Q4 2021 American Vanguard Corp Earnings Call
Greetings and welcome to the American Vanguard Corporation fourth quarter 2021 financial results Conference call. At this time all participants are in a <unk>.
And only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the call.
I will now turn the call over to our host.
Bill Kooser director of Investor Relations. Thank you. Please go ahead.
Thank you very much Diego and welcome everyone to American Vanguard's fourth quarter and full year earnings review for the calendar year 2021 .
We will have several speakers on todays call Mr. Eric went to mute the chairman and CEO of American Vanguard, Mr. David Johnson, the Companys Chief Financial Officer Mr.
Mr. Scot Hendricks, our senior Vice President for the U S crop business and the past commercialization.
Mr. Jim Thompson director of business development, who leads our Green solutions initiative.
So to assist in answering your questions Mr. Bob <unk>, the company's Chief operating officer.
Before beginning lets take a moment for our usual cautionary reminder, in today's call. The company may discuss forward looking information.
Such information and statements are based on estimates and as.
Assumptions by the Companys management and are subject to various risks and uncertainties that may cause actual results to differ from management's current expectations. Such factors can include weather conditions changes in regulatory policy competitive pressures and various other.
Risks as detailed in the company's SEC reports and filings.
Forward looking statements.
Represent the Companys best judgment as of the date of this call and such information will not necessarily be updated by the company with that said, we turn the call over to Eric.
Thank you Bill.
And good day to everyone. We have a different format for today's call that we believe you will find insightful I'll begin with some opening remarks.
Turn it over to David to discuss the financials and then we want to have to guest.
Talk about our two premier growth initiatives, Jim Thompson.
Give you an update on our Green solutions and then Scott.
Well, we'll give you a kind of an update or his view of the north American marketplace, which is which is evolving quite dramatically.
And in addition, he will give you an update on our some paas platform.
And then I'll come back with some concluding remarks.
Okay.
Yeah.
First I'd like to talk to you about kind of the cornerstones of American Vanguard from an investors' viewpoint.
First.
We are a leading solutions provider to targeted niches in the agricultural and non crop.
Industries.
Okay.
Uh huh.
We are poised to benefit from favorable industry fundamentals entails wins, which we are currently.
Currently.
Enjoying at this point.
Yes.
Third.
We have broadened our geographical footprint, providing greater market access and cross selling opportunities.
Okay.
And then on to our two major growth initiatives will discuss in greater detail later in this presentation.
First we have significant embedded.
Value offering clear upside to our shareholders through the same paas platform.
And second our growing green solutions portfolio offering breakthrough technology.
Our six point, we have proven innovation capabilities with a compelling new product pipeline to support our long term growth.
And we have displayed powerful M&A and licensing platform with over 20 acquisitions just in the last 10 years.
Okay.
And we have a very highly experienced and diverse management team with an excellent track record.
And finally, we have strong earnings momentum with mid double digit growth anticipated in 'twenty two.
Year, which I will elaborate on shortly.
Right.
Yeah.
So just a little bit on R 22 performance.
Scorecard, we had originally said we would have revenue growth in the low double digit we wound up at 21%.
We have gross profit margin, we said similar to recent years and is exactly 38%.
Our operating expenses, we were looking to reduce as a percent of sales and we came in at 33 versus the 34%.
Our interest expense was lowered by 29%.
Our tax rate Uh huh.
We're still we're still I'm trying to resolve.
We have the.
Basically here, we're doing a preliminary.
Results.
We have we have an issue that.
David will talk about that's a noncash issue.
But our tax rate currently as we're reporting is at 30%.
And then we have a debt to equity.
Equity target of less than one without acquisitions.
With acquisitions.
2.5, we are less than one book I should point out that we did have an acquisition in the vicinity of $10 million in our third quarter.
Net income.
As we're currently again preliminarily reporting, 22% increase and our EBITDA at 20%.
Okay.
So in the third quarter last year.
I did bring up something that I thought was germane and are not only in our industry but across.
All of the industries.
And so that's the supply chain challenges that that continued today.
