American Vanguard Corporation (NYSE: NYSE:AVD) reported a substantial increase in its financial performance for the first quarter of 2024, with a 35% increase in adjusted EBITDA and an 87% increase in operating income. The company's growth was attributed to strong sales across all business segments, including US crop, US non-crop, and International.
Still, the company also announced a voluntary suspension of its herbicide product, Dacthal, pending a review by the US EPA. Despite this, American Vanguard remains optimistic about future growth and is actively investing in digital and business transformation initiatives aimed at improving efficiency and focusing on higher-margin products.
Key Takeaways
- American Vanguard reported a 35% increase in adjusted EBITDA and an 87% increase in operating income for Q1 2024.
- Sales increased across all segments, with notable performance in granular soil insecticides, liquid corn soil insecticides, herbicides, mosquito adulticides, and pest strips.
- The company voluntarily suspended sales of its herbicide product, Dacthal, due to US EPA concerns.
- American Vanguard is undergoing transformation initiatives, including upgrading its ERP system and standardizing processes, targeting at least $15 million of annualized adjusted EBITDA by 2026.
- The company expects sales to grow between 6% and 9% in 2024, with adjusted EBITDA projected to be between $60 million and $70 million.
- A mild winter and increased corn and soybean pricing have led to optimism for increased demand for insecticides.
- The next shareholders' meeting is scheduled for June 6th.
Company Outlook
- Sales growth projection of 6% to 9% for 2024.
- Adjusted EBITDA forecasted to be in the range of $60 million to $70 million.
- Ongoing transformation initiatives expected to contribute to at least $15 million of annualized adjusted EBITDA by 2026.
- Target to improve EBITDA margin to 15%.
Bearish Highlights
- Suspension of Dacthal herbicide sales due to EPA concerns.
- Wet conditions in the Northwest impacted sales of soil fumigants.
- Production constraints for a new product targeting corn rootworm pressure.
- First-quarter herbicide market performance lagged behind last year for larger peers.
Bullish Highlights
- Strong sales in key product categories.
- Increased corn and soybean pricing may boost demand for insecticides.
- Sales of the Impact herbicide expected to be strong in the second quarter.
- Improvements in sourcing and supply position the company for better equity performance.
Misses
- The company has adjusted its full-year targets due to the Dacthal suspension.
Q&A Highlights
- The company addressed past supply issues and has improved sourcing.
- Optimism for better equity performance based on current forecasts.
- Shareholders' meeting set for June 6th, where further details may be provided.
American Vanguard's proactive stance on addressing regulatory concerns, coupled with its strategic transformation initiatives, positions the company to potentially capitalize on market opportunities.
The anticipated growth in sales and adjusted EBITDA, despite the regulatory challenges, reflects the company's confidence in its business model and market strategy. Investors and stakeholders are likely to keep a close eye on the outcome of the EPA's review of Dacthal and the company's progress towards its long-term financial targets.
InvestingPro Insights
American Vanguard Corporation (NYSE: AVD) has shown resilience in its Q1 2024 financial performance, demonstrating robust sales growth and operational efficiency improvements. In light of this, certain real-time metrics and InvestingPro Tips can provide investors with a deeper understanding of the company's current market position and future potential.
InvestingPro Data highlights the company's market capitalization at $255.78 million, indicating a moderate size within the chemical sector. The P/E ratio stands at 36.58, suggesting investors are willing to pay a higher price for earnings, potentially due to expectations of future growth. Additionally, the company has experienced a revenue growth of 0.81% over the last twelve months as of Q1 2024, which aligns with the reported sales increases in various business segments.
InvestingPro Tips offer strategic insights into the company's financial maneuvers. Management's aggressive share buyback strategy indicates confidence in the company's valuation and future performance. Meanwhile, the fact that American Vanguard has raised its dividend for 3 consecutive years, and maintained dividend payments for 29 consecutive years, reflects a commitment to returning value to shareholders.
For investors looking for a more comprehensive analysis, InvestingPro provides additional tips, including expectations for net income growth this year and an evaluation of the company's liquidity position. Currently, there are 12 additional InvestingPro Tips available for AVD, which could further inform investment decisions.
To access these insights and more, investors can visit https://www.investing.com/pro/AVD and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This exclusive offer can provide valuable context and foresight for those monitoring American Vanguard's performance, especially in the face of regulatory challenges and ongoing transformation initiatives.
Full transcript - American Vanguard Corp (AVD) Q1 2024:
Operator: Greetings, and welcome to the American Vanguard First Quarter 2024 Earnings Conference Call and Webcast [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anthony Young, Director of Investor Relations. Thank you. You may begin.
