AVD - Earnings call transcript Q2 2024 | American Vanguard Corporation

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Operator

Greetings, and welcome to the American Vanguard Q2 2024 Conference Call and Webcast. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure of your Investor my Young, [ now Director ] Relations. is to host, introduce Anthony It Thank you, Anthony.

You may begin.

Unknown Executive

Review. Thank welcome you, Earnings to and American Vanguard's Elisa. Second Quarter Good afternoon, XXXX

Tim to American prepared [ ] Donnelly, available Mark Our attendance Mason agricultural ] and Strategy Bennett, Business member crop Vice related in questions. of Board be and Chief and will led David Bassett, acting Executive Johnson, is Officer; economy remarks also Chief answer [ our Transformation North Architect President, by Financial Officer.

Before cautionary beginning the for presentation, let's take reminder. a moment a

During risks, conditions, forward-looking actual risks cause this management in organization transformation, changes All and in by my by initiatives of call, and we and turn filings. call are company's weather may that be not results may to regulatory other SEC forward-looking discuss policy, judgment to forward-looking over pleasure the information. the reports liquidity various uncertainties date necessarily and statements statements differ. All such are of as and as Such the is and now to company's release subject include company. It this estimated will factors the the detailed to company's information the Tim. represent updated

Timothy Donnelly

Second and for thank Anthony. Thanks, everyone, Hello, Earnings joining Quarter American Call. you Vanguard XXXX

new Before and recent and comment has company decisive Directors direction we to conditions change the I on discuss expedite bold and a industry half, the cover performance, guide to second our company's the action quarter light Board the the like taken team would and first on then current management financial in to of course. of

for CEO to the as immediately accelerate forward making an search CEO we cost top cash previous The of look capital margin both team committed as management allocation business office are on a the Board short-term of of departure company the transformation of such as fill Following [indiscernible] with well while and necessary to CEO. a changes July savings, moving new management, and and [indiscernible] sense the improvements, initiatives during the to urgency position. the XX. The

As you accelerate the necessary skills see comprised is to businesses transformation. the acting with of mandate day-to-day of transformation has to of the and global Mark will They who X, the experience Slide be. OCO improve both turn the on management company. large financial Tim are Senior who can investors, more Bassett, into CFO company. In will than we X to customers operations bring the our at PhD, multiple executives and accelerate is all years Donnelly, senior manage Resources, that of and years all short, know and design. HR which years XX [indiscernible], CEO, with Johnson, architect ] Human and process the XX and David Board President a it at XX [ the our member, performance transformation business run Vice our has Vanguard and Office deserve in and to American employees short-term clear myself, plan; CEO with the

Slide to framework development will recent initiatives agreement provide provide of provide We quarter have will liquidity [indiscernible]. detailed an credit transformation. and discussion amended on EPA of products our with business the just second I the mention X. during quarter's and financial a to our with and report Then Mark XXXX performance performance. the review on half we as use a a first of this the following David overview our call high-level financial will on make for progress made our will completed update Then and

approach of economy, our is search culminated the most in and business, to distribution for I interest our elevated a CEO. American weakness discuss just-in-time commodity been think similarly cost crop by rates, procurement and and in is year prices our full in provide to projections competitors the our has Finally, the which return this resilient impacted. a we that spite Vanguard to highlighted I on which will to inputs new an a update have of financial add company's has persistently farm within due low of channel. hasten sales

to Turning X. Slide

products adjusted down. long-term the adjusted lower-margin to in that, X.X% a EBITDA sales net quarter, declined increase year noncrop second well in sales margin below the X.X% the largely [indiscernible] period. This as sales period comparative ago During million compared margin $XXX.X and to which the EBITDA would slightly adjusted ago in view with higher-margin million year during the potential decreased than to $XXX.X products. and quarter, How decrease crop long lower U.S. in of our reduced of margin our comes we from EBITDA sales

During in up outperforming and double-digit domestic up were XXXX sales half the of products. increases in XX% total noncrop noncrop solutions basis XXXX. green the a quarter, X%, both on first did the and record for both sales by X% Net with of half of first we consolidated

believe it sales, business In years business us this structure [indiscernible] unacceptable. to of Thus, is company, addition, increases team liquidity accelerate the profit will of upon has and solutions been improve the second David take our America primary report said, current the cost quarter, the first year for not view rather double-digit with half Board managing to green was but within in that of XXXX. With reduce In that we our action as has led in down strong costs, with while our the our by recorded been Central impediment in further, transformation. our as about incumbent that management gross equal demand of results and experience overall sales generating and the the portfolio, in