So COVID-19 , obviously shifted demands.
We've seen surges in the placements of demand.
Right now we're pretty much all seems strong demand.
This has translated into.
A number of of global factory disruptions and I'm talking about force matures.
We've seen more force matures this year than I than I can ever recall companies that just are not getting raw materials have equipment problems.
The whole system is strange strange and try to try to try to manage demand as we come out of Covid.
Inflation is also rapid as I think you're all aware.
And lastly on logistics.
Moving products from <unk> eight point be as difficult.
It's very expensive.
Freight rates have increased dramatically.
And we hope at some point this will balance, but given given what fuel costs are today I think it's something that we're prepared for the longer haul.
Joining me this adds up to a number of major challenges and I guess the question is okay. What are we doing to deal with this.
So first.
We're looking at our critical raw materials, and we're adding new sources, where we can to take the pressure off of dependence on any one party or even the two parties.
Second, we're placing orders well in advance given extra lead time.
In order to in order to make sure that that we're going to have material when we when we need to start start production.
We're forecasting our cost of goods on a rolling 12 month period and this is a.
Global effort coming together with what.
What our supply chain and things that costs are coming in our accounting team in finance coming up with that are expressing that into what what actually is occurring with our cost of goods versus our current price structure and then the next point.
Communicating constantly with our global marketing team in order for it to give them the ability to maintain our gross margins.
And finally, what was kind of a.
Once a month discussion with our North American factories, it's weekly or sometimes two or three meetings a week to discuss how to maximize the output of these factories to try to meet the growing demands that we're seeing in the marketplace today.
Okay with that David I'd like to turn it over to you to discuss the financials.
Thank you Eric with regard to our public filings, we plan to file our Form 10-K within the next few days.
As we have previously noted the company's fortunate to participate in industries that are considered part of critical infrastructure in all countries in which we operate.
As a result throughout 2021 and 2020, our customers and suppliers are employees and operations have all continued to operate more or less without disruption.
And the pandemic.
The 2021 year has been a strong operating performance for the company with the overall business revenues up by about a $100 million or 21% as compared to 2020.
Within that improvement in 2021 U S crop business increased by 25% to $264 million and our U S. Non crop business increased by 30% to $79 million and finally, our international business grew by 15% to two.
<unk> hundred $15 million.
All parts of our business is seeing strong demand across a broad range of our product lines and regional distribution businesses.
For the full year 2021, despite some movement by category gross margin percentage was in line with 2020 at 38%.
This underpins the basic stability of the business as we have managed through significant inflationary pressures throughout the <unk> supply chain.
Okay.
Our operating expenses have increased by 18% to $182 million. This is on sales up 21%.
As a result operating expenses as compared to sales with 33% in 2021 as compared to 34% in 2020 I'll.
Our strategic goal is to improve operating leverage of 1% per year.
Yeah.
Yeah.
In summary for 2021 on net sales improved by about $100 million or 21% as compared to 2020. Our gross margin performance has remained flat at 38% of sales despite significant general inflationary pressures and during the second half of the.
Year significant inbound logistics challenges, our operating costs, which for the company includes outbound freight and logistics have increased but at a slower pace than sales and as a result operating expenses when compared to sales have improved to 33% of sales as compared to 34 P.
<unk> in 2020.
Our cash management performance has been strong throughout the year average debt is down and interest expense is 29% below last year.
Finally, our effective tax rate of 30% includes the release of CIT and uncertain tax provisions offset by a one time noncash charge to establish a valuation allowance against the deferred tax asset in Brazil.
The company retains the ability to utilize those net operating losses in the future.
Our net income.
$18 $6 million is up 22% and EPS is at 61 cents per share as compared to 51 cents last year.
If we disregard the onetime tax charge just mentioned net income would have been 72 cents per year per share. Furthermore, joined the final quarter of 2020, we had the benefit of the bargain purchase gain of $4 $7 million that did not recur in 2021.
For a moment be disregarded that gain net income improvement would have been even higher.
Okay.