Anthony Young: Thank you, Jessie, and welcome, everyone, to American Vanguard's first quarter 2024 earnings review. Our speakers today will be our Chairman and CEO, Eric Wintemute; and our CFO, David Johnson. Also joining us to answer your questions will be our Chief Operating Officer, Bob Trogele; our Chief Information Officer, Tim Donnelly; and our Chief Transformation Officer, Don Gualdoni. Before beginning the presentation, let's take a moment for our cautionary reminder. The company from time to time may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the company's management and are subject to various risks and uncertainties that may cause results to differ from management's current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed from time to time in the company's SEC reports and filings. All forward-looking statements, if any, in this release present the company's judgment as of the date of this release. With that, I will turn the call over to Eric.
Eric Wintemute: Thank you, Anthony. Hello, everyone, and welcome to American Vanguard's first quarter 2024 earnings call. We appreciate your continued support and interest. As you will note from Slide 4, I will be covering four topics today. Our Q1 '24 financial performance, current market conditions, our '24 outlook and our transformation efforts. Moving to Slide 5 on Q1 performance. We recorded a 35% jump in adjusted EBITDA during the period. In addition, our operating income rose by 87%. This improvement in operating leverage is evidence that the cost control initiatives that we have started in the second half of '23 are having their desired effect. As I've mentioned in prior calls, our cross-functional teams remain focused on controlling expenses while maximizing operational efficiency. In that vein, we recorded lower operating expenses as a percent of net sales while increasing sales by 8%. Further, all three of our businesses grew during the quarter. Within our consolidated sales results, US crop was up 9%, US non-crop, 28% and International 2%. Now let's turn to our sales during Q1 as per Slide 6. In US crop, we experienced strong results across multiple crops. Sales of our granular soil insecticides rose, which is indicative of continued strong demand from corn growers. Further, we experienced strong sales of our liquid corn soil insecticide index. Similarly, herbicides rose during the period, due in part to Dacthal which was not available last year due to supply issues. Also, Thimet sales rose with demand driven by increased peanut acreage. These increases were partially offset by a drop in soil fumigant sales as wet conditions in the Northwest truncated the application window. Within US non-crop, our mosquito adulticide sales were up in anticipation of stronger-than-normal tropical storm activity. Also, our sales of pest strips were up significantly as consumer and technical markets recovered from the prior year. In addition, our ornamental and nursery business, OHP, recorded stronger sales led by its biorational and pre-emergent product lines. Our International business was up slightly at the top line led by Mexico, where most product lines grew and APAC aided by favorable weather conditions in Australia. Our LATAM business was about even for the quarter with the addition of sales from our recently acquired business in Ecuador, partially offset by generic pressure in Central America. All told then, all three of our businesses demonstrated improved performance and on a consolidated basis, we continue to grow. Before moving on to current market conditions and our '24 outlook and details on transformation, I would like to turn the call over to David for his financial analysis. David?
David Johnson: Thank you, Eric. I will begin my comments with a recap of our first quarter 2024 performance during the course of which I will present important metrics for the period and we'll close with comments on working capital. As you will see from Slide 8, our overall sales for the first 3 months of 2024 increased by about 8% from $125 million to $135 million for the reasons that Eric has already outlined. It is worth repeating here that all 3 of our businesses, US crop up 9%; US Non-crop up 28%; and International up 2%, grew at the net sales line. Turning to Slide 9. While sales were up 8% overall, gross margin dollars improved by 10%, driven by stronger sales of some of our higher-margin insecticides and herbicides and the strong factory performance. Overall, price volume actions, mix of sales and factory performance resulted in gross margin that improved slightly from 30.8% to 31.4% of sales. As you can see on Slide 10, our operating expenses in the first quarter of 2024 edged up to $36.3 million from $35.3 million in the same period of 2023. This increase was driven primarily by our spending of $1.2 million on developing our digital and business transformation plans. We plan to spend more in the next few quarters to invest in the long-term future of our business by implementing initiatives to achieve substantial improvement in business performance. We will see some initial improvements in 2024 that are expected to be largely offset by transformation spending and then primarily benefiting 2025 earnings and beyond. In addition, we had increases in general and administrative expenses related to foreign exchange, audit costs, long-term and short-term incentive compensation and investments in initiatives to improve both our information technology systems and our human resources infrastructure. These cost increases were offset by cost control efforts in selling, regulatory, product development and R&D. With respect to cash flow, as per Slide 11, the company has a pronounced annual cycle of building inventory at the start of the calendar year in order to fuel global sales, particularly during the second and third quarters. It is usual for working capital to expand in the first quarter and Q1 2024 is pretty much in line with the same period of the prior year. We use our revolver debt to fund working capital expansion at the start of the year and pay down as swiftly as possible as the cash cycle completes usually later in the year. We have been carefully managing the inventory build as we monitor industry demand trends. At the end of the quarter, we had $13.7 million in cash as compared to $19.6 million this time last year. This improvement in reduced amounts of cash held in order to pay down debt is a result of significant effort at the end of the quarter to pull cash back to the corporate center to reduce debt and interest expenses as much as possible. Looking at