Financial Data and Key Metrics Changes - The company's net sales increased by 3.4% to $152 million in Q3 2022 compared to $147 million in Q3 2021 [17] - Year-to-date sales were up 13%, with net income increasing by 71% and adjusted EBITDA rising by 30% [29][23] - Gross margins improved from 45% to 50% in the U.S. crop business, while non-crop sales saw a reduction in gross margin by 1% [18] Business Line Data and Key Metrics Changes - U.S. crop sales increased by 4%, contributing to a 14% rise in absolute gross profit [18] - Non-crop sales decreased by 11% year-to-date due to reduced consumer demand for lawn and garden products [8] - International sales grew by 9%, with significant contributions from Agrinos (55% growth) and Brazil (42% growth) [9] Market Data and Key Metrics Changes - High commodity prices for corn, soybeans, and wheat are supporting a strong farm economy, with corn prices rising 68% over the past two years [10] - The international business accounted for 42% of total sales, up from 40% the previous year [17] - The company noted a strong demand for agricultural products, with distribution partners optimistic about the 2023 planting season [11] Company Strategy and Development Direction - The company is focused on three growth pillars: core product growth, green solutions, and precision application innovations [30] - The company is actively pursuing acquisitions, having evaluated over 30 potential targets, with a balanced focus on core products and green solutions [31][72] - The company aims to expand its green solutions portfolio and enhance its precision application technologies [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the agricultural sector's upcycle continuing into 2023, despite potential headwinds such as inflation and geopolitical factors [15] - The company is well-positioned to maintain strong performance, with a robust pipeline of technology and a focus on innovation [15][36] - Management noted that they are not experiencing price pushback from customers, indicating a favorable pricing environment [58] Other Important Information - The company repurchased 1.2 million shares during Q3 2022, reflecting confidence in its business strength [6] - The effective income tax rate increased to 30.5% in Q3 2022, compared to 20.7% in Q3 2021, primarily due to jurisdictional profit mix [21] - The company has made prudent decisions to hold higher levels of inventory to meet demand amid ongoing logistics challenges [27] Q&A Session Summary Question: Thoughts on the agricultural cycle and 2023 outlook - Management indicated that there is no current indication of a downward cycle, with strong prospects for 2024 and 2025 [39][40] Question: Internal needs to drive growth in Green Solutions and SIMPAS - Management is allocating resources to support growth in these areas, including marketing and personnel [42] Question: Pricing dynamics and acquisition strategies - Management is being prudent with acquisitions, focusing on accretive opportunities and partnerships to enhance market access [45][72] Question: Volume versus price impact on sales - For the year, sales were driven 80% by price increases and 20% by volume, with Q3 showing 85% from price [49][55] Question: Future pricing expectations and cost inflation - Management does not anticipate needing to reduce prices even if cost inflation moderates, given the robust farm economy [61] Question: Shift in crop preferences and its impact - Management noted a likely shift towards corn planting due to favorable economics, which could positively impact demand for related products [68]

Financial Performance - Net sales for the three months ended September 30, 2022, were $152,117 thousand, an increase of 3.7% compared to $147,298 thousand for the same period in 2021[15]. - Gross profit for the nine months ended September 30, 2022, was $182,356 thousand, up 18.2% from $154,334 thousand in the prior year[15]. - Operating income for the three months ended September 30, 2022, increased to $11,244 thousand, representing a 25.7% rise from $8,946 thousand in the same quarter of 2021[15]. - Net income for the nine months ended September 30, 2022, was $23,506 thousand, a significant increase of 71.3% compared to $13,713 thousand for the same period in 2021[15]. - Earnings per share (basic) for the three months ended September 30, 2022, was $0.23, up from $0.18 in the same quarter of the previous year[15]. - Total net sales for the nine months ended September 30, 2022, were $449,636,000, up from $398,063,000 in 2021, reflecting a growth of 12.9%[40]. - U.S. crop sales for the nine months ended September 30, 2022, reached $220,503,000, compared to $184,052,000 in 2021, marking an increase of 19.7%[40]. - International sales for the nine months ended September 30, 2022, were $175,485,000, up from $153,448,000 in 2021, indicating a growth of 14.3%[40]. - Consolidated net sales increased by 3% to $152,117 in Q3 2022, compared to $147,298 in Q3 2021, driven by a 9% increase in international sales[106]. - Net income rose by 23% to $6,741 in Q3 2022, up from $5,498 in Q3 2021, reflecting improved profitability[106]. - Gross profit increased by 8% to $61,384 in Q3 2022, with