From my perspective, the operating and financial focus for the company remains as follows as you can see on this slide we havent had another very strong performance on cash the 2020 and 2021 combined we have generated a total of $177 million.
Of cash from operations.
That performance is stronger than the aggregate of the last seven years combined.
The cash has come from our operating activities and from managing working capital.
This performance allows us to continue to invest in the long term development of our business. While also continuing to pay down borrowings on the credit line. It also allows us to make decisions in the long term benefit of our shareholders, including the decision to repurchase up to 1 million shares over the next year.
We continue to follow a disciplined approach to planning our factory activity balancing overhead recovery with demand forecasts and inventory levels. It is pleasing to note that inventory reduced again in 2021, ending at $154 million as compared to 164 million.
This time last year.
Yeah.
Debt at the end of 2021 has reduced by about 51%. Since this time last year with regards to liquidity as you can see from this chart. We have been consistently working down debt from a high in Q1 of the year, which is the normal rhythm for the company to a low at the end of the.
Yeah.
At the same time each quarter of 2021, our financial performance has been stronger than that of the comparable comparable quarter of 2020.
As a result availability under the company's credit facility has similarly been improving throughout the year.
For the full year EBITDA was up 20% at $56 $8 million as compared to $47 $5 million in 2020 as noted above with a significant improvement in EBITDA and debt down as compared to December 2020 availability under the company's credit law.
<unk> has more than doubled.
The strong liquidity position and shows that we can continue to invest in the company's future.
In fact, it is interesting to note that if we took if we look at debt net of cash on hand, the level achieved at the end of 2000 Twenty's close to that achieved in 2016 and is better than any other year since 2012.
In summary, then sales are up and gross margin compared to sales has remained steady.
Operating expenses, which include outbound freight have reduced when compared to net sales interest has improved with strong cash management during the year.
As far as the balance sheet is concerned inventories have again reduced our customers continued to pay well closing no change in our overall credit risk profile some of our biggest customers in the domestic business continued continue to enthusiastically participate in our early pay programs generating deferred revenue that will be realized in.
2022.
That is down significantly and availability under the credit line has more than doubled.
With a solid balance sheet and increase the availability under our credit facility. The company is well positioned to repurchase shares in the market continue our long track long track record of dividend payments.
Some of the long term growth initiatives and follow through on our strategic initiatives to acquired products and businesses that complement our global footprint.
With that I will hand back to Eric.
Thank you David.
I'm going to ask.
Our CEO Bob to Gil to give you the <unk>.
Ground on our Green solutions platform and introduce Jim Thompson, So Bob Yes. Thank you Eric good afternoon.
In 2020, we formally presented our biological strategy to our board of directors.
One result was in the spring of 'twenty 'twenty, we formed a global virtual Green solutions team comprising of the country heads our country technical people in the functions.
To drive growth in this segment.
Technology exchange and to focus on the double digit adjacent space with high margins.
In October 2020, we purchased the assets of a greenhouse.
That time, Jim Thompson was the CFO and interim CEO and joined American Vanguard and our team worked on integrating two manufacturing plants eight subsidiaries and 80 employees in the technology into the American Vanguard family.
In the spring of 2021, the Green solutions segment the team leader retired.
At that point, we appointed Jim to head the Green solutions team. So it's my pleasure to introduce your gym and hand over to you.
Good afternoon, Thanks, Bob very much.
Bob.
I have a short presentation to go through an overview of our Green solutions business will be focusing primarily on near term performance current and future planned activities as well as an outlook for this segment going forward.
In terms of the latest performance. We're very excited about the segment is as you can see from the numbers. We we closed the year out at $40 million in sales through our green solution platform, It's an increase of 20.
Up from $22 million in year 2020.
Two primary drivers were solid organic growth with the existing offerings that we have and also reflecting the acquisitions of both the greenhouse and novo which occurred in 2020, you're getting a full year effect of that in 2021.
In total the growth rate was 82%. If you include the acquisitions, but more importantly, really the organic growth rate of 39% without the acquisitions as a strong base to build from.
Latin America and Brazil.
