American Vanguard (AVD) Q3 2024 earnings summary

Executive summary

• Full-year 2024 adjusted EBITDA guidance of $40–$50M and sales target of $565–$580M (excluding Dacthal recall) reiterated, with transformation plan annualized EBITDA benefit raised to $20M.

• Q3 2024 net sales were $118.3M, or $130.7M excluding Dacthal recall, down from $149.5M year-over-year, with net loss of $25.7M and EPS of $(0.92).

• Gross profit margin fell to 15% from 29% in Q3 2023, impacted by Dacthal recall and generic price pressure.

• Debt reduced by $32.5M in Q3, with long-term debt at $179M and further deleveraging planned.

• Board actively searching for a new CEO to drive transformation.

Financial highlights

• Q3 2024 adjusted EBITDA was $1.8M, down from $11.4M in Q3 2023; adjusted revenue was $130.7M, down from $149.5M.

• Q3 2024 gross margin was 15%, down from 29% in Q3 2023; nine-month gross margin was 26% versus 31%.

• Q3 2024 operating loss was $28.4M versus income of $4.2M last year.

• Q3 included $16.2M in Dacthal recall charges and $8.1M in transformation costs.

• Cash flow from operations for the nine months was $(29.8)M, improved from $(145.9)M last year.

Outlook and guidance

• Full-year 2024 adjusted EBITDA guidance reiterated at $40M–$50M, with revenue expected at $565M–$580M, excluding Dacthal recall.

• Transformation benefits target raised to $20M from $15M.

• Inventory expected to decrease to 34% of sales by year-end, with $25M reduction targeted.

• Management expects gradual ag economy recovery, but inventory overhang and low commodity prices may delay improvement.

• Liquidity expected to be sufficient for the next twelve months.