Mark let multiple initiatives me to this first subject upon of to change, our touch the on turning expect Before [indiscernible].

read As prevents EPA distribution you of just suspension press may which the use. the an sales, earlier that product, have week, this issued its emergency and in

much reduced has in label effort concerns. the a recall, As to you submitted Dacthal suspended April, of voluntarily last meet we may sales an and agency's

our had from sales we assumptions. at removed XXXX [indiscernible] that forecast In addition, time,

on me in to course, of to turn Mark? are, and both with to improve term EPA We permanently. that, efficiency, operating suspension. and faith Mark stakeholders short with our and both leverage multiple working initiatives our let the With in ensure Bassett compliance the good

Unknown Executive

Tim. Thanks,

Before before introduce I first Slide to get quickly like the myself XX. into details, I'd

potential. joining months the a drive Hemlock shareholder by Board solid X valuation that Chairman Vanguard. American at X of my EBITDA large second increase believe in transformation career, substantial my finance of and I'm as to while the us I in cost XX% more creating reducing Prior First, total before do. accelerating because what a spent the foundation time, the the became XX%, almost Vanguard the last the liquidity ago. [indiscernible] mind ran helping and there's company's is board, my in to several than years transformation growth. Prior I I technology. developing company still invested I the After we I businesses significantly in ] Dow that doubt X.X helping about company here, performance. year, spent to the little of were After margin ] and of that, a is that improve in I the CEO years the on new During I joined months a spent half. in a and Semiconductor. inside this focused [ that, the company able the of X I the [ global no time invested stream to in implement. And American rapid company capable in by last delivering early I've worked revenue I company

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felt the want alignment work year. we the throughout critical it how and and of First, to priorities company the to remainder for was get the we

of and and there but teamwork, excitement realizing committed is it's is performance may key urgency. mantra full you the mantra for a simple, tell success. throughout focus, the company is potential. to that I This leadership company's Our driver can sound lot

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concept years technology. to we that company application. a First, has this At The proven we'd spent groundbreaking like discuss many the multiproduct this for point, prescribed SIMPAS. believe developing we've

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customer-centric a targets, conducting to analysis, our In to working as business XX. After a addition simpler organization. implement improvement per diligently to decided transformation new we've our thorough liquidity been accelerate we've Slide

teams. global functions them leveraged have with run that will businesses, are and centralized the We non-crop multifunctional with X into to business allowing businesses, be crop

us improve strategies structure early new allow to X% we We expect will organizational and clear believe global across million. workforce. this roles, to of in more new have deploy already resources design drive this This in us enabled us consistent and us our has trim world, and growth profitability. Working approximately will annualized about this XXXX, effectively more $X and have redundant savings yield identify on to enabling of to our the allowing place to

decision empower roles well company the of of with authority moving taking are As agility sense the responsibilities opportunity employees urgency. and through define a organization part as as operate the our and to effort, to greater to greater we this clearly also

believe initiatives million. Secondly, and excess those wrapping are $X of savings We annualized cost cut finished up material raw or manufacturing rationalization. efficiency across in efforts that savings we purchasing several SKU and to yield will logistics

annualized involving Vanguard degree $X earnings improvements we speak. a as commercial implemented are initiatives Thirdly, American of and we yield have high these pricing confidence The that being has strategy over that of several will million. customer team

Lastly, we our also international strategy. done deep a dive into have

As very to touches company all aspects period we're our working to numerous that The a that the we've in I taken identified us Financial turn energized, and full working our improved year in that over of team we've time. $X team proud to performance our allow now David result our We've a Officer, quickly. call dramatically of say quite actions will collaboratively. and very to spending, over I'm the together we will believe effort, a lower has earnings. In which summary, to lead capital, of accelerating a and to improve opportunities short to is Chief accomplished reach come numerous potential. We're reduce Johnson. million bit will transformation,

David Johnson

ample restrictions. total adjusted to for Mark. you, agreement as and follow allowing summarized with our agreement, have followed projects begin through to of to market; senior second, credit first quarter summary may chem on EBITDA, through this ensure a capacity continued of ag close half business on of my current covenant, for a from that to global by trailing current leverage time our working work we'll with us and amended the we [indiscernible] first, our quarter to comes credit lender Slide includes order the operate our liquidity. In to XXXX, on of with challenging which, nonrecurring higher us the amendment support recall, performance recap modify will terms of charges working we've for facility impacting borrowing comments reset reached within borrowing XX. The Thank a the second a comments to fourth basket lenders I some allow and you the with capital conditions, our and our capacity. This without transformation as capital

more or repurchasing the prevented making rate any any XX from points the for our once First, we interest lenders' levers. improvements have any important X increase we are our can request one agreed or in of will times. exceeds sustained by the to these basis present, amendment leverage show lenders paying when acquisitions shares, dividends term And reinstate that, ratio approval can performance, consent. The without notwithstanding allocation the we capital of