Represent the strongest growth geographies currently in 2021 for Ambac.
And with respect to a greenhouse.
As a subset of this of this number they generated $9 5 million on that product set an increase of 19% over the previous year.
More importantly, we expect that percent increase too to continue to grow over time is really 2021 was a year for for preparation for stronger growth in 2022 and beyond.
The gross margins of this segment are 46% currently we expect that to stay static, but we do expect to see higher volumes of the ambac produced products.
And a growing menu of higher margin third party products important to note that our green solutions portfolio is comprised both of Ambac products and third party distribution products.
What's how are we how are we achieving this growth I'll spend a couple of slides highlighting the current activities that we have in the segment.
First as we've discussed the expansion of the greenhouse products and those product lines with a few sub points.
Scot Hendricks team in the U S.
Has did a tremendous effort and trialing in 2021 that will lead to strong results in 2022.
We are also focused on global geographic expansion by taking the greenhouse products into other geographies that we're not currently selling into.
And we've also established a pipeline of tolling opportunities through our facility in Clackamas, Oregon, which is a microbial fermentation facility that it is an attractive asset that can be utilized by other parties. In addition to ambac.
The second point is simple, which Scott will also go into much more detail later.
But we've launched a biological menu in 2022 as you can see from our more recent press releases.
On the right, we've announced that the invigorate product from from a greenhouse now part of Ambac is one of the first biological liquid solutions that we have running through the system. We also completed a an agreement with exotic.
Partner company, and we'll be displaying their nitrogen fixing product also in some past in 2022.
More importantly.
We've got an extensive pipeline identified for years 2023, and beyond and the importance of having a strong and open menu for the growers is critical to <unk> success.
In addition, we.
Our business in Latin America called Green plants.
Again on a similar theme of taking solutions and running them across our company.
We have established sales outside of Latin America, with our first sales in China, and we're expecting to grow in the coming years and multiple other geographies with a green plants products.
Slider.
Lastly, another key area of activities for the Green solutions products is in the Am Guard environmental technologies section of our business. There we have a very robust.
Raw raw material and development effort underway, we're focusing on broad spectrum herbicide and insecticide active ingredients.
We've got 58 patents filed along with another six that are pending.
This is a new development for Ambac and that we're doing basic research for both the crop and non crop sectors and that that work started last year, but.
The fruits of those efforts so far have yielded a $1 2 million compounds screen. So far with 30, new active ingredients identified with strong efficacy.
Additionally, we've taken the greenhouse products and we've tested those in the turf and ornamental segment, which was a new segment for greenhouse that had never been touched before and we see strong results in those trials, which we believe will lead to future growth in this segment as well.
So this is just a summary of the types of activities that we're seeing in the green solution segment that should lead to future growth activities.
And you can see the fruits of these efforts through our product portfolio.
These are the different pillars of products that we have currently in our portfolio that are already generating revenue.
And you can see that it's quite broad and you can see from from the attributes below each of these pillars that we're covering a very broad part of the market with many different modes of action and many different value propositions for customers.
And most importantly, I think that the key to success for Ambac in this segment is that we present.
Have strength in each of these four pillars, we have a strong research effort and a growing research effort over the past and what Ambac had previously an example of this would be by a tour labs, which you see in the left hand column, there, which is a partnership that we've been collaborating with the Latin American company for a number of years, but we will be.
Announcing a new engagement with them that strengthens that relationship going forward provides additional microbial product.
Benefits, we also partner with with third party universities, and we have our own internal R&D as you see through the <unk> technologies group.
Secondly, we are with the acquisition of a greenhouse added two additional manufacturing plants to further bolster the four that are in the Ambac family.
Manufacturing continues to be a key asset.
From that then you have a very broad range of brands that are different in all the geographies around the world, but with a common strategy that runs throughout <unk>.
Lastly, and most importantly as market access this is where ambac has a distinct advantage we have very very broad reach throughout the world again strengthened by several new entities acquired.
And through the acquisitions in 2020 over of a greenhouse.
