. With faster of of our pushing kind our scheduling focused why these the upsides be. Yes, the 'XX trying a entire at forward on 'XX fleet there that better happened get taking. of as QX, as in of of that KPIs as attuned we're what based we is are where probably more QAD that going to of we've have want of a July of of gives the a year budget cost-saving later to as done measure we've well budgets does view 'XX better of been we're mentioned. January versus the We've implementing at we'll potential we put call which update again, in is in revenue outlook far in much the tracking year in

Christopher Kapsch

helpful. That's also, for one David. Okay. just maybe quick a And

in nature achieve just wondering On what you just see compliance Is get talk of accurate? terms you what the that in amendments these in you back amendments. that of you're the full happen pre-amendment I'm the were if needs fully if million, like about could to assuming what with and covenant the in compliance? order the just is covenants. I'm $XX for And cost to amendments, what

Eric Wintemute

which much at too as function And out of of that, X.X%. then of and the kind ourselves cash essentially position leeway would purposely will more we're a far our how clarify the Just us we ratio charge, giving in that for sort we've a guess to debt-to-EBITDA the plan according to this us so our save determine ratio. what to as up set on pull go are the amendments QX so I that of collect Again, -- David, year-end if goes is. debt-to-EBITDA ahead

David Johnson

the and about as through be September just rate was forecast X.X% the amendment for and duration for as through Eric XXXX, start well. QX described, the as on exit which if could we but come XXXX long of the cost of The $XXX,XXX could our period, early of then it interest

Eric Wintemute

in the takes 'XX. $XXX,XXX, life just us and a It's the that remaining it's through you of so And not amortized know hit QX. over

Operator

Wayne question Our next from Pinsent with Gabelli comes Funds.

Wayne Pinsent

little you we'll how million achieving savings. the a on $XX there, Eric, on touched just it bit cost curious be of quickly

but the the identified see but one-time have there? any you in was in probably And costs full it it breakdown there. of What's mentioned the ongoing amount How XXXX, operational that much you just press then or you'll saw I with also program? savings. interest release mentioned You the because cadence

Eric Wintemute

delay as in be there'll pick of it we see We've quarter. And contracts benefits comes occur but be manufacturing, identified let's one amortized move far some that we're capitalization look actually If with place certainly Well, that just gets going would I would mean see QAD go piece Yes. faster have over system. some for occur of that as X-year phase a in take charges, in as from we it in to at sold. the And each That if period. SKU. those there's sale, kind a example. onetime up, that you will kind margin, normally, first and those we as is as and different capitalized the will we raw obviously on them, in time so now. manufacturing XX-day depends a With materials on we're figure but looking that regards each like of to at it to

on do color our I not agreement which with that you if to it's I bank them, question of whether does with our think million the year each know onetime our the can clarifying EBITDA got with adjusted and a $X bank. you've that? charge we gives don't I affect regards or think

Wayne Pinsent

you of $X Okay, kind we that's rate run what that expect and for under going this could forward. cost or at, million going so

Okay, thank you.

Operator

question Instructions] investor. Helton, is Our private from a [Operator next ] [ Steve

Unknown Attendee

SIMPAS business with and agreement with complicate I program question recent between just had kind AGCO this does equipment? a quick Trimble, your your the of sales

Eric Wintemute

That's and good AGCO, Bob insight better has has question. on do. Bob followed that and through I probably have but had than with discussions I

David Johnson

deal quick positive. see hope have X, in you We'll with already lot through. so so has wait distribution already systems. over a as much I for so we've therefore relationship until with that opportunities Steve. see We then for years, that have there's that to is if X planting the of action And XXXX points, Two, between there color gives points, you more don't expands to season. AGCO We've see our question. place. I that We've we goes a XXXX already cross-selling agreed an network. a working reinforce distribution Yes, started a AGCO It and in X,XXX we process. opportunities. follow-up We list our think precision been just that. management start X

Unknown Attendee

fit Yes. No, something exactly well to with that if you helps SIMPAS similar if a lot. I had I didn't or equipment the know in was of guys just kind AGCO them. might curious.

Eric Wintemute

We're symbiotic.

Operator

comes with Markets. Kapsch question Loop from Capital Chris next Our

Christopher Kapsch

follow-ups. couple a of had I Yes,

cash? or strong implications next either And you these the to of the will this levels, working inventory and if of look be end you fourth quarter your what generate sorry, quarter and year capital for source how of are through be sort like can Just become liquidate fourth as of therefore, a much you position have turned debt able or year, achieve 'XX? just that through curious your to if you

Eric Wintemute

That's a very good question. in I QX? mean I think we're $XX looking to reduce about million

David Johnson

million, $XX like million, $XX something that.

