Q4 2023 American Vanguard Corp Earnings Call

Greetings and welcome to the American Vanguard fourth quarter, and full year 2023 conference call and webcast. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call.

Operator: Greetings and welcome to the American Vanguard fourth quarter and full year 2023 conference call and webcast. At this time, all participants are in a listen-only mode.

Operator: A brief 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. As a reminder, this conference is being recorded. Thank you. You may begin. Thank you very much, Diego.

My friends. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Bill Kooser director of Investor Relations. Thank you you may begin.

Yeah.

Thank you very much Diego and welcome everyone to American Vanguard's fourth quarter and full year 2023 earnings reveal our.

William A. Kuser: And welcome everyone to American Vanguard's fourth quarter and full year 2023 earnings review. Our speakers today will include Mr. Eric Wintemute, chairman and CEO of American Vanguard; Mr. David Johnson, the company's chief financial officer; and assisting with your questions, Mr. Bob Trogele, the company's chief operating officer. Mr. Don Gualdoni, the Chief Transformation Officer, and Tim Donnelly, the Chief Administrative Officer.

Our speakers today will include Mr. Eric <unk>.

Chairman and CEO of American Vanguard, Mr. David Johnson, the Companys, Chief Financial Officer, assisting in your questions. Mr. Bob <unk>, the company's Chief operating officer.

Mr. Don Goldoni, the Chief transformation Officer.

And Tim Donnelly Chief administrative officer.

William A. Kuser: Before beginning, let's 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 assumptions by the company's 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.

Before beginning let's 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 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 changed.

William A. Kuser: Changes in regulatory policy, competitive pressures, and various other risks that are detailed in the company's SEC reports and filings. All forward-looking information represents the company's best judgment as of the date of this call, and such information will not necessarily be updated by the company. Additionally, bear in mind that the financial information that we discussed today is subject to the completion of a full year 2023 audit process. With respect to the filing of our Form 10-K, we are still in the midst of completing documentation, and will likely be filing with the SEC for an extension to the due date under Rule 12B-25. Thus, the 10-K will be filed within 15 days after March 15, 2024.

Changes in regulatory policy competitive pressures and various other risks that are detailed in the company's SEC reports and filings.

All forward looking information represents the company's best judgment as of the date of this call and such information will not necessarily be updated by the company.

Additionally, bear in mind that our financial information that we discuss today is subject to the completion of a full year 2023 audit process with respect to the filing of our Form 10-K, we are still in the midst of Campos.

Cleaning documentation and we'll likely be filing with the SEC for an extension.

To date under rule 12, B Dash 25.

The 10-K will be filed within 15 days after March 15th 2024.

Eric G. Wintemute: With all that said, I turn it over now to Eric Wintemute. Thanks, Bill. Hello, everyone, and welcome to American Vanguard's four-year 2023 earnings call. I appreciate your continued support and interest. Today, I would like to cover four topics. All right. Excuse me, you may have muted yourself.

With all that said I turn it over now to Eric went to me.

Thanks, Bill and Hello, everyone.

And welcome.

The American Vanguard's forward your 'twenty two 'twenty three earnings call I appreciate your continued support and interest.

I would like to cover four topics.

Oh excuse me may have mute yourself.

Eric G. Wintemute: Pardon me? Um, go ahead. Okay. Okay. First, as you'll see on slide four, first, our full year performance, with particular note on how we rebounded in Q4. Second, current market conditions, which are stable. Third, our sound business fundamentals, and fourth, our initiative to unlock American Vanguard's full value. Before I get to the last point, I will have David give us an update on our financial performance. When we last spoke in January, we gave you performance targets for 2024. For reasons I will outline today, we are still targeting 24 net sales to increase by 8 to 12% over 2023. However, we are now raising our target for Justin Thibodeau to fall between $70 million and $80 million.

Yeah.

Oh, sorry.

First as you'll see on slide four first our full year performance with particular note on how we rebounded in Q4.

Second current market conditions, which are stable third our solid business fundamentals and for our initiatives unlock American vanguard's full value.

Before I get to the last point I'll have David give us an update on our financial performance.

When we last spoke in January we gave your performance targets for 2024.

The reasons I will outline today, we are still targeting 24 net sales to increase by 8% to 12% over 2023.

However, we are now raising our target for adjusted EBITDA to fall between 70.

And $80 million.

Eric G. Wintemute: With that kind of performance, we should receive a higher valuation than what we are currently seeing in the market. As you well know, our stock has historically traded at over 10 times EBITDA. And now, if you use net debt plus market cap and divide it by 75 million, the midpoint of our 24 EBITDA target. We are currently trading at under six times, with a strong balance sheet, stable markets, and after having de-risked supply issues, we are poised to enhance shareholder value this year. Further, I'm pleased to report, in summary, what we were able to accomplish in Q4. At this point, I can say definitively that Q4 was, in fact, a rebound period for us, as you will note on slide 5.

With that kind of performance, we should receive a higher valuation and what we are currently seen in the market.

As you well know our stock has historically traded at over 10 times EBITDA and now if you use that debt plus market cap and divide it by.

75 million the midpoint of our 24 of EBITDA target.

We are currently trading at under six times.

With a strong balance sheet stable markets.

After having derisked supplier issues, we were poised to enhance shareholder value this year.

Yeah.

Further I am pleased to report in summary that we were able to accomplish in Q4.

At this point I can say definitively that Q4 was in fact, a rebound periods for us as you will note on slide five.

Eric G. Wintemute: Due to global de-stocking activity, a glut of generic products from China, and supply issues with two of our leading products, Aztec and Dactyl, our performance for the first nine months of 2023 was below expectation. However, with the supply chain mended, two of our high-margin products in hand, and a subsidence in gestalking, we were able to record 8% higher sales in Q4 as compared to the I will also note that, with respect to Aztec and Dactyl, we have dual-sourced the supply of raw materials and intermediates, thereby ensuring continuity and availability going forward.

Due to global Destocking activity, a glut of generic products from China.

And supply issues of two of our leading products our second Doctor all our performance for the first nine months of 2023 was below expectations with the supply chain and it drove our high margin products in hand.

Subsidence and Destocking.

To record, 8% higher sales in Q4 as compared to the prior year.

I'll also note that with respect to as toxic basketball, we have dual sourced the supply of raw materials and intermediates.

Thereby ensuring an sir.

Continuity and availability going forward.

Eric G. Wintemute: The Course of Q4: Are working capital and the balance sheet improved towards more normal levels? With higher sales, we reduced inventory to $220 million, generating cash from both sales and customer prepay. We reduced net debt to $128 million and increased borrowing capacity to $112. In the process, we improved our debt to EBITDA ratio significantly to land comfortably below our target of 2.75 times. In the short term, this will reduce our interest rate by at least half a percent.

Yeah.

Oh of course.

Oh, Q4, our working capital and balance sheet and improved <unk>.