Nova and we believe that that market access as a key not just for us to take our own products to market, but also as we partner and license and distribution agreements with third parties, we have very very broad reach.
So going forward the key drivers to our continued success are identified here.
We see.
C and as Scott will talk about as well generally.
A much higher level of acceptance of the biological products in the space now.
And we see that trend really increased over the last two years.
In addition, ambac possesses all of the necessary elements to take advantage of these of these tail winds.
We have a Sim pass solution, that's promoting soil health, we have a very strong product development pipeline.
And we in addition have created other tools around all of these products and inputs that helps to automate and validate the application of these crop inputs and we're able to not just provide products to the market, but provide technology solutions that can be utilized across all of the various groups in the company crop non crop.
<unk> geographies theres lots lots more that we can do in these areas, but we think that we have all of the tools necessary to be successful.
And lastly.
All of that.
All of those activities and all of these.
Performance metrics that we showed kind of leads to what we what we think the future looks like.
As you look at the dark Green shaded area, that's our base business that really consist of the current products that we have the current geographies, we have and we're estimating that growth rate to continue at about a 20% clip over the next several years.
But the light green shaded area or the incremental growth opportunities that we see from Green solutions come in the form of an R&D pipeline, which we've discussed additional licensing and distribution opportunities, which are presented to ambac on a nearly daily basis.
And.
Our Sim past channel.
Upside potential, which we see merger and acquisition activity, which which Eric has highlighted is a strong point for the company and lastly, tolling pipeline opportunities all of those we considered to be different areas of increased success over the coming years.
So in summary, we're very bullish about where our green solutions platform is going.
And what we can do in the coming years to help increase profit and revenue to the company.
Thank you Jim Thank you.
Okay.
We have some remarkable dynamics occurring right now in the AG space.
So I thought you would like to hear from Scot Hendricks, who heads up our.
U S AG team in Canada to give you his insights Scott's been with US for 12 years now and also is in charge of our application technology, including its impasse, which he's going to update you on as well.
Got it.
Eric Thank you.
Eric had asked me to provide an overview of our U S AG sector. So I will do that I will highlight a number of drivers that are really stimulated.
Our overall AG economy in our U S business I'll talk about what <unk> is focusing on to drive it.
And facilitate our growth and then talk about our new and exciting technology with syntax.
Yes.
U S AG has a rich history, providing the world with the highest quality and safest food globally.
It's through our advancement using innovation and keeping you exit U S AG sector on the cutting edge through technology that keeps us on the forefront of productivity within USA.
But before we get to technology and how it is driving our business today I want to talk a little bit about what the catalyst is for driving and stimulating our U S AG sector.
It starts with two primary crops and you can look at the other commodity crops within our U S business as well, but there is a growing trend.
What Eric is showing in the chart of soybean futures and if you look over the last 10 years yesterday hit high compared to 2013.
Eric Lin chips to the next slide.
The same thing with corn.
You add annually to production of corn and soybeans. It represents around 180 million acres across the United States.
Production.
And in those two markets certainly understanding the commodity price is the primary driver for gross farm income that relates to impact input purchase decisions that allow us growers retail customers to maximize production and yield for their operations.
It's our goal to make sure that we understand that and planned to give some perspective of how the segments within our U S business is divided herbicides by far continues to lead the way weed resistance. The number one driver in crop protection used in the U S AG market.
We continue to build plans and solutions by crop segment to fight and defended and although Ambac has historically been strong in the insecticide sector, we recognize the opportunity for growth and have expanded our herbicide portfolio in corn, soybeans, rice cotton and sugarcane.
We've acquired through our M&A strategy six herbicide brands assure to first rate classic Python Fournette and info.
Has helped drive our market share and the herbicide segment and.
The growth per annual it's been about 5% year over year and continues to be strong driver in our marketplace.
If you look at what we're focusing our resources and investments in today, we start with our core business, we implemented our manager or forecasting an innovation process implementation.
One highlight our customer planning activity. This leads to more accurate forecasting it helps us better understand trends in the marketplace and helps drive our innovation review process, which is helping us to accelerate herbicide growth in our core segments. We launched just this last year two additional brands to expand our brand impact.
