Executive Summary

Q2 2025 delivered broad-based beats with net sales $129.3M (+1% YoY), GAAP EPS $(0.03) vs $(0.42) YoY, gross margin 31% (from 29%), and adjusted EBITDA $11.0M (vs $6.2M YoY); results exceeded S&P Global consensus on revenue ($125.0M*), EBITDA ($5.8M*), and EPS (−$0.11*) .*
Management reiterated FY2025 guidance: revenue $535–$545M and adjusted EBITDA $40–$44M; 2025 CapEx outlook reduced to $5–$6M (from $8–$9M in Q1), implying improved free cash flow and prioritization of debt paydown .
Operating discipline remains the core narrative: OpEx down $5M YoY in Q2; inventory $191M (−$53M YoY), debt $189M (−$22M YoY); gross margin uplift driven by SIOP/procurement/manufacturing efficiency .
Macro and channel trends improved: destocking now only a “slight headwind”; U.S. crop/non-crop grew modestly; international stable; GreenSolutions softer in U.S. due to tariff uncertainty but expected to accelerate in LatAm in H2 .
Potential stock catalysts: continued execution on cost/margin gains, H2 seasonal uplift (fumigants), reaffirmed full-year guide, and visible CapEx pullback toward debt reduction .

What Went Well and What Went Wrong

What Went Well
- Adjusted EBITDA nearly doubled YoY to $11.0M on better gross margin (31%) and lower OpEx; management credited SIOP, procurement, and manufacturing efficiency gains .
- Working capital, debt, and inventory all improved YoY; inventory $191M (−$53M YoY) and debt $189M (−$22M YoY), with free cash flow prioritized for debt reduction .
- Reiterated FY2025 revenue ($535–$545M) and adjusted EBITDA ($40–$44M) guidance despite a soft industry backdrop; H2 expected to be seasonally stronger .
- Quote – CEO: “Our gross profit margin… increased to 31% from 29%… and 26% in the first quarter… the highest… in the last 5 quarters” .
What Went Wrong
- GreenSolutions U.S. softness tied to tariff-related channel uncertainty; overall growth ahead of company average expected but timing skewed to LatAm/H2 .
- Cotton exposure a headwind; weakness offset by corn acreage strength and granular soil insecticides, but mix still pressured Q1/Q2 at times .
- Credit facility maturity (Q3’26) requires extension/replacement 12 months prior to avoid current classification; discussions ongoing with lenders amid a higher rate environment .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$128.209	$115.800	$129.313
GAAP EPS ($)	$(0.42)	$(0.30)	$(0.03)
Gross Margin (%)	29%	26%	31%
Adjusted EBITDA ($USD Millions)	$6.164	$2.973	$11.039

Actual vs S&P Global Consensus (Q2 2025)

Metric	Consensus*	Actual	Surprise
Revenue ($USD Millions)	$125.000*	$129.313	+$4.313M (beat)
Adjusted EBITDA ($USD Millions)	$5.750*	$11.039	+$5.289M (beat)
GAAP EPS ($)	$(0.11)*	$(0.03)	+$0.08 (beat)

Segment Net Sales (Quarterly)

Segment	Q2 2024 ($USD Millions)	Q2 2025 ($USD Millions)
U.S. crop	$52.289	$52.674
U.S. non-crop	$19.011	$19.585
Total U.S.	$71.300	$72.259
International	$56.909	$57.054
Total Net Sales	$128.209	$129.313

Operating Expense Detail (YoY, quarterly)

Expense	Q2 2024 ($USD Millions)	Q2 2025 ($USD Millions)
SG&A	$31.051	$28.757
Research, Product Dev. & Regulatory	$8.599	$5.803
Transformation	$7.345	$1.621

Balance Sheet / Working Capital KPIs (sequential)

KPI	Q1 2025 (End)	Q2 2025 (End)
Inventory ($USD Millions)	$184.596	$191.497
Long-term Debt ($USD Millions)	$167.498	$189.500
Cash & Equivalents ($USD Millions)	$11.805	$14.482

Notes: Management emphasized YoY improvements in debt (−$22M YoY) and inventory (−$53M YoY) despite normal seasonal inventory build in H1 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$535–$545M (Q1 update)	$535–$545M	Maintained
Adjusted EBITDA	FY2025	$40–$44M (Q1 update)	$40–$44M	Maintained
CapEx	FY2025	$8–$9M	$5–$6M	Lowered

