Sign in

You're signed outSign in or to get full access.

AV

AMERICAN VANGUARD CORP (AVD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 preliminary net sales were approximately $169.0M, down ~2% year over year; adjusted EBITDA was ~$18.0M (down ~18% YoY), while full-year adjusted EBITDA reached ~$42.0M and adjusted revenue excluding Dacthal recall was ~$563.0M .
  • Balance sheet improved materially: total debt fell to $156.0M (from $179.0M in Q3 and $211.0M mid-year), and inventory ended ~$178.0M, down ~$42.0M vs. year-end 2023 .
  • 2025 guidance introduced: revenue $565–$585M, adjusted EBITDA $45–$52M, capex ~$10M; management expects free cash flow to be “meaningful” and allocated toward debt reduction; transformation costs projected at ~$5M with $8–$10M benefits in 2025 .
  • Management tone: cautiously optimistic; tariffs likely a modest raw material headwind (<$3M EBITDA impact if in place for full year), but growers are buying closer to season (just-in-time); EBITDA margin cadence expected to be stronger in H2 than H1 .
  • Wall Street consensus estimates from S&P Global unavailable at time of analysis; estimate beat/miss cannot be assessed (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Debt and working capital reduction: “We ended the year with total debt of $156 million, down from $179 million last quarter and $211 million at mid-year 2024,” and inventory ended ~$178M, down ~$42M vs. 2023, supporting improved liquidity .
  • Transformation progress and 2025 targets: “Adjusted EBITDA target range of $45–$52 million and expect sales to fall in the range of $565–$585 million… we expect capex of approximately $10 million… free cash flow should show a meaningful improvement” .
  • Strategic clarity and leadership: New CEO Dak Kaye reiterates the mantra “SIMPLIFY, PRIORITIZE and DELIVER,” indicating focus on margin expansion and operational simplification; improvement plan includes ERP and enhanced SIOP processes .

What Went Wrong

  • Q4 performance down YoY: Net sales ~$169M vs. $172M in Q4 2023; adjusted EBITDA ~$18M vs. ~$22M in Q4 2023, reflecting ongoing macro and product-mix pressures .
  • Significant non-recurring charges: ~$118M in total 2024 charges (asset impairments including goodwill, SIMPAS write-down, slow-moving inventory write-downs, transformation costs), contributing to reported losses and delaying the 10-K filing (12b-25) .
  • Channel and product headwinds: Generics pressure (Folex), Aztec overhang/destocking, and Dacthal recall costs weighed on volumes/margins in prior quarters; customers’ just-in-time approach constrained restocking .

Financial Results

Quarterly Comparison (Reported; preliminary for Q4)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$128.2 $118.3 ≈$169.0
Adjusted EBITDA ($USD Millions)$6.2 $1.8 ≈$18.0
Gross Margin %29% 15% N/A (not disclosed)
EPS ($USD)$(0.42) $(0.92) N/A (preliminary; not disclosed)
Total Debt ($USD Millions)$211.3 $179.0 $156.0
Inventory ($USD Millions)$244.9 $246.0 ≈$178.0

Notes:

  • Management referenced Q4 adjusted EBITDA margin “closer to 10.5%,” consistent with ~$18M on ~$169M revenue .
  • Q3 adjusted revenue excluding Dacthal recall impacts was $130.7M .

Full-Year Comparison

MetricFY 2023FY 2024 (Reported)FY 2024 (Adjusted for Dacthal)
Revenue ($USD Millions)$579.0 ≈$550.0 ≈$563.0
Adjusted EBITDA ($USD Millions)$53.0 ≈$42.0 ≈$42.0
Adjusted EBITDA Margin %N/A7.5% (management) 7.5% (management)
Non-recurring charges ($USD Millions)N/A≈$118.0 ≈$118.0

Segment/Geography Breakdown (Selected Quarters)

SegmentQ2 2024 ($MM)Q3 2024 ($MM)Q4 2024 ($MM)
U.S. Crop$52.3 $35.5 N/A
U.S. Non-Crop$19.0 $22.5 N/A
International$56.9 $60.3 N/A
Total$128.2 $118.3 ≈$169.0

KPIs and Balance Sheet

KPIQ2 2024Q3 2024Q4 2024
Debt reduction (quarterly change)—($32.5) ($22.0)
Inventory to sales target34% year-end target (plan) Slight miss on 34% target; pivot to turns Ending inventory ≈$178M; turns 2024 avg 1.67, target ~2.0 by YE 2025
Credit facility amendmentImplemented; covenants reset; dividend/buyback require consent —Amendment acknowledged; aim for new facility summer 2025
Dacthal recall charges—$16.2M in Q3 (est.) Exclusion adds ~$12M to FY revenue