Turning let's sales. on now performance, our financial focus to

Slide As revenue as million you period $X.X from about overall the will see the same down of XXXX. XX, from compared was quarter to

Our generics the business sales was ordering compared challenged as second U.S. just-in-time quarter. that X% and from were crop to by net and recorded pressure down

quarter, On other the was our year. sales spot, growing a during hand, compared to noncrop with the U.S. XX% bright business last

X% Finally, to [ prior compared as the comparable by year. ] interational business to declined

by the to U.S. rose period year. XXXX, Turning X% to crop during about the Overall, net were same flat noncrop our new businesses as first U.S. the comparable compared and international XX% sales [indiscernible] period. [indiscernible] was of sales the up prior of while essentially

to product approximately changes, gross sales the average quarter which decline net net for with the in XX, arose and U.S. This from decline mix our Turning lower by decreased carry margins. second higher quarter Slide crop profit some generally products, of primarily sales XX%.

we to inventory control of from margins working to sales. and overhead gross recorded XX% up as lower XX% addition, cost In we work recovery factory capital. Overall,

profit On target profit encouraging. With XX% and was side, sales. first XX% our to our were sales the months lower for internal which X% gross the period respect X and from ended of inventories comparable net the up marginally for slightly second flat declined the XXXX the of of end plus than was 'XX of quarter, margin gross for

As see and and our These business former over nonrecurring in process digital transformation were discussed XXXX. transform expenses our the this primary the XX% for support CEO. severance from by operating XX, initiatives arising include will activities platform. XXXX the just approximately for on The comparable for period change you Slide in costs costs to the both increased of third-party costs driver structuring increase expenses consulting

to Without ordinary incurred half expenses also from XXXX, XX%, onetime have the the compared expenses would these million some year. for costs. Similarly, last and costs, We X% including first other transformation, of costs. by by other of approximately for $XX.X rose operating onetime the severance as out operating declined quarter type

inventory to Slide now Turning XX. on

see XXXX. trends will You our of quarterly a basis since the inventory on start

activity focused inventory capital to That back out million of on year-end. debt. our We inventory of reach building internal are than slightly quickly XXXX. to moving sales demand, our target. target in was monitoring are levels, and lower of our scaling we to third-party only XX, by reduce driving XX% efforts, of on net products which drives by at levels $XXX Inventory factory these drives selling levels procurement ended down June nonstrategic positions. Through inventory our working That turn smaller

funds we entire U.S. lot through Accordingly, a So a of X of that additional it company. Furthermore, than was result the in interesting debt again the back focus starting my at and the And That drive start July, as from up is subsidiaries. weeks the before we across call pleasing cycle note to turn that comments. to international our our I'll million the customers that, borrow collected following $XX sums Tim. first more down to continues. were of QX annual with to detailed able

Timothy Donnelly

David. you, Thank

be and like weakness same $XX adjusted factors EBITDA a and cognizant of market. and and inventory. In At of year-to-date time, interest million could affect million. the the ag demand mentioned, XXXX. [indiscernible], earlier, channel financial commodity had working we Nevertheless, rates, they number the we XXXX Our last full activity in both targeting are year. Further, while activity, decreasing actually also on foresee to considerations, the performance. Like are $XX of economy crop are our geopolitical has working controlling $XX profit million, as I within year outlook. impact like. of agricultural capital from these inventory last number our that are segment in million year second our of will David over mentioned factory the sales topic our we to than an many competitors, optimize our sales were stable require we down had Year-to-date, $XX full a case, as higher this to prices, is the targets light our through us between the half the

X%. [indiscernible] expected We our $XXX to are be range to million flat This decreasing the X% X% $XXX also in of of sales results now prior up to target in our versus million. to a sales targeting down

retained effort. conducting mentioned and breed in well-respected CEO search As have ag we search a tech earlier, that are firm we [indiscernible] of the and