Eric Wintemute

inventory It's process shouldn't you're where not deploying tell at different times, on something we that our doing it's I all X.XX% working focused picture in Okay, you been understanding paying have can in that X% part is interest we're that capital. it's we're of QX. but interest. completely when a the versus

they dramatically think of storing a to there's strong acquired each some items are at told down we've bring bottom are that are such, been lower-margin globally we're and products. along, where all businesses, our these that may been. Particularly we products concerning line. our set driving look As of as that we've we And topline all essentially on targets from really inventory not focused them is those distribution be and I have

deployment entities. And granular them, to to we specifically accountable We'll to products. let focus products, We improve a numbers. them give those as on low-margin to going target capital need across. little sell we're hold somebody and more view to get the working else each higher and got margin volume you've to If of we'll mentioned, building need

Christopher Kapsch

focused plan is just plan therefore some of at Sorry, be the just where operational measures? examines your on the be know aren't and SKUs candidates follow-up transformation might that there that might to aren't, as don't there for profitable any simply a part just this rationalization? if that, Or and really product more is transformation looks and I

Eric Wintemute

our our stocking We're we billing side. to of gone Again, have kind on justification including inventory. being distributors margin, all have of the of customers, customers aspects, focused to that in products would a number

so with kind the as our can. deploy going to bank, make our we're got such, And we've a of capital capital, We're we that reevaluate on up products. best what and not sure we're We're we to bank. return not set that a as do be to we getting to need

yes, examining we're all So aspects.

Christopher Kapsch

Okay. then question. And other one

and And market, and is bifurcation up others? curious, pronounced Bayer That's is pretty will Monsanto of and this and And lines say so healthy think more of there hasn't was they interesting, the Sort those be obviously chemistry. backdrop. another to some was, given ratio, understood on pressures But the corn to pretty portfolio some your the them, for products I those results, than one it perused business morning. corn let's pricing trade to sort is soy then that most the along in acreage season it sort any to question. Then been positive I there crop downbeat shift this subjected was of mentioned that, your this guess likely in they soy. are I where from second subject pressures broader that well by a also of

Thank the implications wondering in on your year. net Just what of a normal any, if you. that, portfolio

Eric Wintemute

Sure.

play of molecule. that with a that generic kind pressure that historic product in. not has associated And more glyphosate as I a product believe general, not far that's we As than that's globally. They there's have geoplasm

seeing is We're a generic. we standpoint, the and think there that the immune deal that do tells your which pressure it. we're remains not part crop said, to Central you exposure second of I maybe a of other great demand seed planting some I I question, sorry, of But regard more than still healthy, have to is areas. I'm missed as But inputs. from for not was second to with what Obviously, it. piece? having our America the the

Christopher Kapsch

on the Just to from shift acreage corn soy.

Eric Wintemute

acres in where that say corn. don't shift mean areas on cotton. some effectively Yes. the of areas, to the shift effectively typically our corn, which with on would corn even tend in I They corn, are in we're more be let's there the like of you maybe are or high-pressure we're South see those corn/soybean

SIMPAS products Solutions soybeans on portfolio of a have growing We Applied our well. have soybeans, and products on as we

it's million to so think acres I our portfolio XX with about of mean this that ours acres our involved multi to using and corn was system of that to it there's of a products our more for -- upon SIMPAS product? with was the we the based crops. as launching much add cotton year million year XX going this rootworm peanut really corn I into think, from doesn't pressure. is soybean people off play. that And on corn could are insecticide getting have on more our in X.X a we're million But SIMPAS of corn yes, produce our I of acres as And strategy we're BioWake products products happy well things part well, one soil

Christopher Kapsch

Yes.

Eric Wintemute

our real will BioWake rootworm product also this first line. low that is commercial corn again, And pressure. be for

But new a to As launch you window. know, we BioWake corn a product, product soybean in products of areas. and light amount did have pressure peanut be last fair moved specific, controlling cotton we then addition which short a and and our and in trial very year would in rootworm

Operator

further time. questions Eric There the to you. comments. at to are this floor over I'd Thank like closing Wintemute back no for turn

Eric Wintemute

is giving that a Well, the we the and very an very into is we I report season, a do hope nice some to and come Okay. been company. where performance 'XX of time, last January. meet us this for With our look much you update when QX I in quarter for expectations. It's But appreciate together into forward as for, the that, time not attending. thank get you pressure Bye-bye. and headed believe taken to we we've upon corrective we've approach

Operator

teleconference. today's concludes This

your You your this participation. lines time. disconnect Thank for you at may

American Vanguard (AVD) 8 Nov 232023 Q3 Earnings call transcript