It's more normal levels.

Higher sales, we reduced inventory to $220 million.

Generating cash from both sales and customer and prepay.

Reduced net debt to 128 million and increased borrowing capacity to 112.

And the process, we improved our debt to EBITDA ratio significantly to land comfortably below our target of 275 times.

Short term this will reduce our interest rate, but at a minimum a half a percent.

Further our stronger balance sheet and improve liquidity, both enable us to allocate cash judiciously and to provide a firm foundation for operating the business.

Eric G. Wintemute: Further, a stronger balance sheet and improved liquidity both enable us to allocate cash judiciously and provide a firm foundation for operating the business in 24 hours. That brings up the second area of focus, current market conditions. I will discuss this on slide six. As you know, grains, particularly corn and wheat and also soybeans, are global commodities, and their prices are influenced by global factors. In 2023, Brazil passed the US as the largest supplier of corn and soybeans in the world. With good yields and increased supply from Brazil, prices for these crops have declined. For example, the price of corn in the U.S. has dropped nearly one-third since early last year from $6.38 a bushel to about $4.25 a bushel.

Sure.

That brings up the second area of focus current market conditions.

Covered this on slide six as you know reign, particularly corn.

We'd also soybeans, our global commodities and their prices are influenced by global factors.

In 2023, Brazil passed the U S as the largest supplier of corn and soybeans in the world.

With great yields and increase supply from Brazil prices for these crops have declined.

For example, the price of corn in the U S has dropped earlier.

One third since early last year from 638, a bushel to about four and a quarter per bushel.

Eric G. Wintemute: That said, the farm economy has been strong for the past two years, and demand for crops and crop inputs remains stable, even as commodity prices are falling. At the same time, biologicals are continuing to gain traction with growers. These inputs typically contribute to soil health and appeal to growers as a sustainable long-term investment in their most valuable asset, that is, their land.

That said the farm economy has been strong for the past two years and demand for crops and crop inputs remains stable, even as commodity price levels.

Sure.

At the same time biologicals are continuing to gain traction with growers.

Inputs typically contribute to soil health and appeal to growers.

Stable long term investment.

In their most valuable asset that is their land.

Eric G. Wintemute: We are also seeing continued interest in products that have a softer environmental footprint. With respect to the distribution channel, the stocking frenzy of 2023 seemed to work itself out. Roarers still need inputs, but they will tend to buy them closer to season in order to minimize carrying costs. This is true over the length of the distribution channel.

We are also seeing continued interest in products that have a softer environmental footprint.

With respect to distribution channel Destocking, a frenzy of 'twenty to 'twenty three changes worked itself out.

There's still need inputs.

It's just that they will tend to buy them closer to season and.

In order to minimize carrying cost.

This is true over the length of the distribution channel.

Eric G. Wintemute: Also, as evidenced by our Q4 sales, distribution can and will purchase crop inputs even in advance of the planting season. Furthermore, demand for our end-use products in the U.S. was stable on a 23- or 24-year basis. That said, we're seeing a higher level of sophistication and discipline in inventory control at the retail end of the distribution channel. Some of our competitors have softened their guidance for 24, noting an inventory overhang of their products in the distribution channel. The state of oversupply largely affects South America, particularly Brazil, and Europe.

Also as evidenced by our Q4 sales distribution channels will purchase crop inputs, even in advance of the planting season.

Further demand for our <unk> products in the U S was stable at 23 on a full year basis that said, we are seeing a higher level of sophistication and discipline and inventory control at the retail end of the distribution.

Some of our competitors have softened their guidance for 'twenty for noting an inventory overhang of their products in the distribution channel.

The state of oversupply, largely effect, South America, particularly Brazil, and Europe. By contrast, we are not facing within our major markets.

Eric G. Wintemute: By contrast, we are not facing a blip within our major markets. We're a niche player in Brazil, and our sales into that country are minimal. Furthermore, as I mentioned on our last call, AgChem sales in Brazil dropped by an average of 33% in 2023, while ours declined by only 4%. Normally, we do very little business in Europe.

We are a niche player in Brazil.

Sales into that country of our metal.

Further as I mentioned on our last call <unk> sales in Brazil dropped by an average of 33% in 2023, while ours declined by only 4%.

Normally we do very little business in Europe.

Let's turn now.

Eric G. Wintemute: Let's turn now to the third element of our discussion on slide seven, that is, American Vanguard and its business fundamentals in light of the market conditions that I just outlined. With respect to last year's de-stocking and our industry's poor performance, it bears repeating that even with the unavailability of two of our high-margin products, we outperformed the ag-chem market as our net sales were down The industry average was closer to 13%.

So the third element of our discussion on slide seven that is American vanguard and its business fundamentals in light of the market conditions that I just outlined.

With respect to last year's Destocking, our industry's poor performance it bears repeating that even with the unavailability.

The availability of two of our high margin products, we outperformed the AG Chem market as our net sales were down 5% year over year.

Industry average was closer to 13%.

Eric G. Wintemute: In other words, we were not affected as materially by de-stocking or, for that matter, China's generic pressure. And as I say, procurement has been rationalized by the channel. Also, we did not oversupply the market. That is, we sold what the market demanded without price reduction. In fact, we have maintained brand value and legitimacy in the eyes of our customers.

In other words, we were not affected us materially by destocking or for that matter Chinese generic pressure.

And as I say procurement has been rationalized by the channel.

Also we did not oversupply the market 23 that is we sold the market demanded without price reduction.

Fact, rehab maintain brand value.

Intimacy in the eyes of our customers.

This confidence is reflected in their continued commitment.

Eric G. Wintemute: This confidence is reflected in their continued commitment to significant prepayments that many of our U.S. customers made in Q4. Given our favorable inventory position in channel distribution, current sales activity, and our customers' outlook, we are targeting a sales increase of 8 to 12% and adjusted EBITDA of $70 to $80 million in 2024. At this point, I'd like to turn the call over to David for his comments on our financial performance. I will then return and give my thoughts on unlocking the value of American Vanguard. Thank you, Eric.

Difficult prepayments that many of our U S customers made in Q4.

Given our favorable inventory position in the channel distribution current sales activity and our customers' outlook. We are targeting a sales increase of 8% to 12% and adjusted EBITA of $70 million to $80 million 24.

At this point I'd like to turn the call over to David for his comments on our financial performance I will then return and give my thoughts on unlocking value from America.

David.

Thank you Eric.

David T. Johnson: I will begin my comments with a recap of full year 2023, during the course of which I will present important metrics for Q4, as well as working capital and liquidity analysis. As you will see from slide 8, our overall sales for the full year declined by about 5% from $610 million to $579 million for the reasons that Eric has already outlined. You can see from the graphic depiction that U.S. crop, with the unavailability of Aztec in the first half of the year and Dactyl for most of the year, declined by 7%, while both U.S. non-crop and international declined more modestly.