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025N/A$565–$585New range introduced
Adjusted EBITDA ($USD Millions)FY 2025N/A$45–$52New range introduced
Capex ($USD Millions)FY 2025N/A≈$10New (supports FCF)
Transformation costs ($USD Millions)FY 2025N/A≈$5New (down materially from 2024)
Transformation benefits ($USD Millions)FY 2025N/A≈$8–$10New benefits from commercial, logistics, org.
Inventory turns (x)FY 2025 target~1.67 (FY2024 actual) ~2.0 by YE 2025Raised focus; KPI change (from inventory/sales to turns)
Tariff impact (EBITDA)FY 2025N/A< $3Nominal raw material headwind
Capital allocationOngoingDividends/buybacks unrestricted historicallyLender consent required under amended facilityTightened (credit amendment)

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Supply chain & inventoryShift to S&OP; target 34% inventory/sales; debt $211M; working capital reduction plans Continued destocking; debt down $32.5M; inventory % goal reiterated Year-end inventory ≈$178M; pivot to inventory turns; target ~2.0 by YE 2025 Improving working capital discipline
Tariffs/macroWeak farm economy; just-in-time buying; lower commodity prices Cautious channel; generics pressure; pockets of green shoots Tariffs nominal raw-material impact (<$3M EBITDA); growers cautious; H2 margin stronger Cautious optimism
Product performanceGreen Solutions growth; non-crop strength Aztec/Folex headwinds; OHP +45%; Green Solutions +18% Q3 Mix details limited; focus on margin, simplification Portfolio mix optimization
Regulatory/legalDacthal emergency suspension; recall cost likely Dacthal recall charge $16.2M; further costs possible FY revenue ex-Dacthal +$12M; 10-K delay; 12b-25 filing Resolving overhangs
Transformation/ERPOCEO formed; cost actions; SIMPAS partnering Raise transformation benefits to $20M; organization redesign New CEO; ERP/SIOP upgrades; FY2025 benefits $8–$10M Execution phase
R&D/Green SolutionsEmphasis on biologicals; registrations Green Solutions strength in LatAm; seed inclusion Continued focus (no new KPIs disclosed) Structural growth vector

Management Commentary

  • CEO Dak Kaye: “My message across the organization… SIMPLIFY, PRIORITIZE and DELIVER.” He targets double-digit EBITDA growth over next 3–4 years, viewing 2024’s 7.5% EBITDA margin as “about half of what our full cycle earnings power can be” .
  • CFO David Johnson: “We ended the year with total debt of $156 million… inventory ending at approximately $178 million (including some impairment charges)… approximately $118 million in non-recurring cash and non-cash charges in 2024” .
  • CEO (tariffs): “We have analyzed the ongoing tariff situation and believe it will have a nominal impact… less than $3 million EBITDA impact if tariffs remain in place for a full year” .
  • CEO (cadence): “We are seeing the second half of the year being more positive… Q1 and Q2 being lower… Q4… strong quarter” .

Q&A Highlights

  • Filing timing and 12b-25: Audited 10-K delayed due to complexity of write-downs; management working to file “days or weeks, not months” .
  • Working capital prioritization: Inventory is the high-focus item; refreshed SIOP led by new SVP Operations & Supply Chain; targeted improvement in turns .
  • Margin bridge: Plan to raise gross margin ~300 bps (29%→~32%) and reduce OpEx from ~26% of sales to ~20%, targeting mid-teens EBITDA margin over cycle .
  • 2025 cadence: Lower margins H1, stronger H2; Q4 seasonally strongest .
  • Transformation benefits FY2025: ~$8–$10M (commercial $4–$5M; logistics/procurement $2–$3M; org ~$2M); transformation costs ≈$5M in 2025 .

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 revenue/EPS/EBITDA were unavailable at the time of analysis due to data access limits; therefore, we cannot assess beat/miss or estimate variance. Where consensus comparisons are required, please note that S&P Global data was unavailable.

Key Takeaways for Investors

  • Liquidity inflection: Material debt reduction ($211M→$156M over H2) and inventory drawdown to ~$178M suggest improved cash generation trajectory into 2025; free cash flow prioritized for further deleveraging .
  • Profitability path: 2024 adjusted EBITDA margin at 7.5%; management outlines tangible levers (gross margin uplift and OpEx reduction) and expects H2-weighted EBITDA cadence in 2025 .
  • Guidance baseline: 2025 revenue $565–$585M and adjusted EBITDA $45–$52M appears grounded in cautious farm economy assumptions (just-in-time buying, modest tariff headwinds), implying defensible targets .
  • Transformation execution: Lower transformation costs (~$5M) with ~$8–$10M benefits in 2025, ERP/SIOP upgrade and org redesign should improve turns and margins; watch for execution updates and KPIs (turns, gross margin progress) .
  • Regulatory overhang narrowing: Dacthal recall accounted for ($16.2M in Q3; FY adjustment adds ~$12M to revenue), and 10-K delay attributed to impairment assessments; filing resolution is a near-term catalyst .
  • Trading implications: Near term—stock likely sensitive to progress on audit filing, inventory turns, and debt reduction pace; medium term—margin expansion evidence and H2 cadence reassertion to support rerating if execution aligns with guide .

Citations:
Q4 preliminary press release and 8-K:
Earnings call transcript Q4:
Q3 press release and 8-K:
Q2 8-K and press release: