American Vanguard Q2 Earnings Call Highlights

Second-quarter sales fell to $117 million from $129 million, while adjusted EBITDA declined to $6.6 million amid weak agricultural demand, delayed customer purchases, higher freight costs and lower factory utilization. U.S. specialty sales growth partly offset declines in U.S. crops and international markets. Management highlighted cost-cutting and growth initiatives, including Los Angeles facility rationalization expected to generate at least $4 million in annualized savings and a product pipeline targeting 50 launches and $100 million in annualized revenue by 2030. American Vanguard reiterated its 2026 outlook for sales of $530 million to $550 million and adjusted EBITDA of $44 million to $48 million, citing delayed shipments and a stronger third-quarter order book.

American Vanguard NYSE: AVD reported lower second-quarter sales amid challenging agricultural market conditions, while management said U.S. specialty growth, cost actions and product-development investments supported its full-year outlook. Second-quarter sales totaled $117 million, down from $129 million in the prior-year period. First-half sales declined about 2% to $240 million. Chief Executive Officer Dak Kaye said the quarter reflected continued pressure on farm economics, including high capital costs, higher fuel and fertilizer expenses tied to the Middle East conflict, and conservative purchasing practices among distributors, retailers and growers. Customers have increasingly ordered closer to the time of use and, in some cases, deferred purchases month to month, Kaye said. International markets also faced adverse weather, inflation and higher raw-material costs.

U.S. crop sales fell 9% in the second quarter, primarily because sales in the company’s cotton portfolio shifted into the third quarter as customers delayed purchases. Insecticide sales also declined amid low bug pressure and cautious grower spending, Chief Financial Officer David Johnson said. Those declines were partly offset by continued herbicide momentum, led by the company’s Impact and Envoke brands, while soil fumigant sales remained stable. On a first-half basis, U.S. crop sales increased 5%. American Vanguard’s specialty business grew 11% during the quarter and 10% during the first half. Johnson said OHP led demand for biological solutions, while turf results exceeded the company’s forecast. International sales declined 18% in the second quarter and 13% in the first half. Management cited dry conditions associated with El Niño in Central America, paused customer shipments related to local labor activity, reduced agave acreage in Mexico, and softer Brazilian demand for a copper fungicide following higher raw-material costs. During the question-and-answer session, Kaye said the company was seeing higher—not lower—pricing in Brazil for its copper fungicide as copper costs rose. He also said American Vanguard had implemented freight-related price increases in July and that the increases appeared to be taking hold.

Margins and EBITDA Affected by Freight, Volume and Factory Utilization Gross margin was 30% in the second quarter, compared with 31% a year earlier. Johnson attributed the decline to roughly $2 million of higher freight costs during the quarter and weaker factory absorption. For the first half, however, gross margin improved by 100 basis points to 30%, from 29% in the year-earlier period. Kaye said higher freight costs reduced first-half margins by an estimated $2.2 million, or 90 basis points. The company expects pricing actions intended to recover those costs t...