I will begin my comments with a recap of full year 2023 during the course of which I will present important metrics for Q4, as well as working capital and liquidity analysis.

As you will see from slide eight our overall sales for the full year declined by about 5% from 610 million to.

It's a $579 million for the reasons that as Eric has already outlined.

You can see from the graphic depiction U S crop, but the unavailability of Aztec into first half.

And backfill for most of the year declined by 7%.

Well, both U S non crop and international declined modestly.

David T. Johnson: During the fourth quarter, with respect to U.S. non-crop, we are observing a more stable sales trend following the de-stocking efforts of retailers that began in the beginning of 2023. With regard to international, the bar graph tends to bear out the fact that an oversupply of generic products did not materially affect our business in the regions that we serve. Turning to slide 9, with a sales decline of 5%, our gross profit declined by about 7%, and our gross margin percentage decreased from 32% to 31% year over year. As you may know, our U.S. crop business carries our highest-margin product, many of which we manufacture in our factories. The drop in sales of high-margin products, such as Aztec and Dactyl, would necessarily put pressure on gross margins.

During the fourth quarter with respect to U S. Non crop we are observing and most stable sales trend following the destocking, yes. It does.

Retailers that began in the beginning of 2023.

With regards to international the bar graph tends to bear out the fact that oversupply of generic products did not materially affect our business in the regions that we serve.

Turning to slide nine with a sales decline of 5%.

Gross profit declined by about 7%.

Gross margin percentage decreased from 32%, 31% year over year.

As you May know for our U S crop business.

He is our highest margin product many of which we manufacturing factories. The drop in sales of high margin products, such as Aztec and ductile wouldn't necessarily put pressure on gross margins.

As you will see on slide 10, our operating expenses in 2023 edged up about to about $156 million from about $151 million in 2022.

David T. Johnson: As you will see on slide 10, our operating expenses in 2023 edged up to about $156 million from about $151 million in 2022. This was due to increased selling expenses both in South America to support our new business in Ecuador, the largest banana growing country in the world, increased travel coupled with additional R&D and regulatory costs, which represent a continued investment in our future with a concurrent defense of our registration. These increases were partially offset by a decrease in G&A expenses, largely due to reduced incentive compensation as a result of overall financial performance.

This was due to increased selling expenses, both in South America to support our new business in Ecuador, the largest banana growing country in the world.

And increased travel coupled with additional R&D and regulatory cost.

Which represents a continued investment in our future with the concurrent defense of our registrations.

These increases were partially offset by a decrease in.

G&A expense largely due to reduced incentive compensation as a result of overall financial performance.

With respect to cash flow as per slide 11, despite a negative change in working capital, but you could do to slow sales and expansion of working capital primarily driven by the accumulation of inventory.

David T. Johnson: With respect to cash flow, as per slide 11, despite a negative change in working capital, which occurred due to slow sales and an expansion of working capital primarily driven by the accumulation of inventory, we closed the year with net debt of 128 million. I will cover liquidity in a few moments. Looking at our statement of operations on slide 12, you will note that our drop in sales with slightly higher OPEX translated into lower operating income, lower income before tax, lower income tax, and a consequent net income of about 7.5 million, or 26 cents per share. Bear in mind, as Eric has intimated, for the first three quarters of 2023, we generated very little net income. That's what you're seeing on slide 12.

We closed the year with net debt of $128 million.

I'll cover liquidity in a few minutes.

Looking at our statement of operation on Slide 12, you will note that the drop in sales with slightly higher opex translated into lower operating income lower income before tax lower income tax and the consequent net income of about $7 5 million.

26 cents per share.

Bear in mind. This is Eric has intimated for the first three quarters of 2023, we generated very little net income.

What youre seeing on slide 12, as far as net income and EPS.

David T. Johnson: As far as net income and EPS are concerned, they were generated in Q4. Now, turning now to working capital. On slide 13, you will see our inventory trends on a quarterly basis since 2021. Note that as compared to 2022, we took a step up in inventory during 2023. Here again, with the unavailability of certain key products and lower demand due to de-stocking in the distribution channel, we ended up accumulating inventory at the start of the year. However, we should turn the corner in Q4 as more normalized market conditions return. At 38% of net sales, our ending inventory is higher than we would like.

As consumers generally.

<unk> generated in Q4.

Turning now to working capital.

On Slide 13, you will see our inventory trends on a quarterly basis since 2021.

Note that as compared to 2022, we took a step up in inventory during 2023 here again with unavailability of certain key products and lower demand due to destocking in the distribution channel. We ended up accumulating inventory start to the year.

We turned the corner in Q4 as more normalized market conditions return.

At 38% of net sales our ending inventory is higher than we would like we are targeting to get inventory levels down to 195 million by the end of 2024.

David T. Johnson: We're targeting to get inventory levels down to $195 million by the end of 2024. Now, let's take a quick look at debt and liquidity, as shown on slide 14. The only strain that was apparent in the first nine months of 2023 took a turn for the better in the fourth quarter, where we recorded a significant drop in borrowing from $218M in Q3 to $139M in Q4 and a concomitant increase in borrowing capacity from $29M to $115M. Year-end numbers are approaching historical averages. However, with our targeted performance in 2024, we would expect to have an even stronger liquidity position at year end. That sums up my detailed comments.

Now, let's take a quick look at debt and liquidity as per slide 14.

<unk> strain that was apparent in the first nine months of 2023 took a turn for the better in the fourth quarter.

While we recorded a significant drop in chlorine from $218 million in Q3 to $139 million in Q4.

No comment.

Concomitant increase in borrowing capacity from 29 million to $115 million.

Year end numbers are approaching historical averages.

With our targeted portfolios in 2024, we would expect to have an even stronger liquidity position at the year end.

That sums up my detailed comments on the whole while 2023 started quite slowly in the face of adverse market supply conditions I am pleased with the progress that were made in Q4 during which we significantly improved the balance sheet.

David T. Johnson: On the whole, while 2023 started quite slowly in the face of adverse market and supply conditions, I'm pleased with the progress that was made in Q4, during which we significantly improved the balance sheet. This gives us a great foundation for 2024 and beyond. With that, I'll turn the call back to Eric.

This gives us a great foundation for 2024 and beyond with that I'll turn the call back to Eric Eric. Thank you David.

Let me now turn to the fourth part of my comments.

Eric G. Wintemute: Thank you, David. Let me now turn to the fourth part of my comments, namely unlocking American Vanguard's full potential, as seen on slide 15. You may recall on our January call that Coe Street Campbell asked me in effect, "Where do you go after you've returned to more normalized, historic performance?".

Unlucky in American Vanguard's full potential.

As seen on slide 15.

You may recall in our January call. The Cove Street capital asked me back.

Where do you go after years of return to more normalized historical performance what's next.

One of our analysts pose the question.

Probably unlock the elusive value that is inherent in the company.