XX, ideal search of market Slide of this You appropriate. as on to the will provide attributes note as progresses, will candidate and the or the them some we updates

let's summed Slide up the done last review on in XX. what So X we have weeks as

we to while doing full potential and the executive and First, have complement won unleash for manage CEO. ] search enterprise to to company's operations we earnings it the with OCEO of a the steer a [ both skills, day-to-day

of we credit Second, to to agreements ensure and greater quickly working flexibility reset our capital. acted have

redoubled expenses to fourth, our maximize workforce Third, the to with and goal is the and a and shareholders we a provide business-related focus are return. reduction. beyond. In margin closing, we have to our and short our the EBITDA driving with in transformation, efforts possible of XXXX highest both midterm, XX% including And reduce liquidity achieving digital

engine given that the a We greater return to of it. to the long-term company final better. for into the for the change let on growth. And point put depends are it our all have while company been transforming shareholders, leaner at mandate know to and O CEO, company a we profitability me future upon efforts this a We, the

that, time call the for for that Alicia? open and agents We of now. change change With the questions. are up the I'll that is

Operator

Instructions] [Operator

Partners. the question Scott Capital from Fortune with comes of first ROTH line Our

Scott Fortune

through Board and on thanks all going the and changes here. afternoon, for stepping color Good

mentioned transformation You that. accelerating the in

Just see of us steps kind of savings, through and to cost of kind $XX kind And what of step the million expectation in you the kind that? of accelerate synergies really to these that portfolio costs of financial these company? kind a forward see the of sense Just cost of the coming savings acceleration in flow and here? P&L through can kind going

Unknown Executive

[ This that. answering a Bass]. Mark at I'll Sure. take stab is

there's I think tracks. again, multiple

year, well, -- So should logistics XXXX. and track end those benefit The until again start third there's full probably the the end the through got which end a quarter, believe, roll And a next begin to to I a we earnings XXXX, expect we that then the but late see -- in probably beginning savings as this bid time should year see will through there's in see those the of seeing takes our statement. Because this because should hitting -- our which and later full realize process savings by in time XXXX. procurement to early year, of of we the of beginning and it those starting middle the commercial by track full material hit material the -- income begin of raw our raw year. next some the full initiatives, for the won't for we're million with to of you've savings but number

next up this the late full ] ramp end the of [ XX they'll and year. beginning by So get year

Scott Fortune

kind just significantly, we the And I international get here a market, has kind in more quarter the level Got fourth that a out to your push changed standpoint? weaker of normal to it. ag I involved dig bit that is of as being the the saw And just [indiscernible]? detail. confidence quarter, fourth kind a quarter into side. significantly. sense of of wanted we around the to strong to that But of guidance on American the in or are going ag North more current so provide little market little visibility that and a appreciate from quarter trying What big the just color

Unknown Executive

thoughts Maybe the XXXX the crop and business. Dennis and Mason, with U.S. stability. crop -- at on sector, relative the season looking [ Mason crop U.S. us, ] ] our the on [ runs your it's line he

Unknown Executive

inquiry inventory, could this Yes, economy, Scott, challenges flow you Yes. manage, and [ know happening comes on their question. ag what we're a again, QX. industry. of which thank having the a the look we is to bit Joe, of moving purchases. favorable did bit what's had ] to manage outcome. But -- little ] has in to down for manage now, in at lower customers 'XX. a look Mason little are in here. comment into seeing little to that cash trying just ag the we're you bit lot the Scott, We We then beginning a your [ understand customers time -- down and these their channel QX

bring customers that in QX, believe 'XX we in actually through purchase will we So purchased to moving in for to more QX probably just see begin although be we'll time the of grower. to

what's really the We of more that's down it's of driven share. that that. [indiscernible] business. It's of a think So a don't lot phasing

Scott Fortune

real Are down And is still follow-up ] overall? to strong? prices on commodity on positive and of quick a kind economics that. very [indiscernible] [ Does health are helpful sense with farmer obviously, the a see just we remain and starting

Unknown Executive

a Yes. We're a and of movement good a lot No, very that's the ag of seeing around pricing. lot economy question.

prices several dropped So slide, over unfortunately, significantly the commodity seen last months. corn and pretty soybeans we've have

dropping last to year. see that income versus farm net somewhere is We reports XX% are near beginning

more taking other Many pretty good. competitors, OpEx as around referenced earlier. seeing a the puts timing. is outlook expenses. our to the it's that industry them reduce we're think And some especially of We other for to on they the health It buy what is. equipment lot you portfolio, of But ag of was these it timing just So necessarily their moves see customers. don't farm segments comes that and pressure economy that some the and and not well can parts economy back around drastic on of purchase, our in by going to Tim

the ag the that's reflection of a here So and over all we've last the several economy seen drop that months.

