American Vanguard Corporation · NYSE:AVD
American Vanguard — Shareholder Meeting (June 2010)
42 slides from American Vanguard's shareholder meeting presentation, Jun 10, 2010
Slide 1: Positioned to Succeed - 2009 Annual Report
POSITIONED TO SUCCEED AMERICAN VANGUARD 2009 ANNUAL REPORT yh WS /) — Pee a : A d ; AA [ssl
Slide 2: Annual Shareholders' Meeting Management Presentation
American Vanguard Annual Shareholder’s Shareholder s Meeting Management Presentation Thi presentation This t ti contains, t i in i addition dditi tto hi historical t i l iinformation, f ti fforward- d looking statements. Such statements are based on management’s current expectations and are subject
Slide 3: Presenters and Topics
Presenters and Topics Eric Wintemute . . . . . . . . . . . . President & CEO David Johnson . . . . . . . . . . . . Chief Financial Officer Trevor Thorley . . . . . . . . . . . . .Chief Operating Officer Glen Johnson . . . . . . . . . . . . . Sr. V.P., Product Development ► 2009 Performance Challenge
Slide 4: 2009 Challenges - U.S. Market
2009 Challenges - U.S. Market End-Use Demand (Growers/Farmers) Purchasing Restraint ► Credit Crisis Impact ► Commodity Price Volatility Distribution Channel Demand (Distributors & Mid-West Retailers) Working Capital Restraint ► End-User Purchasing Restraint ► High-Cost Fertilizer & Glyphosate Write-
Slide 5: Global Ag Market Performance
Global Ag Market Performance (Distributor level – average exchange rates - Nominal US$) Year Crop Non-Crop GM Conventional Protection Agrochemicals Seed Seed ($m) ($m) ($m) ($m) 1998 28,995 1,405 14,559 1999 28,090 1,915 14,515 2000 27,830 2,195 14,269 2001 25,760 2,778 13,597 2002 25,150 4,270 3,14
Slide 6: Global AgChem Company Sales
Global AgChem Company Sales Agrochemical Company Sales (excluding seed and traits) Company 2009 vs vs. 2008 % Change Syngenta -8.0 Bayer -3.9 BASF 1.5 Dow AgroSciences -3.9 Monsanto* -33.6 DuPont -9.7 MAI -12.5 Nufarm** -20.4 S Sumitomo Chemical C 1.7 Arysta -7.1 FMC -0.7 Cheminova -5.8 58 * Year en
Slide 7: AVD Balance Sheet Strengthening
AVD Balance Sheet Strengthening ► Drive down inventory ► Simultaneouslyy drive down debt ► Year-end inventory revaluation 120000 100000 80000 60000 Inventory 40000 Revolver 20000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 '08 '08 '08 '08 '09 '09 '09 '09 (dollars in thousands) 7
Slide 8: AVD Financial Performance
AVD Financial Performance (dollars in thousands except earnings and dividend information) 2009 2008 2007 Net sales $209,329 $237,538 $216,662 Net income $ (5,789) $ 20,019 $ 18,728 Earnings per common share–assuming dilution (1) $ (0.21) $ 0.73 $ 0.68 Total assets $254,711 $286,937 $248,581 Long-ter
Slide 9: Operating Expense Control
Operating Expense Control Selling: Promotional programs & sales i incentives ti Administration: Compensation restraint & contained benefit costs R&D/Registration: New product development & e eg s a o cos re-registration costs s Freight: Continued logistics efficiency improvements 9
Slide 10: Continue Management Discipline
Continue Management Discipline Inventories: Restrain seasonal expansions & reduce d year-end d llevels l Cap Ex: Maintain all necessary regulatory regulatory, environmental & safety requirements Debt: Reduce term debt on schedule & tightly manage bank revolver 10
Slide 11: Finance Department Achievements
Finance Department Achievements ► Standard cost system overhaul & automation ( (completed) l t d) ► Hyperion financial consolidation implementation (imminent) ► Disclosure review committee management ( g g) (ongoing) ► Credit facility renewal 11
Slide 12: Continuing Finance Objectives
Continuing Finance Objectives ► Timely & accurate published financials ► Financial support for all AVD functional d departments t t ► Maintain outstanding banking relationships ► Skillful management of working capital & debt levels 12
Slide 13: Continuing Balance Sheet Strengthening