Eric G. Wintemute: What's next? Similarly, one of our analysts posed the question of, "Unlock the elusive value that is inherent in the company." Let's discuss the answer on slide 16.

Yes.

Now, let's discuss the answer on slide 16.

Along with our advisor or.

Our team is driving business transformation initiatives to improve operating leverage and move adjusted EBITDA to 15% of net sales by 2026.

Eric G. Wintemute: Along with our advisor Carney, our team is driving a business transformation initiative to improve operating leverage and move adjusted EBITDA to 15% of net sales by 2026. Recall the process of defining the target, Pathfinder, as you see on the slide. This initiative should translate into $15 million, or more, in additional EBITDA on an annualized basis. This is not a new endeavor.

The process of defining the target.

As you can see on the slide.

This initiative should translate into $15 million.

Or more in additional EBITDA on an annualized basis.

This is not a new endeavor as you may recall, we announced the transformation initiative at the end of Q.

Two last year.

At that time, we had also identified we can achieve a 15.

Eric G. Wintemute: As you may recall, we announced the transformation initiative at the end of Q2 last year. At that time, we had also identified we could achieve a $15 million benefit through operational and commercial changes. With Carney's help, we are validating the initial assessment and defining a plan by which to obtain this improvement in operating leverage.

$15 million benefit through operational and commercial changes.

But part is how we are validating the initial assessment and defining a plan by which to obtain this improvement.

Operating leverage.

As per slide 17, we expect that about 60% of this benefit will come from operational changes in manufacturing planning inventory.

Eric G. Wintemute: As per slide 17, we expect that about 60% of this benefit will come from operational changes in manufacturing, planning, inventory, and procurement, including freight. About 30% will likely come from commercial areas, such as price. Stay awesome. Thanks, man. Product portfolio, and R&D funding, and another 10% will likely come out of GNA, will implement these changes over the course of the next two years, and as I say, should realize the full benefits in 2026. In short, we'll be applying sound business principles to all that we do with the intention of returning value to our shareholders. That is our first priority. Turning to slide 18, as part of the Transformation Initiative, we are reassessing our working capital allocation, including with respect to our three growth platforms, Core, We will pause to note that with respect to our core business, our team continues to launch new formulations and make sure that we are ready for the future.

Sherman, including freight.

30% will likely come from commercial areas such as pricing.

Sales expenses product portfolio.

R&D funding.

Other 10% will likely come out of G&A.

We will implement these changes over the course of the next two years and as I say it should realize the full benefit in 2026.

In short, we will be applying sound business principles.

All of that we do with the intention of returning value to our shareholders.

Our first priority.

Turning to slide 18, as part of the transformation initiative.

Reassessing, our working capital allocation, including with respect to our three growth platforms.

Solutions.

A positive note with respect to our core business. Our team continues to launch new formulations and fixtures for example are they love.

Herbicides.

Jo Malone brand solutions, we reported a 10% increase in sales.

Over here.

But the new products like fire away.

Hum.

Currently.

I'm sorry.

And now I would.

Our first form.

Okay.

In connection with some past we've validated this technology.

Eric G. Wintemute: For example, Zay Lowe and Rindy Kurosawa, and the Gaumont Grand Solution reported a 10% increase in sales year-over-year, with new products like BioWare, a lubricant that is being used currently in corn, soybeans, peanuts, and cotton. And now, by way of time, our first corn-boosting bio-injector. In connection with Sympath, we have validated this technology and proven its mechanical functionality when used with both solids and liquid inputs.

Proven as chemical functionality.

Its use with both solid and liquid effluents.

Its potential in both the U S and Brazil markets and most recently is it still that enhancement tool field trials involving prescriptive versus perpetual application.

The <unk> platform is ready.

Portfolio is continuing to increase.

Eric G. Wintemute: Its potential in both the U.S. and Brazil markets, and most recently, as a yield enhancement tool in field trials involving prescriptive versus conventional applications. The Sympath Platform is ready. Our product portfolio is continuing to increase. EAC Group. Page 17 of 18, In closing, we have a solid business with a strong balance sheet, broad geographical reach, and free growth platform. We are poised to return to greater profitability in the short term, and with our initiative to unlock. American Vanguard's full potential

At this stage maturity, we expect that we will incur reduced development costs for <unk> going forward.

Now positioned to capitalize on market demand as broader appetite for equipment prescriptive application technology increases.

Okay.

In closing, we have a solid business with a strong balance sheet broad geographical reach and three growth platforms.

Poised to return to greater profitability in the short term.

And with our initiatives to unlock.

Erica Vanguard's full potential we are investing in returning greater value to shareholders.

Eric G. Wintemute: We are invested in returning greater value to shareholders. This is an exciting time for the company. And again, we thank you for your continued interest in. That'll turn it back to the operator for any questions. There you go. Thank you. And at this time, we'll conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

This is an exciting time for the company and again, we thank you for your continued interest and support.

With that I'll turn it back to the operator for any questions Diego. Thank.

Thank you Sir and 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 your line is in the question queue.

You May press Star two if you would like to remove your question from the queue for.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: You may press star 2 if you would like to remove your question from the line. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we pull for questions. And our first question comes from Scott Fortune on Roth MKM. Please state your question.

And our first question comes from Scott Fortune with Roth Kam. Please state your question.

Yes.

Good afternoon, and thanks for the questions here.

Wanted to step through I know, you're kind of focusing on looking at the growth platforms going forward here and you highlighted that for the near term.

Just wanted to get sense for now where I guess, specifically focusing on 10 paths and the confidence there.

Scott Thomas Fortune: Good afternoon and thanks for the questions here. I wanted to step through, I know you were kind of focusing on looking at the growth platforms going forward here and you've highlighted that for the near term. I just want to get sent forward now where, I guess, specifically focusing on 10-pass and the confidence there of this really starting to take the adoption where you're at as far as the number of 10-passes in the field now and that ramp of, you know, you mentioned new products and productions for the 10-pass going forward here. Just kind of step us through as you look out over the next couple of years the opportunity, you know, 10-passes taking a while to get here but the opportunity now for that going forward that would be helpful. Yes.

This really starting to get take the adoption, where you're at as far as numbers 10 passes in the field now and then.

And that ramp of you mentioned new products in productions, if for the same path going forward here, just kind of step us through as you look out over the next couple of years.

The opportunity fantastic taken while the kids here, but the opportunity now for that going forward that would be helpful.

Yes.

And as far as the numbers were still we're still delivering equipment now, but I think we're somewhere in that 240 to 250 systems.

That are quite frankly.

And as you know we're growing our platform we did get some.

Eric G. Wintemute: And as far as the numbers are concerned, we're still delivering equipment now, but I think we're somewhere in that 240-250 system that is in play currently. And as you know, we're growing our platform. We did get some, have some approvals from EPA for this season that we were looking for. We are, we have some products that we've got teed up for 25 that we think we'll have in place. One of the things we were able to complete in 23 and have just gotten, have received the results from was specifically with counters, a prescriptive application with, and average 10 to 12 bushels in most areas. We're Unknown Speaker. And then we also test the product.

Some approvals from EPA for this season that we were looking for.

We are we have some products that we've got teed up for 'twenty five.

We think we will have in place one of the things we were able to complete it in 'twenty three and I'm just gonna have.

Preceding the results from was specifically with calendar was a prescriptive application.

Understood.

And.

We are seeing.

On average 10 10 to 12 bushels.

Crews and those areas, where nematode pressure was.

And then we also tested the product to see where there wasn't.

Pressure and found what you might expect was essentially stable.

Benefit.

So.

Model well mapped.

Mapped out.

Current fields and we've seen the results that we would expect from a prescriptive application.

Similarly.

Eric G. Wintemute: What? found what you might expect. So. Modeled out, mapped out different fields, and we've seen the results that we would expect from prescriptive applications. Similarly, with zinc, and not just, you know, we're remodeling, but we're modeling on soil pipe, as well as kind of nematode count, as you might imagine, sandy soil has the highest level of sandiablone, www.annarratranscription.org Within zinc, we also found that there are certain soil types where zinc deficiency is an issue and we've seen, CyberConnect, Trevor Alexander, Brennan Teiger, Jeff Guthrie, and other organizations work on a global scale engagement application and working with small businesses.

And not just.

We will remodel and what you're modeling on soil player.

As well as kind of inventory count.

Sandy soil.

The highest level.

Hospitals are coming.

Jos.

Thanks.

Also found that there are certain soil types were zinc deficiency is an issue and we've seen that.

Okay.

In type increase.

Uh huh.

Crystal.

Martin or Jim which is relatively.

Relatively inexpensive compared to the insecticide application. So we think we've got some potential pick up in value.

Andre.

It didn't we didn't have not figured out exactly where the benefits are at least for the.

Eric G. Wintemute: All of them, Mike, relatively all those. University of Michigan.

Acres that.

Okay.

Okay.

So it's a it's.

Part of this process has been.

Eric G. Wintemute: Thank you, www.americanvanguardcorp.com behind, Unknown Attendee, James Thompson, Brandon Rogers, Don Gualdoni, American Vanguard Corp. did not figure out exactly where the benefits are. Part of this process has been... Benson, Rowers, Kurt Vlaude, Right? Right, and you know, to demonstrate the return on investment. What is the important part?

Convincing growers.

<unk>.

Right.

Particularly application.

Yes.

<unk> demonstrated the return on investment is kind of what what is.

It's an important part.

Okay.

Brazil.

Material outcome to counter some of the prescriptive later this year.

Congress.

That's a big upside for us there because it is registered not only.

But also soybeans.

Sure.

Hi.

Okay.

Bruce.

Eric G. Wintemute: .., www.americanvanguard.com, For Sympath and Adoption, kind of moving forward; we are looking to ramp it up. Okay, I appreciate that color.

For for some pass.

Sure.

Forward.

To wrap up.

Yes.

Okay I appreciate that color and then one more for me.

Eric G. Wintemute: And then one more for me, just kind of stepping through the transformation plan, you've kind of unpacked that a little bit, you were going to provide more color on the KPIs and targets of focus for that. But just want a clarification on the additional savings, the additional 15 million, that cadence, you mentioned timeline through 2026 to fully optimize all that. Is that 15 million on an annualized basis, or that's going to be taken over time through through 26? Just kind of clarification there.

Yeah, just thanks, Kevin to the transformation plan.

You've kind of unpack that a little bit you are going to provide more color on the kpis and targets a focus.

For that but just want a clarification, the additional savings and additional $50 million.

That cadence E Mitchell timeline through 2026th is to fully optimize all of that.

Is that $15 million.

B C. So or that can be taken over time through through 2006, just kind of clarification. There and then just kind of more we'll give more color on the transformation plan around the Kpis that you guys are suggesting.

Eric G. Wintemute: And then just kind of more, a little bit more color on the transformation plan around the KPIs that you guys have been suggesting. So what we did was kind of looked at 24 and said, "what's our gap to getting to 15%?" And as you know, 24 had improvements that we baked into it and came up with this gap of $15, $15, $17 million. And so what Carnegie is doing for us is creating that pathway, as we said, to getting us to that level. What we identified in the 24th year should be opportunities to expand that number in 25 and 26, with the target again of moving us up to getting to that 15% of net sales. So obviously, we expect 25 and 26 to grow, and therefore, that's what we're saying, 15% or more. But we're tying it to the year that we have in front of us, 2024.

So what we did is kind of looked looked at 24 and said, what's our gap to getting to 15% and is now 24 had had improvements.

Baked into it.

<unk> came up with this gap of <unk> $15 million to $17 million and so what harnesses.

For us it is creating that.

Pathway as we said.

Yes.

Getting us to that level, so what we identified 24 here.

Should be opportunities to expand that number in 'twenty five 'twenty six with the targeted down.

Moving us up to date.

Get you to that 15%.

So obviously, we expect 25 and 26 to grow and therefore, that's what we're saying 15 more but we're tying it to the year that you have in front of us in 2024.

Don Gualdoni: With regard to KPIs, Don, if you want to just highlight where we're at with our KPIs. Unleashed on the team now, and I think you're getting ready to, to get ready to, to kind of put those in play. We are. Thanks, Eric. Thank you for the question. This is Don Gualdoni.

With regard to the Kpis Dawn if you wanted to.

Kind of where we're at.

Since Youre right.

At least on the team now I think youre getting ready to.

Yeah.

Sure kind of puts us in place we are thanks, Eric and thank you for the questions the dongle Donnie.

Don Gualdoni: So on KPIs, we are looking at both financial and operational KPIs. The financial ones are certainly the ones that you would expect, gross margin dollar performance of the business as a whole, EBITDA, and varying forms of operating expenses. Now we take those, and then we want to push those out into the business units. That's done normally and always through the budgeting process. And then we want to go one double click further on that and then cascade those business unit targets down into key roles so that each individual that is, that has the responsibility for driving the performance of the business knows exactly what their targets are. Again, this is not new to the business. We've done that historically, but we haven't necessarily done it as thoroughly as we're going to do it on this path. Another type of KPI is the operational KPIs.

So on Kpis, we are looking at both financial and operational Kpis, the financial ones or certainly the ones that you would expect.

Gross margin dollar performance.

The business as a whole.

EBITDA and varying forms of operating expenses.

Now we take those and then we want to push those out into the business units. Those are that's done normally and always through the budgeting process.

And then we want to go one doubleclick further on that and then Cascade those business unit targets down into key roles. So that each individual that is that has a responsibility for driving the performance of the business knows exactly what their targets are again this is not new into the business.

Done that historically, but we haven't necessarily done it as thoroughly as we're going to do it in this path.