Timothy Donnelly

at Congress on know ganging with you. to had There been connection growers up mean, There's said, interest encouraging. like, it. That have [indiscernible] -- malaise. a some before it's experiencing. are been bit rates [ look recently a commodity somewhat factors yes, Yes. looking growers being though, Scott other here the this seeking that profitability of Interest consideration you're is prices I in Tim. a were have then in ] at -- more tomorrow, something looking farm bill decrement we're but additional the of And Yes, I

the sort would money with and I that thing their think to we then be them quarters, in is money particularly of I as expect this relates can mean fiscal agree respect last move cost procurement ] their as finally, still this, -- growers to in [ think light So of is with Nathan to pricing. a minds commodity on cost continue trailing to I of several well. And and it will of But growing inputs. rectitude practices they'll still requiring the be

Scott Fortune

appreciate if and I kind of recent I And one Helpful. that. base could news. on the [indiscernible] more touch get in, just

want get With issues. focused just your any kind kind of or in for the the on which got the risk that and in abject backlog have -- to litigation potential in [indiscernible] forward, moving products green can [indiscernible] products side, just that replace of any of them that there sense Your [indiscernible]? pipeline more from you

Unknown Executive

Yes.

[indiscernible], our highly this. With mean, and initiative in raises, front, and we biorational we different like products. product placing continue important I expanding to expand maybe I Obviously, is on environment it to think, the as in have, certainly always to competitors, it constructively at of the us sorry, don't any we litigation all good sort But effect to works an the sense got [indiscernible] presently, invest on Solution will with an industry, or earliest. And is a press aware I in of issues where relations you've and we products continue question the -- lines. me one answering Green like. not have public under the world and present. we path is very giving Dacthal our this context. I the that of back I yes, risk to are solutions gone it EPA, Green context biorationals registration how many the other work coverage maybe -- respect a Solution maybe to if adverse go will really regulated minute, think and to give a to the other to from that fair back to through emphasis Scott, our think a I'm with a the review. is regulatory in have take necessarily let of we are drive We're to the and registration. the continue this and of be products has

the they really that it were where program, is at that at in which the [indiscernible] focusing study. forward might study no it's little we there So That's legal, testing, at that with it's And looking about were give their move let any more would And effect. And maybe did active by registered up not happened what the have of likes and it they And an undergo. That test to was like it -- that to what reps, found of effect fetal they me basis to think -- rodents and just that number screening culminated might see those asset. a looking Dacthal. body looking test agency reps. on was products mothers testing and Dacthal is thyroid the neonates prenatal There scientists the any AI, frame in to of ever if some EDSP, way, human ingredients requiring done and typically right? the it was do. humane. then I days, as were are There's that function bit, that on refined comparative do, XX it, not was these a agency they do which and we requested had ago, that disruptor little they help context to a that's was endocrine a testing years started things establish endocrine the

on let's be in then us label So mitigate the could an here, effect. is they all as translation happens take then to they this of alleviate would we fetal extrapolate a they able up And vein, which do give they a after ultimately, do in that to were information this kind enough reduced submitting that, of is harm ended that and either rodents they is human done out us they of could is many they risk uncertainty. there And/or what help is we say, to there case do and our And only figure it months, why well, with usually laboratory fetuses. And for with interspecies perceive other so. animals. And was to data an a what that trying way say, not be

in harm. believe ensuring the been anyone. probably We point, data the what It's effect. actual could of that and -- There's really a company's here move, looking here -- not because injury being exposure person from is of prophylactic report important to we of condition, say, preventive we're view my of safety there's no a trace to actual the stop EPA to never So it all they at doing to other a is and utero. My looking point certain making train that says be that the with I taking preventative that at there that on we're agency can years to from let's don't have no in -- a a looking a a the at make end here that point kind report been this is way. from registrant, the data say, thing Scott, things it's of way product this we it to found the develop back and measures I are

of to So in I'm thought I but leave news not that sure just kind any have the maybe things coming out that's the I you, many I I that's then read, [indiscernible]. that context. of of -- would

Scott Fortune

and That's It's very great [indiscernible] helpful. a how context, I helpful. very appreciate you

Operator

Our next Markets. Lake from Klieve Ben line question comes with of Street Capital the

Benjamin Klieve

the first for initiatives My been one the and implemented. have your outlook XXXX until guidance regarding is XXXX

-- expense a but ago. I'm X% months EBITDA Really not clearly, months XXXX EBITDA margin you midpoint transformation few margin an close The at from but But from perspective, would are XX% were anywhere you from conditions unchanged before. to that. implies if now. from square us help ratcheted your target guidance current can where XX Your the margin today targets you XX% that of high EBITDA the help, an in range. have wondering remains down tough,

still why help EBITDA X the you from dynamics as comfortable margins understand feel now? right given can now your having you So years target, XX% us all of underway