Context: Prior to Q1, management in March guided higher at $565–$585M revenue and $45–$52M EBITDA for 2025; the Q1 call reduced to current levels now reiterated in Q2 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 prelim & Q1’25)	Current Period (Q2’25)	Trend
Supply chain, SIOP, procurement	Transformation and simplification agenda formalized; control of working capital highlighted	Margin uplift attributed to SIOP, procurement, and manufacturing; OpEx at 27% of sales (vs 31% last year)	Improving execution
Tariffs / macro	Tariff impact expected nominal to COGS; may create opportunities for U.S.-based footprint; cycle in early recovery	Tariffs created channel uncertainty for U.S. GreenSolutions; potential long-term opportunity for domestic manufacturing	Mixed near-term; potential positive LT
Channel destocking	Continued through Q1; distributors at historic lows; expected improvement into Q2/H2	“Only a slight headwind” in Q2; sales up YoY and sequentially	Easing
Product performance / crop mix	Dacthal absence, agave weakness (MX), Australia drought; Metam and Thimet strength; corn acreage supportive	U.S. crop/non-crop both grew; granular soil insecticides aided; GreenSolutions softer in U.S., expected H2 strength in LatAm	Improving mix ex-GreenSolutions (U.S.)
Regional trends	Brazil transformation improved contribution margin despite lower sales	Central/South America GreenSolutions expected to pick up in H2 with seasonal strength	Positive H2/LatAm
Capital structure / credit facility	Higher rate environment likely; working on longer-term structure	Active talks to extend/amend facility ahead of 12-month reclassification window	In progress
Technology/ERP	ERP standardization created implementation issues called out in filings timing	Focus shifted to procurement org build and SIOP cadence	Operationalization underway
SIMPAS/IP	Savings from de-emphasis; exploring strategic options/partners	“Being worked on,” no update of substance	Ongoing, limited visibility

Management Commentary

“We remain confident that we can achieve our 2025 EBITDA target of $40 million to $44 million and a revenue target of $535 million to $545 million.” – CEO .
“Our gross profit margin… increased to 31% from 29%… and 26% in the first quarter… highest… in the last 5 quarters.” – CEO .
“We cut our costs by $5 million in the quarter… SG&A was reduced by $2 million and… research, product development and regulatory was reduced by almost $3 million.” – CFO .
“Inventory increased by only 7% since year-begin… down $53 million YoY… debt… $189 million vs $211 million last year… we intend to use the majority of free cash flow to further pay down debt.” – CFO .
“CapEx… in the range of $5 million to $6 million for 2025… points towards a reasonably strong free cash flow year in 2025.” – CFO .

Q&A Highlights

Credit facility: Management in “productive conversations” with lenders to amend/extend ahead of the 12-month reclassification window; details not disclosed .
Procurement and manufacturing: New operations leadership and procurement resources credited with quick payback; factory utilization initiatives include cross-plant alignment and tolling opportunities .
Inventory turns: Targeting ~2 turns by end of next year or early 2027; cadence constrained by synthesis lead times and campaign builds .
GreenSolutions/tariffs: U.S. softness tied to tariff uncertainty; expecting LatAm seasonal pickup in H2 .
Margin sustainability: Q2 mix and manufacturing efficiencies drove results; management striving to sustain/improve toward long-term 15% EBITDA margin target, acknowledging volatility by quarter .

Estimates Context

Q2 2025 result vs S&P Global consensus: revenue $129.3M vs $125.0M*, adjusted EBITDA $11.0M vs $5.75M*, GAAP EPS $(0.03) vs $(0.11)* – all beats .*
Forward quarterly consensus (single-analyst coverage): Q3’25 revenue $128.0M*, EPS $(0.08); Q4’25 revenue $163.0M, EPS $0.28*; Q1’26 revenue $120.0M*, EPS $(0.06); Q2’26 revenue $135.0M, EPS $0.09* (low estimate count = 1) [GetEstimates].*
Annual consensus: FY2025 revenue $536.1M*, EBITDA $40.5M*, EPS $(0.13), consistent with reiterated guidance midpoints; free cash flow $29.3M (est.) [GetEstimates].*

Values retrieved from S&P Global.

Key Takeaways for Investors

Q2 marked a clear inflection: gross margin recovery to 31% and adjusted EBITDA nearly doubled YoY on disciplined cost and improved operations, with continued guide confidence .
Balance sheet trajectory constructive: lower CapEx ($5–$6M) plus EBITDA guide support FCF deployment to pay down debt; watch upcoming amendment on the 2026 facility .
Channel dynamics improving: destocking now a modest headwind; H2 seasonality and fumigants should support volumes; GreenSolutions likely to reaccelerate in LatAm .
Mix tailwinds: higher U.S. corn acreage and granular insecticides strength offset cotton softness; focus on procurement and utilization should continue to aid gross margin .
Execution watch items: sustain gross margin at ~30%+ amid product mix swings; deliver OpEx as % of sales down from 27% toward low-20s target; progress toward inventory turns ~2 .
Estimate implications: Following across-the-board beats and guide reiteration, consensus (though single-analyst) may lift H2 EBITDA and revenue; sensitivity remains to macro/tariff outcomes and channel reorder cadence .*
Trading lens: Positive setup into H2 on seasonal strength and operating leverage; monitor lender amendment headline, GreenSolutions demand normalization, and any incremental tariff commentary .

Citations:

Q2 2025 8-K and Exhibits (press release, financials, transcript) .
Q2 2025 Press Release (Business Wire) .
Q1 2025 Press Release and Call .
Q4 2024 Preliminary Press Release .
S&P Global estimates noted with asterisks.*

AMERICAN VANGUARD CORP (AVD)·Q2 2025 Earnings Summary