Another type of Kpis is the are the operational kpis, so raw materials, where manufacturers. So the raw material efficiency is very important for our business.

Don Gualdoni: So raw materials, we're a manufacturer, so raw material efficiency is very important for our business and is a lever of driving profitability. So we are going to do, we're going to have an approach to how we measure raw material efficiency in the business. And it already is part of our continuous improvement process to get better in that regard. But marrying up those KPIs across our top, say, 10 products allows us to know where we need to be focusing more of our attention. There are also improvements that we're seeking to make in forecasting, both on the manufacturing side and the commercial side of the business. So making sure that we're manufacturing to the plans that we intend and that those plans are informed by the commercial forecast of the business. Those are some examples of KPIs that we're working on. And then also, as I said, driving these KPIs to the business units and from the business units to those key stakeholders, the roles in the organizations that are responsible for each one of those.

And as a lever of driving profitability.

So we are going to do we're going to have a an approach for how we measure the raw material efficiency in the business and it already is part of our continuous improvement process to get better in that regard.

But marrying up those kpis across our top 10 products.

And a continuous improvement effort allows us to know where we need to be focusing more of our attention.

There's also improvements that we're seeking to make on forecasting both on the manufacturing side and the commercial side of the business. So making sure that we're manufacturing to the plans that we intend and that those plans are informed by the commercial forecast of the business.

Those are some examples of Kpis that we're working on and then also as I said driving these kpis to the business units and from the business units into those key stakeholders the roles that.

In the organizations that are responsible for each one of those not something necessarily that's new but certainly much more exhaustive process and.

It is something as Eric just mentioned.

That I am working on with the <unk>.

Precedence of the business presently.

Okay I appreciate it.

Scott Thomas Fortune: So it's not necessarily something that's new, but certainly a much more exhaustive process. And it is something, as Eric just mentioned, that I'm working on with the presidents of the business presently. Okay, appreciate it. And then one last quick one for me. Sorry about that. But just wanted to step through, provide a little bit of color. I know you said about the different geographies, but the U.S. is doing well

And then one last quick one for me sorry about that but just wanted to step to provide a little bit color. I know you said the different geographies. The U S is doing well here.

You had mentioned much in Latin America, just kind of unpack 2024.

Some of the pressures still remaining in South America, and Latin America, which doesn't affect you as much but just kind of help us understand the strengths in different geographies and where there might be some pressure still.

Eric G. Wintemute: You didn't mention much about Latin America. Just kind of unpack 2024, as some of the pressures still remain in South America and Latin America, which doesn't affect you as much, but just kind of help us understand the strength in different geographies and where there might be some pressure still. And so Mexico is very solid.

So <unk>.

Mexico saw very solid.

Certainly there is no generic pressure in all of the markets.

But we do have we.

We do have some kind of unique.

Uh huh.

Products.

Mexico.

And.

Yes. There was there were inventories are particularly kind of globally. If you look at.

Eric G. Wintemute: Certainly, there is generic pressure in all the markets, but we do have some kind of unique products in Mexico. And there are inventories, I mean, particularly globally, if you look at the broad, Broad Application of Herbicides. I think that's probably a big plot.

Brian.

Broad.

Brian <unk>.

Application of herbicides.

Thats, probably a six months there were certain insecticides I think we're loaded up.

Got it.

Generic world.

Central America, we've probably had more generic pressure there where we saw products.

Eric G. Wintemute: There were certain insecticides that I think were loaded up that got into the generic world. Central America, we probably had more generic pressure there where we saw products that, as the Chinese price of a lot of commodity products came down, we saw some pressure certainly on inventories that we had. Not as much in Brazil because Brazil predominantly was kind of a fruits and vegetables business that expanded into corn and soybeans with the counter. But again, not sitting with generic pressure as much.

As the Chinese price.

A lot of the commodity products.

We saw some pressure.

On inventories that we had.

So not as much in Brazil, because Brazil, we have.

We have great predominantly was kind of a fruit and veggie business, they've expanded into corn and soybeans with calendar.

But it does not not sitting with.

Generic generic pressure as much.

Eric G. Wintemute: From a timing standpoint, the de-stocking, that I think was universal. I think virtually every market that people definitely had been watching, you know, the inventory that was coming, www.americanvanguard.com, That gets to your heart.

From a timing standpoint, the destocking.

I think was universal.

Virtually every.

Every market.

But we're definitely.

So we're watching.

Inventory.

But again as we said.

Okay.

Oh.

That's kind of the.

Yes sure.

Good question.

Scott Thomas Fortune: Thank you for the question. And our next question comes from... Chris Kapsch with Loop Capital Markets. Please state your question. Yeah, hi, good afternoon.

Thank you for your questions.

And our next question comes from Chris Capps with loop capital markets. Please state your question.

Yes, hi, good afternoon, a few questions. So one regarding the outlook for 2024.

Christopher John Kapsch: I have a few questions. So one regarding the outlook for 2024. Given that, you know, you had these two key products, Aztec Doctyl, that were impacted by, you know, the absence of availability of actives last year, just curious about what the expectation is for those products baked into your overall 2024 expectation? Or would you expect just a normal demand environment?

Given that you have.

Two key products I'll talk about that.

We're impacted by absence of availability.

After last year.

Just curious about what the expectation is for those products baked into your overall 24 expectation.

Would you expect just a normal demand environment or will you see outsized growth.

Eric G. Wintemute: Or will you see outsized growth because of restocking of those products throughout the channel in 24 hours? Any color there?

Because of restocking.

Those products throughout the channel and 24, let me color though.

Eric G. Wintemute: So, well, I mean, we started selling Aztec in Q3 and Q4. So part of that was building back home inventories because the inventories were down 5% or somewhere in that range. So we did have good demand. We continue to have good demand now that the season is unfolding, and we're not seeing any inventory build. So we would expect to have a strong second half of the year as well. But that goal was pretty much completely gone.

So.

I mean, we started selling asset from Q3.

Four so part of that was.

Building back some inventories because the inventories were.

Yes.

5% or somewhere in that range.

So we did have good demand we continue to have good demand analysis as the season is unfolding.

We're not we're not seeing any inventory build so we would expect to have.

Strong second half of the year as well.

That goal was.

Yes pretty much.

Dawn.

We did we did and do have.

Eric G. Wintemute: We did, we did have ongoing orders. We haven't filled all the orders. Yeah, but we did, have been supplying between the fourth quarter and the first quarter a fair amount.

Ongoing quarters.

Sure Kevin fill all the orders.

Yes, we did.

Have been supplying between fourth quarter and first quarter.

A fair amount.

Eric G. Wintemute: We are expecting, Man, it does look strong going forward; product was growing for us, and so output looks good, certainly so far. So I think we're www.americanvanguard.com That said, this corn rootworm pressure, I think Aztec is kind of the key product where pressure is heavy, and so we have grown, we grow, I guess, with the corn rootworm pressure that's in the, Got it. That's helpful. And then on the Pathfinder and the focus on, I guess, 15% EBITDA margin in 2026. Curious if those at Structurally can't see it getting there and therefore might be subject to, I don't know, rationalization, or is this sort of improvement expected to be kind of across the portfolio by 26? We're not baking, we did not bake any acquisitions per se, into the model.

We are expecting the man.

It does look strong going forward.

The product was growing for us.

Yes.

So outlook.

Certainly so far so I think we are.

We're looking at.

Thanks.

Yes.

Sure.

Yes.

This pressure.

Thank you.

Media product refresher as heavy.

And so.

We have grown <unk> I guess with the call.

Where the pressure that's on appeal.

Got it.

That's helpful and then on the Pathfinder.

Focus on I guess, 15% EBITDA margin 2026, I'm curious if those.

If that bogey. If you will is based on the portfolio.

Today or is there any instances where youre looking at.

A product line or a suite of products that you just structurally can't see it getting there and therefore it might be subject to I don't know rationalization or is this sort of improvement and expect it to be kind of across the portfolio by 26.

Eric G. Wintemute: We do have kind of ongoing projects that we do in our core business, both through licensing, www.americanvanguard.com, and of course, as we expand the products in the portfolio for Sympath, those are there. Those are targets that we've identified going forward for the next couple of years. But as I said, we're not, we did not fake, acquisitions into a bottle.

We're not baking in and we did not break any acquisitions per se.

Model.

We do have.

Kind of ongoing projects that we do on our core business.

Both through licensing.

Combination products.

As part of that.

And of course, as we expand the products in the portfolio for some pass.

Those are those are targets that we've identified going forward for the next next couple a couple of years.

Eric G. Wintemute: Well, just as a follow-up, what about, you know, rationalizing products, meaning just products that are lower margin dragging on the overall mix? Don't I don't really see a pathway to get to that or to help the overall company get to 15%. And then, and then what also is embedded in sort of the growth rates of your, you know, the more novel growth platforms, maybe, you know, just more generally, when and when might you expect to kind of update the growth targets for those products? So, so with regard to product rationalization, yes, I mean, we are, as part of what we're identifying, we're identifying quality of business, and return on working capital. So those products that do have lower margins won't be emphasized the way we want to focus our team on our higher margin products. Unknown Attendee, James Thompson, Brandon Rogers, Don Gualdoni, American Vanguard Corp, www.americanvanguard.com, working on purchasing power to lower our cost of goods. And right now, it is a pretty good time, as we saw.

But as I said, we're not we did not bake.

Acquisitions are into fall.

Well just as a follow up what about rationalizing products, meaning like just products that are lower margin dragging on the overall mix and scale.

Don't really see a pathway to get to that or to help the overall company to get to that 15% and then and what and then what also is embedded in sort of the growth rates of your yes. The.

The more novel growth platforms, and maybe just more generally.

Do you expect to kind of update the Greg targets for those.

Thank you.

Yes.

So with regard to product rationalization, yes, I mean, we are as part of it.

What we're identifying we're identifying quality of business.

Return on working capital.

So those products that do have lower margins.

Our won't be emphasized.

We want to focus our team on our higher margin products.

So that that is part of.

Of the process.

So of course, we're working to improve.

Manufacturing output.

As far as as usual and then.

Combine that with with.

Yes.

Working on purchasing power to lower our cost of goods.

Right now it is.

Pretty good time.

We saw.

Prices Spike.

Eric G. Wintemute: Unknown Attendee, Jeff Bronchick, Gerard Sweeney, William Kuser, Don Gualdoni, Anthony Hendrix, We've done an initial pass with that as far as the next couple of years, we do want to get through this process with planning, kind of identify what, just as you were talking about, some rationalization, if that's what it is, how we improve, as I mentioned, kind of 60% coming And once we've baked that in, we can put clear direction on it. We want to be in a better position to assess how this affects each of the three plans.

Sure.

Oh man.

We're seeing a softening of the backlog number.

As for quarter.

Core of intermediates for years with that because that's part of improving our margins as well.

With regard to.

Yes, as far as the growth platform.

We are.

<unk> done an initial pass with that as far as over the next couple of years.

We do want to get through this process with priority kind of identify.

What we're.

We're talking about some rationalization if that's what it is how we improve as I mentioned.

60%.

Does it come from the operational side, and then 30% maybe from the commercial side once we once were.

Yes.

And put clear direction.

We are better positioned to assess how that affects each of the three platforms.

Got it.

Christopher John Kapsch: Got it. That's helpful. And then the last one for me just is related to sort of an industry issue that seems like it's becoming pretty, Unknown Attendee, James Thompson, Brandon Rogers, Don Gualdoni, American Vanguard Corp., you know, I guess, up in the air, or uncertain, given the lawsuit. And then, I guess, you know, there's the ability for growers to use it this year, but next year is in jeopard So, I don't know if you have any views about how that may play out, Eric.

Helpful. And then the last one from me just related to sort of have.

An industry issue that.

It seems like its becoming pretty acute.

Sure sure leaves some uncertainty and that is around the herbicide that camber and the fact that the EPA.

Registration is could be.

Now I guess up in the air or uncertain given the lawsuit and then.

Yes, there is.

The ability for growers to use it this year, but next year is in jeopardy.

So I don't know if you have a view about how that may play out Eric.

Eric G. Wintemute: And, you know, what the implications might be if, you know, if that's further, if there's further restrictions on DICAMBA, does that represent any opportunities for ABB? Thank you. Yeah, from the Dicamba side of the marketplace, I think it's up to the companies that have platforms on Dicamba to decide whether they want to challenge that ruling. So that would be a decision for the courts. I'm sure there'd be a fair amount of support for that challenge, but it's not nothing that we would be involved in. From an opportunity standpoint, I mentioned Zalo and other kinds of herbicides that we've put together, our Sinead, which is kind of topramazone plus glossinate. We're ramping up our portfolio of herbicides and have some opportunities there. But Bob, maybe from your side?

And what the implications might be.

That's further.

If there's further restrictions on dicamba does that represent any opportunities for abd thank you.

Yes from the from the canvas side in the marketplace.

Up to the to the basics.

Basically flat.

Platforms on that number.

To decide whether they want to challenge that ruling.

So that would be a decision for the courts.

A fair amount of support for that challenge, but.

Okay.

<unk>.

From an opportunity standpoint.

And we mentioned I mentioned.

Zillow.

Sure.

Sure.

Besides that.

Together our rich.

Which is.

Amazon bus fascinated.

We're ramping up our portfolio.

Of herbicides.

As such.

Thank you Mark.

But Bob maybe from your side.

Ulrich G. Trogele: Yeah, I think that the opportunity is being discussed with customers now. The news is pretty recent. You know, we're in the middle of the season.

Yes, I think that.