Family now to four brands, we launched impact Z impact core in Sydney over the last three years and have had significant growth.
Much like Jim mentioned, a moment ago, we haven't focused on our Green solutions. We continue to look at ways to leverage technology technology across functional segments by capitalizing on what green plants has to offer and what we can see from activity in other markets. The same thing with Am guard and <unk> solutions.
<unk>.
We are building on the foundation of what we acquired or a greenhouse and a bureau stimulate business by focusing on soil health looking at opportunities to continue to expand opportunities in this segment by <unk>.
Developing sustainable solutions with our partners customers and then we continue to drive our historical bio solutions Smart box <unk> plus and other solutions we have in this space.
Precision AG technology is a continuing and growing sector in our business. The CAGR has been double digit over the last several years.
It's certainly an area that we continue to focus with sand pass and the balance of our application technologies.
We are continuing to look at ways to be relevant to our customers.
And use <unk>.
Our experience and our solutions to help drive that segment of the business.
But we have to start with the advantages of our North American manufacturing, we have six plants as Eric mentioned, a moment ago in North America.
And really our competitive advantage is our agility to respond to the changing U S market demands.
The opportunity that we have to work with our supply chain colleagues and manufacturer to change product mix have been critical to meet the demands in 2021, and what we see in 2022.
We'll continue to look at ways to maximize our plant capacity, despite challenges with logistics and labor.
We on a monthly basis review, our costing and helps drive our gross margin in 2021, we implemented three price increases throughout the course of the season beginning in 2022, we added 2% surcharge on all sales to offset logistical costs that are continuing to rise.
We're looking at opportunities to increase price throughout the growing season with planned activities.
Our goal for the last decade has been to drive portfolio and market diversity to achieve sustained growth market diversity enables and back to gain mind and market share with our customers as Eric indicated earlier in his comments.
The U S crop segment has demonstrated strong growth and I hope you have a better understanding of our business and our outlook today.
Okay.
<unk> next application technology that augments, our current delivery systems. Our goal from day, one of development was to deliver a game changing platform for retailers and growers.
The same pass ecosystem encompasses a number.
<unk> technologies and innovations that allow our customers to go out and extract value in the marketplace. It enables our precision AG retailers an opportunity to optimize the repository of data collected through Sol and tissue samples along with other methods methods overtime.
<unk> now can utilize.
Data that they have collected.
To make prescriptions.
Prescriptions that are driven based on data points.
Proactively in the marketplace at plant with our <unk> solutions.
Same pass utilizes embedded learning blocks.
That provides growers insight to their return on investment by treatment zone, a deacon picture of this as the <unk> system moves through the deal we place a small untreated check in each treatment zone to allow the grower in the precision AG agronomists and opportunity to overlay yield nap.
So at the end of the season, they can measure of return on investment on an annual basis.
Lastly, <unk>.
<unk> was developed to deliver operational efficiencies up and down.
Chain manufacturing all the way to productivity, we have automated processes. It provides traceability from manufacturing to distribution to retail to infield application.
This is critical to make sure that we have scale and convenience.
<unk> ecosystem has been engineered to address.
The challenges associated with industry.
Carbon.
Initiatives.
We developed a software system called ultimate that supports seamless integration of data thats needed to meet the USA standard for carbon records, you've got to be able to measure validate record an audit.
We believe the ability to provide all stakeholders traceability is invaluable.
With current and future carbon credit.
Food safety and sustainability goals by customer.
Our goal is to continue to expand the toolbox of St past solutions that meet unmet needs today, while enabling our customers to achieve their sustainability objectives. Their carbon it's all health strategy by 2024.
We will have 14 surpassed applied solutions for corn, and soybeans nine forgotten and seven for peanuts.
We are excited about the portfolio that is growing well.
We're excited about the opportunity that we're going to be able to provide our customers.
Today and tomorrow through sand passive solutions.
Yes.
As we look at the highlights from 2022, and some insight from 'twenty three and beyond.