Unknown Executive

top Yes, let in. and I the certainly at [indiscernible] end can fill is this Mark

over a So an also of factors to efficiency. consistency wouldn't EBITDA that contributing improvement time. be of would vis-a-vis an higher-margin It the recovery period margin be sales and in products just be would

vagaries we're And XXXX to at we think the in period. right same be we XX-month I not now sales the have over would to depressed subject currently that necessarily looking trailing going is expect that undergone.

it number So kind line and to we performance of we of improved if take joined that with top an an bring improved can bear. efficiencies

even now at could Admittedly, As year what you're what does a you Mark transformation that XXXX. has stable in should margin described, efficient surely, feasible EBITDA full in the products, been if to EBITDA the an conspire future, of -- the a basis -- done has is more seeking. historical that margin, be produce that sales to but -- arrive on what with XX% representative of we margin the well look taken could with at whole more XX% in looking of an enterprise at appear we're be margin was norm together those purpose it is that not on range things

Unknown Executive

conditions. of on top that, I that would just add to improving

focused what I of lot numbers feel numbers, upside sometimes about. the that that would that benefits a for quantify, much a quantify and transformation. stage this a there's there's simpler, think more with of these we've to I example, organization to like there at value resources. There's to talked are, and think of you allocation of better And the it's I -- these lot comfortable can of we with all we're very hard unleash are potential hard say, that

into comfortable very I with, continue $XX think I and on is but number this number believe -- a get to lot personally it there's to build we we So million it. that I'm to as of well develop as upside and a

section. I benefits. think also initiatives some talked They're in we also, liquidity recurring the about

process, I of Again, over of process be. the that years the continue year to S&OP sales a of well. ramping spending money path because not That's been down if quite bottom last So advanced unleash. number we a SIMPAS. think, a will far of on had as spending do it bit that the line slow of every do well as lost we've we'll as handful the We've that could was down, drop down as we that

secondary transformation captured as benefits of will we think this I and tertiary we a capture lot that haven't there's that so continues. And

Unknown Executive

] we would can -- as mean calculating greater also be up living of in kind possible. the know We're of of all working is going we're TS Elliot effectively I a think, was now a picture definitive business senses breathing it's I investment, appreciate. background. as the revealing on -- And of -- things you a It's and to thing and What this when might than better impact return this has we that forward. this organism. strength, -- the clarity kind [ that is are and like doing is we'll very it's Yes. foreground is many has -- greater that it I like be those

Benjamin Klieve

Got That's helpful. it.

look and working I'll the more than of well is guys through of [indiscernible] you certainly was. how the sense, are at You at that pieces kind all kind MP what reference time. moving many are the I And and now me. understand environment same how right makes

in -- you and Solutions. remain I appreciate I sounds the like today has? It Or that all of your legacy yes, on place Grain all have any are there. One comments it material kind question So talk of would business as quite enthusiastic about about context on Solutions from made way? you kind that Green Can transformation what you've opportunity. portfolio that going continue is within -- take to specifically the

Unknown Executive

a Well, at stab I'll it. take

Solutions. company the of lot had in a think Green success I has

have is be and allow to crop to think us to people, a to think has growth very us think, very this to an out of business, of resources, business, growth targeted to opportunity allocation we global the [indiscernible] of allocation a strategies into more of one have had us a strategy areas aligning ways targeted again, one I those that we've be transformation, coherent accelerate even R&D where, customer-centric than I portfolio so historically X more capital develop we'll -- able than even I strategies, allow very more business that With will the figure far. successful. thus

and faster really close us the area that's growth than can the think I we in help the resources in another have So where drive transformation past.

Unknown Executive

focus being say in your by farming that What we how enthusiasm products so for the on And then EU also probably some one places like oil, this plant would midst the bacteria-based it mass. [ as respect working point expand root that a is are is how as portfolio to the to microbiome the registration that. primarily, are other serving on fermented ] digital most grower I we sustain These is think can for enhance of is prized purposes, we with health the be our breadth the that of reasons the with that your products, are asset things state these of the the like level and emphasis ag. is in there our would regenerative led insofar market the These evolving are health Germany. that of [indiscernible] continued were improve to is by with soil even some of in value to

this the is into, say, bothers So test globally. uptake, requiring and any green example, in of product nitrogen, nitrogen before that for would fits they sort of agriculture be a line kind of taken well. This synthetic have fits helping are we with so nitrogen potassium well let's direction to that the growers the authorities fertilizer products are soil -- applying and level the