Continuing Balance Sheet Strengthening ► Drive down inventory ► Simultaneouslyy drive down debt 120000 100000 80000 $ Inventory 60000 Revolver 40000 20000 0 Q1 '09 Q1 '10 Q2 '09 Est. Q2 '10 (dollars in thousands) 13
Slide 14: 2010 Perspectives
2010 Perspectives ► Distribution channel inventories lowered Replenishment occurring ► End-use demand improving, particularly cotton ► Better credit availability & stable commodity prices ► Improved water supplies in Western US Region ► Market demand will require increased production thru-puts R
Slide 15: Organizational Improvements
Organizational Improvements ► Sales & Marketing ► Manufacturing ► Technology ► Administration 15
Slide 16: Organizational Improvements: Sales & Marketing
Organizational Improvements Sales & Marketing g National Accounts Manager 2 New Regional Managers Clear roles & responsibilities New incentive compensation program instituted New marketing tools 16
Slide 17: Sales & Marketing Initiatives
Sales & Marketing Initiatives ► Aggressively promote SmartChoice® (granular soil insecticide) A dual ingredient, g g general p purpose, p economical new p product ► Aggressively promote Counter® (granular soil insecticide) For secondary y soil insect control in corn & sugar g beets ► Aggressivel
Slide 18: Organizational Improvements: Manufacturing
Organizational Improvements Manufacturing Tailoring production to meet sales forecasts Pursuing P rs ing additional contract man manufacturing fact ring opportunities Established process engineering and logistic teams 18
Slide 19: Los Angeles Assets
Los Angeles Assets LA facility in Commerce, California Manufactures PCNB, Metam, Bidrin and a number of other products 19
Slide 20: Axis Assets
Axis Assets Axis facility near Mobile Mobile, Alabama Produces Metam, Dibrom®, SmartChoice® & other products This is the center of our tolling activity 20
Slide 21: Hannibal Assets
Hannibal Assets Hannibal facility in Missouri Manufactures Thimet® and Counter® insecticides 21
Slide 22: Marsing Assets
Marsing Assets Marsing facility in Idaho A dedicated formulation and packaging facility Potential to expand production of flowable products for many seed treatment applications 22
Slide 23: Organizational Improvements: Technology
Organizational Improvements Technology Monsanto veteran – John Killmer, Interim Head of Technology Department Recent hiring of 5 new experienced chemists Focus on formulations, process chemistry, yield enhancement and waste minimization 23
Slide 24: Organizational Improvements: Administration
Organizational Improvements Administration Human resource leadership change and reorganization Goals & objectives performance management system Establishing better internal company-wide communications 24
Slide 25: Amvac's Traditional Business Model
Amvac’s Traditional Business Model Two Prong Approach ► Organic Growth (existing products) Label expansion, packaging improvement, new formulations, improved marketing programs programs, field research ► Acquisitions/Licensing Acquire mature brand name products from majors who are focusing on new in
Slide 26: Organic Product Growth - Metam
Organic Product Growth - Metam 19x Increase 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010E 1991 Market Conditions: • Market cluttered with 4 other competitors Key to Growth: • Acquired market leader in 1996 and marketing rights of #3 competitor in 1997 • Large product development and regulatory
Slide 27: Proven Track Record of Acquisitions and Licenses
Proven Track Record of Acquisitions and Licenses Dibrom Folex Naled (US) Tribufos Orthene (Valent) (Aventis) Acephate 1998 2002 (Valent) 2008 Vapam Axis Hivol Metam Sodium Plant 2,4-D Lorsban Marsing (Zeneca) (DuPont) (Pace) (Dow) Plant 1996 2001 2003 2006 (Bayer) 2008 Deadline Bidrin Smartbox M t l
Slide 28: Product Introductions and R&D Products