gross margin improving to 40% from 39% year-over-year[107]. Assets and Liabilities - Total current assets as of September 30, 2022, were $436,801 thousand, an increase from $342,000 thousand as of December 31, 2021[21]. - Total liabilities increased to $413,607 thousand as of September 30, 2022, compared to $321,422 thousand at the end of 2021[21]. - Cash and cash equivalents rose to $20,808 thousand as of September 30, 2022, from $16,285 thousand at the end of the previous year[21]. - Total stockholders' equity decreased to $362,568 thousand as of September 30, 2022, from $372,738 thousand at the end of 2021[21]. - Long-term indebtedness from the revolving line of credit increased to $149,300 million as of September 30, 2022, from $53,300 million as of December 31, 2021[55]. - The Company's total Funded Debt was $149.3 million, with a Consolidated EBITDA of $77.2 million, resulting in a leverage ratio of 1.93, well below the maximum allowed ratio of 3.5[58]. - Long-term net debt increased to $148,414,000 as of September 30, 2022, compared to $52,240,000 on December 31, 2021[152]. Cash Flow and Investments - Net cash used in operating activities for the nine months ended September 30, 2022, was $(45,678,000), compared to $(174,000) in 2021[29]. - Cash used for investing activities decreased to $9,978 in 2022 from $18,431 in 2021, with no product acquisition in the current year[148]. - Financing activities provided $59,797, with net borrowings under the Credit Agreement amounting to $96,000 during the nine-month period ended September 30, 2022[149]. - The company has the capacity to increase its borrowings by up to $120.8 million, compared to $94.9 million available as of September 30, 2021[58]. Shareholder Activities - The company declared cash dividends of $0.025 per share for the quarter ending March 31, 2022, totaling $742,000[24]. - The company declared a cash dividend of $0.025 per share in September 2022, totaling $715 million paid out[51]. - The company announced a share repurchase program to buy back up to 1,000,000 shares of its common stock over the next year, with no repurchases made in the same periods of 2021[96]. - The company repurchased shares totaling 606,000 during the quarter ending June 30, 2022[24]. - The company repurchased a total of 720,350 shares of common stock during the three-month period ended September 30, 2022, at an average price of $19.06 per share, totaling $13,731,000[166]. - An accelerated share repurchase arrangement was executed on August 22, 2022, for $20,000,000, resulting in an initial delivery of 802,810 shares at an average price of $19.93[169]. Tax and Regulatory Matters - The Company reported an income tax expense of $2,963 for the three-month period ended September 30, 2022, compared to $1,517 for the same period in 2021, reflecting an effective tax rate increase from 20.7% to 30.5%[95]. - For the nine-month period ended September 30, 2022, the income tax expense was $10,187, up from $5,324 in 2021, with the effective tax rate increasing from 27.4% to 30.2%[95]. - The Company has been cooperating with an ongoing investigation by the DOJ and EPA regarding environmental statutes, with discussions for potential resolution expected to resume soon[76]. - The Company is engaged in settlement discussions with the USEPA regarding the suspension of DCPA, with a hearing date set for January 24, 2023[80]. Operational Insights - The company experienced strong demand for its domestic crop and international products during the nine-month period ended September 30, 2022[32]. - The company plans to continue meeting demand by adjusting prices and optimizing factory performance amid inflationary pressures[106]. - Operating expenses rose by $1,730 to $50,140 for the three-month period ended September 30, 2022, reflecting a 4% increase compared to the same period in 2021[117]. - Research, product development, and regulatory expenses increased by $2,020 to $23,241, driven by infield activities and international product defense[135]. Market Risks and Controls - The company has not engaged in hedging activities for foreign currency exchange rate risks, which may affect revenues and expenses from non-U.S. dollar functional currencies[157]. - The company is exposed to market risks related to interest rate fluctuations due to its variable rate line of credit[157]. - The company continues to assess business risks, including inflation and increased interest rates, which could adversely impact financial performance[164]. - As of September 30, 2022, the company's disclosure controls and procedures were deemed effective by management[159]. - There were no material changes to the critical accounting policies during the reporting period ending September 30, 2022[155].

American Vanguard Corporation (NYSE:AVD) Q2 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants William Kuser - Director of IR Eric Wintemute - Chairman and CEO David Johnson - CFO Ulrich Trogele - COO Conference Call Participants Gerry Sweeney - ROTH Capital Chris Kapsch - Loop Capital Operator Greetings. Welcome to the American Vanguard Corporation Second Quarter 2022 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A questio ...