Unknown Executive

been North external of If for mentioned I sales in supplier as just have the to think before, also we're our [indiscernible] organization. comment grow within I margins big We're with been with our announced biologicals because in previously U.S. crop what our to well Ben, there pillars we're are top specifically our a our bring just partners it want was [ U.S. one -- the to as looking evolving a the working but of may had table America we've solutions it's space and key and segment. The strategy inclusion internally by profits franchise XX organization us. in a projects I we one note, life. in portfolio. And named of and can around continue There's our products, may sales building what but development on that this of good fastest-growing to is focus well, [indiscernible] at ] done Tampa green feed

we ensure have but point, we're to going put that So areas this done to what going we we of growth the were we're to we specialize proud effort, up in have to continue build point. to that to on in this

back specific space. what doing but focusing So what that's accelerating and to referenced that in product goes on we're transformation strategies, that our Mark as

Benjamin Klieve

back in it. I'll queue. comments. me, it. one get One for Got and Got last All helpful

You going the working this XX% at of commented out you're the excuse can on any of lay in me. through here this second a that the quarter, on second your expectations kind down of quarter end wondering sheet capital the quarter, I'm ending at able working end to of capital the fall target be the the year the rip calendar levels general. [indiscernible] out for to level, balance if to end from of for year? from XX% inventory high you to ending

Unknown Executive

Yes.

slows down I the the annual X third quarters of then see during year. typical of think it's and capital or the usually in expansion the comes first cycle in quarter company's fourth. working the The we that expand X

capital the working see to down expecting over are balance we million come year. the of So

Benjamin Klieve

[indiscernible] of queue. of back to these All get ongoing good. months, and That's right. I'll couple helpful. initiatives the here all Very with over next

Operator

Consett question Funds. with next the Our comes ] Lee line [ of Gabelli from

Unknown Analyst

any to product Dacthal. products channel and back And ask the of to Do the there's lowered the significantly still wanted risk of guide? in Just is getting component on that pushed you? if that know you

Unknown Executive

and is fact that the the is mean, short were subsequently. in much, how one There's it much. we the unavailable then only was of sure reasons market I the sales for think but I suspended had we're There It And product we a channel. than not we not the time. in was was, for

accounting included there be of recall of that's would extent, thing for or point be the numbers To commercial was would view, period back that that think that an in had the going which from [indiscernible]. accounted is subject a So in forward. typically our any I take material a

Unknown Executive

There's no point. this at decision

that yes, be would So whenever. accounted

Unknown Executive

this Yes, point. so indetermined a at it's little

Unknown Analyst

in one mentioned timing just are in just level on you then into sales? guide with What's that lost in QX And and the those XXXX Okay. moving confidence drop time. of those the sales the

Unknown Executive

to handle you want do that? Nathan,

Unknown Executive

Yes, sure, Will.

the of that the be are will customers distributors purchasing. all, first So

pattern make first to a around purchase distributor will say want I normal that customers there's our our So portfolio.

We So in they see or don't that's a excess overstocking going of that we've after couple especially to happen. product, distributor the seen into full-in got just the that are X customers last X on the years.

they're So their approach conservative in in. they bring going be very to very, what and

space. that in normal see we So

purchase standpoint, look to to inputs. to their the crop have There a going timing a their be what crop they're confidence as they have they to crops protect and far farmers happen. growers and As still but it's grow do, still, may different, from consolidation, may

the So farm what have the net past crop, down in depending just farmed. they be will opportunities, and and continue that grow have means It are will growers to to will on purchase. plan may not we maker cash being but income be they a with [indiscernible] they see to that due flushed as

to will we many there of the our crops utilize So and it. that on be the products get products

confident take we're yes, will So that, place. that

Unknown Analyst

yet. then release hasn't fears it that And finally, out the gone just Okay. press

will when unusual. was financials it little -- wondering Just a full because the

Unknown Executive

until but a arrive go. but released, get pretty to to was financials much very It ready point to wire trying filing may tomorrow on are actually I release slip today. shortly. The guess the of may it press We're the

Operator

] Paul Rewrite Lennar Our next of with the question Capital. comes from line [

Unknown Analyst

on press out the being not to regard release with yet, either. website it's Clarification not the

annual you the that current Does restriction that have and of affect So buybacks. dividend? the slide on show in dividends $X.XX lenders the sort mentioned some put

Unknown Executive

Yes, will it forward. going impact

Unknown Executive

Right.

So it's annually. million $X just

Unknown Executive

is didn't clearing the we notion also have our in Yes, of before, would something And at quarterly we with the true. have doing which time that will lenders, to is it's be the part package. But do going consideration correct. the of to conjunction It's sizing the what do with forward. but dividend a was we overall making

Operator

from [Operator comes line the Our question Andrew Lester, Private next Instructions] of Investor.