We are on pace to achieve our target of selling 70 systems to grow and in fact, our sales have outpaced our ability to supply for 2022.
You look at our targeted 125 systems for 2023, we are on track.
We have a number of prospects that we had in the holding been prepared and ready for 2023 and beyond.
As Jim mentioned and Eric earlier on we have a number of commercial agreement announcements that we've launched into the marketplace. The announcement of Microsoft ironclad by various agent for <unk>.
Vita by exotic which is a plant nitrogen fixing solution that we're very excited to bring to the marketplace and our own invigorate.
Bio solution for sole health product.
As we look at the revenues that can be generated by Sim pass in the coming years, we continue to look at.
Past to better understand the future.
This was a chart that we shared with the investment community in 2021 that indicated what our revenue would be out to 2025.
On a monthly basis on a quarterly basis, we continue to look at refinements based on what we see with solutions that we're able to bring to the market. We feel like are going to be value propositions that customers.
Customers are going to want again to need based on information that we're gleaning from the marketplace and with that we're excited to share.
That we have made another refinement to our projections, we're now projecting and in 2025 that we can add an additional $30 million to the bottom line and net sales.
We are very excited about sand pass the technology that we're going to be provided as an organization through the solutions.
That we're working on with third parties, both our customers and peers in the marketplace and the future of the business is very strong. Thank you. Thank you Scott and just to clarify Scott's talking about four crops in the U S market only we have not modeled in Brazil.
Australia, Mexico.
Or other geographical regions at this point, but we'll be reporting that in the future too.
Okay, I'd like to just wrap up kind of giving you two viewpoints on our on our future growth.
So in November we gave you kind of our base business.
What we saw at 694.
We're not changing anything there.
Again, we've updated this before and have come up with where we see our green initiatives.
And we had reported.
Scott said 84 back in 84, hitting a 25%, but that's not that's now updated.
And so if we pull that together, we're now hitting a peak level of 947 revenue by the end of 'twenty five.
<unk> is committed to you we will update these grafts as we move forward.
On a quarterly or as they occur.
And finally, just kind of what we're looking at for guidance on our 22 year.
Our revenue growth, we're projecting somewhere between eight and 11% increase in revenue gross product gross profit margins.
At 38% to 40% level operating expenses.
I think David mentioned, we have a target to try to reduce 1% per year as a percent of sales.
Sorry, sorry.
Sorry in advance for Ya.
On interest expense, we see that being similar to what we were in 'twenty, one, but again it depends on on our acquisitions right now, where we're obviously trending down in debt.
But we'll see what kind of acquisitions, we have come on board.
Tax rate, we're expecting to be somewhere in the mid mid twenties.
Our debt to EBITDA ratio again, we're kind of sticking with less than one without acquisitions and we may depending on the right acquisitions.
Press, our press our debt for the right strategic.
Okay, and finally on net income.
Yeah based upon the 61, we're reporting we're seeing an expectation of increase in net income and 60% to 70%.
We're a final outcome to be more than what David talked about the 72% of <unk> 72, a share that would reflect.
The increase in earnings of 35% to 45%.
So with that.
Appreciate you guys all are listening to this and we will open it up to any questions you may have Diego.
Thank you and ladies and gentlemen at this time, we will conduct a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that Youre line is in the question queue.
Press the Star key followed by the number two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Once again to ask a question press star one on your telephone keypad will pause for a moment as we poll for questions. Thank you.
Okay.
Okay.
Okay.
And another reminder to ask a question at this time press Star one on your telephone keypad.
Okay.
And ladies and gentlemen, there appears to be no request for questions. At this time I'll turn the floor back to management for closing remarks.
Okay, well I'll take that as that you enjoyed our new format and we've answered all of your questions.
So again, we remain available to anybody who would like to have individual discussion coordinated through.
Sure Bill cruiser and thank you very much for this update and we look forward to reporting again in the near future.
And bear in early May so we're.
We're coming up on that soon so thank you very much everybody and have a great evening.
Thank you. This concludes today's call all parties may disconnect have a good day.