Product Introductions and R&D Products Introduced 1993-2008 Currently in R&D Bayer 36 6 Syngenta 18 5* BASF 20 4 Dow 21 1 Sumitomo 16 3* DuPont 7 3* Monsanto 1 0 Other Japanese 43 1 18 8 Rest 21 5 Total 183 45** * Some in co-development with other companies ** S Some lilicensed d products d t counte
Slide 29: New Product Development
New Product Development (Three Legged Stool) ► New product development “Pipeline”: more than a dozen candidates, including insecticides, fungicides, herbicides, and growth regulators ► Many are targeted at high-valued, niche market opportunities Gross profit margins could be 50% or better ► World-
Slide 30: Impact - Post Emergent Corn Herbicide
Proven Experience Impact® – Post Emergent Corn Herbicide Licensed from BASF in 2005, prior to development completion Amvac completed development, development product formulation formulation, registration, and successful market introduction Impact achieves competitive share of market for post-
Slide 31: Glyphosate Tank Mix with Impact
r glyphosate tank mix with IMPACT The unique HPPD chemistry of IMPACT® herbicide torches tough to control glyphosate tolerant broadleaf and grass weeds — including waterhemp, ragweeds, pigweeds, lambsquarters, velvetleaf, kochia and more. IMPACT is the only HPPD herbicide labeled by Monsanto for enh
Slide 32: Nuvan - Broad Spectrum Pest Control Insecticide
Proven Experience Nuvan® – Broad Spectrum Pest Control Insecticide Existing molecule (DDVP) which Amvac has repositioned to address commercial pest management and consumer demand Applications Professional pest treatment Grain storage pest management Bed-bug Bed bug control Bed bug Video Be
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Slide 34: New Consumer Initiative
New Consumer Initiative Dp Fr . l 4c >) Kills Flying & Crawling Insects as listed
Slide 35: New Product Development Pipeline
New Product Development Pipeline Fungicides Product Crop F1 Stone Fruit F2 Peanut, Cucurbit, Rice, Turf F3 Grapes, Strawberry, Peanut, Soybean, Corn, Potato, Apple F4 Peanut Cucurbit, Peanut, Cucurbit Rice, Rice Turf F5 Grapes Strawberry, Peanut, Soybean, Corn, Potato, Apple Insecticides Product Cro
Slide 36: New Product Development Pipeline
New Product Development Pipeline Herbicides Product Crop H1 Vegetables H2 Vegetables, Aquatic H3 Soybean, Corn, Vegetables H4 Corn Insect Growth Regulator Product Crop IGR1 Pomme Fruit, Nut Crops, Vegetables Plant Growth Regulator Product Crop PGR2 Vegetables 36
Slide 37: SmartBlock Potato/Vegetable Sprout Inhibitor
SmartBlock™ Potato/Vegetable Sprout Inhibitor Licensed University Technology Amvac has completed development, formulation & product t ti testing Registration & commercial launch in 2011 Global Gl b l market k t potential t ti l ≈ $45 million illi Attractive U.S. & European demand as an alt
Slide 38: Efficacy of SmartBlock on Potatoes
Efficacy of SmartBlock™ on Potatoes Untreated SmartBlock™ (1 application) SmartBlock™ Safe, food-grade additive Superior sprout control Significant global market potential CIPC (3 applications) Easy “drop-in” replacement 38
Slide 39: Crop Protection Market Forecast
Crop Protection Market Forecast $m Forecast Growth 46000 1 8% p.a. 1.8% 44000 Through to 2014 42000 40000 38000 36000 34000 32000 30000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Phillips McDougall 39
Slide 40: Investment Premise
Investment Premise ► Strong, solid balance sheet ► Sustainable cash-flow generation ► Improving market conditions ► Disciplined approach to cost/expense control ► Diminishing fixed manufacturing cost with higher thru-put 40
Slide 41: Positioned to Succeed
Positioned to Succeed ► Market and sell effectively ► Manufacture efficiently ► Manage economically ► Expand through collaborative arrangements ► Achieve incremental growth Organic growth of existing products Acquisition and licensing New product pipeline This strong base sets the stage for st
Slide 42: Positioned to Succeed - 2009 Annual Report
POSITIONED TO SUCCEED AMERICAN VANGUARD 2009 ANNUAL REPORT yh WS /) — Pee a : A d ; AA [ssl