Unknown Analyst

of I I want the hoping appointing and change start the and well, getting from don't for thanking direction company, of in correct? sort by and off I the Is to XXXX. the searches, I'm this Board producing did taking to attorney, that steps want necessary started do but just I some all understand. data understand control. that to The not sure Google make I company

Unknown Executive

That sounds yes. right, [indiscernible].

Unknown Analyst

with in And in potential settlement XXXX, the that of was I assume for product an a it, settlement. I Dole awareness private this it $XXX,XXX sort issue to company necessitate Foods, a again, but was supposedly to there tried pay which, no a search there's when disclosure of greater

Unknown Executive

[indiscernible] in including -- was plantations in Hawaii early it It yes, places, and okay. different and banana was XXXXs, discontinued a but various products in the was of sort

Unknown Analyst

or government issues -- mean, problems wording Is -- So of no their somewhat government distinct severe, there there was separate specific and studies I was no but the before of statement the although correct? seems from the this. that

Unknown Executive

identified to property. of a is to agency This that been following correct. scientific the harm That's move that's a an sort study to introduction or by take in response has not persons

Unknown Analyst

revisions. in and never and upward pretty from been happens for That's earnings I've the an when the EBITDA the you reductions years, announcements I the cycles downward the and track marketplace. But familiar I'm Okay. couple of separate investing couple of of Also, of what sort I and series shareholder understand have company's in of provisions with the nature we And mean of and the a the and marketplace, things commodities, like years. nature for uninterrupted and there's revisions. last comforting. of last follow

lead is the of of there current in happen. prior somebody in this So a case order addressing a Or only numbers in this quarter there believe was its assume industry because that this I base some nothing the potentially would -- was that the incorporate magnitude optimism state. point revision could forward? of these can going Do at past, and to

Unknown Executive

in we time, [ there that have been some tell think to that we can the you're about a targets have targets the know then have the subsequent conditions. believe, -- giving the you not see that today that of and what do I the conservative we are, based and are but we be the arisen as been And punctilious future have the conditions also people take non-crop to targets been affected conditions we take only or year. aware product, our that corrupt from in trenches who achievable demand into account them believe what to them. But [indiscernible] the positive also have international. targets be shareholder making of understand of that establishment for current selling I very you've now, be for I remainder ], And are whether upon the our they stock actual we that

in enjoy raising the things based the to at fairly future upon that rubric we're find the would that's extent far So going up to said we in we too we're are that happen, have that certain that that targets low following targets. estimates. And been that's setting level a our

Unknown Analyst

product repeat of it in the debt sort would And previous past, to assumption in smooth the of of been marketplace company sort the of the whereby use the or used dislocations regarding company's sell really of debt manufacturing statements of type essentially very debt product, debt and or to as return the normal. low they the they and company. as free go to their debt expected status to that either everything And would back would

have for until [indiscernible] is that's significant this until there before require circumstances Or the the dividend. the So is lenders might guess, announcement does repaid? preapproval that something seems between the something the all them to that debt changed that it more relationship with I Is -- changed?

Unknown Executive

this their, and purview increasing by of incurring sort an return charges, -- performance we allocate are respect to the allowing and of use -- I the related expect in some with ratios us outside like unchanged. It's what interest use our for the tighter, lender if of into otherwise, repurchase the at your credit the revolver, say, our from That are that, at put the if dividend, the before they're basis our risk financial sort to a some transformation from where -- cash, terms you that a that of cover repaid of elements the you -- what your becomes funds, covenants other of acquisitions. will the view, are let's would up point period think that would the direct conjunction in [indiscernible] more finally, say, risk to ratio look the the -- the [indiscernible] we credit specifically letter nonrecurring greatest let's you do investments And then is the seek additional the a and for in requirements and then arise not company. those concern over X amended they those based fullness allow of basket not in its will, to case. And a that's upon is and specific agreement It's debt or to ability to the take time. tend that the things to maximum would above. And security, for And to degree business, also is they higher. at financial in that's to have of leverage the [indiscernible] Xx on is in ratio of is share the lender ongoing release funds to the with in cash

Operator

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

Timothy Donnelly

do and the Thank Corporation. you value to for look Vanguard you with joining we are committed call speaking you, look We support company, your Thank very in and in soon. to Take to care. forward of Again, to continuing we interest and maximizing thank to today. all privilege investor everyone, the for being do so. also able American you so for the forward

Operator

teleconference. today's concludes This

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

American Vanguard (AVD) 8 Aug 242024 Q2 Earnings call transcript