The opportunities being discussed with customers now.

News is pretty recent.

We're in the middle of the season, so there'll be.

Ulrich G. Trogele: So there'll be really this is a 2025 discussion as the crop season ends. You know, one of our key initiatives as far as innovation has been our pro-lease formulation technology, which is in Salo and allows a good solid solution into windows of herbicide resistance, but also, if technologies like Dicamba do not survive the regulatory process, that will open up a window for Ambex technology. And sorry, just the one quick follow-up on that Bob appreciated that the release that formulation is that the one that's associated with advanced or different chemistry? Unknown Attendee No, that, that, that is a..., that comes out of our formulations team here in California. It's a technology where we can put multiple chemistries together with the basic chemistry of glufosinate and ammonia and stabilize them, and deliver them to the end user. It broadens the... The acre opportunity for us as far as value extraction is concerned, and it targets any resistant weed issues that the grower may have as far as timing is concerned.

Really this is a 2025 discussion.

As the crop season.

One of our key initiatives as far as innovation has been our pro lease formulation technology.

Which is in CLO and allows good solid solution.

Into windows.

Herbicide resistance, but also.

Technologies like Dicamba do not survive the regulatory process.

Open up a window for.

<unk> technology.

Got it and sorry just.

One quick follow up on that Bob I appreciate it.

The formulation that Matt is that the one that's associated with and to answer different chemistry.

No.

That comes out of our formulations team here in California.

It's a technology, where we can put.

Multiple chemistries together with the basic chemistry of to fascinate ammonia.

<unk>.

Stabilize it and deliver it to the to the.

End user.

It broadens the.

The acre opportunity for us as far as value extraction.

It targets any resistant weeds.

The issues that the grill or may have as far as timing.

Christopher John Kapsch: It enhances its ability to be more flexible as far as application is concerned. So it's something that we're very, very excited about going forward, and we have a family of products that are coming with that basic formulation technology. Yeah, this is, okay, different chemistries that don't mix well together, like oil and water and having, having, yeah, having a great fire that that suspends for long duration periods of time. So that's been, that's been a drawback on a number of products is just compatibility with other chemicals. Got it. And this one is sort of centered around glucose, it sounds like. Thank you. Yeah, correct glufosinate, but you know, we see potential in other uses also.

It enhances.

Enhances <unk> ability to be more flexible as far as the application. So it's something that we're very very excited about going forward and we have a family of products that are coming with that basic formulation technology.

Okay. Thank.

Thank you the different chemistries that don't don't mix, well, together like oil and water and having having having our grid supplier.

Spends for long duration periods of time, so that's been that's been a drawback.

<unk>.

Products is just compatibility with other with other products.

Got it and this one is it's sort of centered around good fascinated sounds like thank you.

Yes, correct cooler fascinate, but we see potential other uses also.

Operator: Thank you. Thank you, and just a reminder to the audience: to ask a question at this time, press star one on your touchtone phone. To remove yourself from the queue, press star two.

Thank you.

Okay.

Thank you and just a reminder to the audience to ask a question at this time press star one on your Touchtone phone to remove yourself from the queue Press star two.

Our next question comes from Andrew Luster with Harlot capital. Please state your question.

Andrew Lester: Our next question comes from Andrew Lester with Harla Capital. Please state your question. Hi. Thanks for taking the question. Last quarter, in light of different market conditions, the company had to borrow bank debt that they thought would be sort of short-lived.

Hi.

Thanks for taking the question.

Last quarter in light of different market conditions, the company had to borrow bank debt.

B.

Sort of short lived.

Andrew Lester: In light of better results, could you state how much of that debt has presently been repaid, and how quickly you expect to be able to pay down the balance? Thank you. So, yeah, you can stop that. Okay, so, yeah, there's a little bit of that in the multiple. Unknown Attendee.

Might have better results could you state.

How much of that debt has been repaid.

And how quickly you expect to be able to pay down the balance. Thank you.

So yes, you can say, okay no so yeah.

No there isn't.

That multiple.

Okay.

For the end of Q3.

Eric G. Wintemute: All right. Thank you, with other reasons. The 175 target. This amendment has stayed in place for a year and has kind of graduated back to normal to three and a half years. But if we got to 2.75, it would.

The reason, we mentioned the $2 75 target.

This amendment.

It is important.

It's kind of a graduated.

Uh huh.

But if we got to $2 75.

Good.

Yes.

Okay.

Eric G. Wintemute: And until we have the ability to do that, Unknown Attendee, Unknown Attendee....

We have the ability.

Sure.

Please go ahead.

Andrew Lester: Okay, and just in addition, just a suggestion for the future. I know you released the news that the earnings call would come out via Bloomberg. I would just make a recommendation that it be sort of more broadly disseminated because it's very easy to miss for somebody who didn't have Bloomberg, whether it be, you know, Reuters or Dow Jones or Yahoo Finance, something like that, I just think would be helpful for shareholders.

Okay.

Okay and just.

Just a suggestion for the future I know you released the news that.

The earnings call would come out.

Via Bloomberg.

I would just make a recommendation that it sort of more broadly be disseminated because it's very easy to miss with somebody who didn't have bloomberg whether it would be.

Wonders of Dow Jones or.

Finance something like that I, just think it would be helpful for shareholders. Thank you.

David T. Johnson: Thank you. I appreciate it. I don't know, David, if you had anything more you wanted to add to it. No, I think that's it. Yeah.

Alright, I appreciate it I appreciate it.

Yes.

I don't know David.

Greg wanted to ask.

Yes.

Operator: Okay, then. Thank you, and as a final reminder, to ask a question, press star 1 on your touchtone phone. We'll pause for a couple of moments to see if there are any questions, and there appear to be no additional requests for questions. I'll hand the floor back to Eric Wintemute for a closing comment. Okay, well again, I appreciate everybody taking the time to listen to the presentation. Again, as I said, it's an exciting time for us. We're making a lot of improvements in our organization as we go forward. We feel very bullish about the outcome for 24 in the autumn. We look forward to giving you additional updates on our next call, which is not all that far away. As we get through 2.1,

Yes.

Thank you and final reminder, to ask a question press Star one on your Touchtone phone, we will pause for a couple of I wanted to see if there any questions.

And there appears to be no additional requests for questions I will hand, the floor back to Eric <unk> for closing comments. Thank you.

Okay, well again I appreciate everybody, taking the time to listen presentation.

As I said, it's exciting time for us.

We're making a lot of.

Improvements in our organization as we go forward.

Very bullish about it.

About the outcome for Q4.

And we look forward.

Additional updates.

Our next call.

Far away.

So as we go through Q1.

Eric G. Wintemute: And I appreciate your participation. Thank you very much. Thank you. That concludes today's call. All parties may disconnect. Have a good day.

Sure.

I appreciate I appreciate it then your participation. Thank you very much.

Thank you that concludes today's call all parties may disconnect have a good day.