Q1 2024 Performance Update Insights from American Vanguard

American Vanguard Corporation (NYSE: AVD) disclosed its financial performance for the first quarter ending on March 31, 2024.

Key Financial Highlights for Q1 2024 compared to Q1 2023:

  • Net sales surged to $135 million from $125 million.
  • Adjusted EBITDA1 rose to $15.5 million from $11.5 million.
  • Operating Income escalated to $6.1 million from $3.3 million.
  • Net income decreased slightly to $1.6 million from $1.9 million.
  • Earnings per diluted share decreased to $0.06 from $0.07.

Eric Wintemute, the Chairman and CEO of American Vanguard, expressed satisfaction with the company’s enhanced operational efficiency, marked by a substantial uptick in adjusted EBITDA and operating income compared to the previous year. This improvement was attributed to cost control initiatives, resulting in reduced operating expenses relative to net sales, even after accounting for transformation costs. The ongoing transformation program is expected to generate an additional $15 million of adjusted EBITDA annually by 2026, promising greater efficiencies.

Wintemute highlighted growth across all three business segments: US Crop, US Non-crop, and International. Strong sales within US Crop were driven by granular soil insecticides, herbicides, cotton, and peanut products, buoyed by a stable farm economy and favorable weather conditions. While destocking initiatives from the previous year have lessened, cautious procurement practices persist within the distribution channel.

In US Non-crop, notable sales increases were observed in mosquito adulticides, pest strips, and OHP products for nursery and ornamental uses. International sales saw a moderate uptick, particularly in Mexico and APAC regions, despite lingering overstocking issues in other areas.

Wintemute acknowledged stable market conditions, underpinned by a robust farm economy and a more relaxed procurement environment within the distribution channel. However, in response to concerns raised by USEPA, the company voluntarily suspended sales of the herbicide Dacthal pending potential label approval to address regulatory queries. Consequently, annual targets were adjusted to achieve a 6% to 9% increase in net sales year over year, with an adjusted EBITDA target of $60 – $70 million. Further insights will be provided during the upcoming earnings call.

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