our statement of operations on Slide 12, you will note that our sales grew by 8%. Our gross profit increased by 10% and our operating expenses increased by only 3%. These factors together generated significant improvement in operating leverage, with operating income up 87% over the same period of 2023. Furthermore, the fair value of our equity instrument improved during the quarter. As a result, profit before interest and tax improved by 107%. Our interest rate increased from 6.8% last year to 8.3% this year, primarily related to movements in the Fed rate, but also as a result of the current modifications we have with our bankers. That includes more flexibility on leverage and fixed charge coverage ratios, but adds about 0.5% of interest rate. At the same time, our borrowings are up as a result of our current investment in working capital. As I just mentioned, our business cycle is such that we will normally see working capital and consequently debt increasing during Q1 and Q2, possibly leveling to slightly up in Q3 and then significantly -- significant reduction in Q4 as the growing cycle for our major markets completes its own annual cycle. Our tax rate is higher this quarter, primarily as a result of the fact that our entities in Brazil made losses in the first quarter of 2024. Because of Brazil's past business performance, US GAAP does not currently permit us to take the benefit on tax expense that would normally be available. As a result of the increased interest expense and the changes in year-over-year tax expense, our net income is down slightly, even though our operating performance and consequently, adjusted EBITDA was up significantly. Turning now to working capital on Slide 13. You will see our inventory trends on a quarterly basis for the last several quarters. While inventory grew on an absolute basis in Q1 2024 as compared to Q1 2023, you can see that the increase since 12/31/23 is actually lower than in 2024 than in 2023. Further, 39% of net sales are investment in inventory similar to the level at this time last year. And though we would like to see this balance come down more quickly, it is something we need to manage carefully down, ensuring that we have the right balance of products in inventory to meet customer needs in a timely manner during the 2024 season. During the later part of the year, we plan to move inventory levels down with the intention of reaching a 2024 year-end target of around 34% of net sales. That sums up my detailed comments. On the whole, the first quarter of 2024 showed improvement in comparison to the same period of 2023 in terms of both operating income and adjusted EBITDA. The company has embarked on an exciting phase of transformation and is managing to invest in a major initiative and still return a profitable result. And as such, I'm quite pleased with the progress we're making in this regard. This initiative will be critically important to the business in the latter part of 2024 and into 2025 and beyond. With that, I turn the call back to Eric. Eric?
Eric Wintemute: Thank you, David. As per Slide 14, on news of an improving US economy, the Fed seems to have shifted away from making interest rate hikes and is now debating whether to cut or hold those rates. In addition, the U.S. dollar has begun to strengthen over foreign currencies. While helping consumers with purchasing power over foreign-made goods, the strong dollar, when coupled with high grain inventory stocks has served to suppress commodity prices compared to 2023. Nevertheless, even as current corn and soybean prices at current levels, farming still remains a profitable business. Further, while still observing conservatism and buying crop inputs, our distribution partners have relaxed their stringent destocking approach from last year, at least with respect to our portfolio. In short, the farm economy is strong and we expect stable albeit more deliberate buying activity. The same is true of the non-crop market, where we are seeing further normalization of procurement patterns by retail and professional customers. Now let's turn to Slide 15 on our 2024 full year outlook. While market conditions remain stable, there's one factor involving our herbicide Dacthal that causes us to adjust our previous full year targets. In the course of routine registration review, US EPA has expressed concern over potential health issues of this product. Accordingly, out of abundance of caution, the company has voluntarily suspended sales of Dacthal and submitted a significantly narrow product label to the agency that we believe addresses their concerns. We have committed to maintaining that suspension of sales pending UPH review and potential approval of that new label. The outcome of the agency's review is uncertain at present, but we are factoring the loss of Dacthal sales into our '24 forecast numbers. Accordingly, our full year '24 targets are as follows: we expect next sales to increase between 6% and 9% as compared to '23, while adjusted EBITDA will be within the range of $60 million to $70 million. The midpoint of this range would be a 16% -- I'm sorry, a 19% increase over '23 adjusted EBITDA. Further, at that midpoint, our stock is currently trading at a discount of nearly 50%, assuming a standard valuation metric of 10x EBITDA. Let me turn next to our transformation initiatives as per Slide 16. On the digital slide, we are working with QAD (NASDAQ:QADA) not only to upgrade their current -- to their current adaptive global ERP system, but also to standardize our business processes. At the end of this initiative, then, all segments will be following the same processes using the same set of tools and drawing from one source of tool. This will give senior management a clear granular view into our business operations and both increase our ability to make real-time decisions and to plan and forecast with greater accuracy. On the structural transformation side, we are moving quickly, with what we call Project Accelerator. Working with clients' team over the next 16 weeks, we'll be doing deep level analysis and several sub initiatives in parallel. Within the commercial realm, we will focus on our sales and marketing strategy, pricing and product mix. Within operation, we will do deep dives into material sourcing, logistics and manufacturing productivity. Within G&A, we will select and refine an organization design that best supports our future business plan as well as ensure that these many efforts are managed through a properly resourced transformation office. This broad initiative will generate EBITDA benefits through a range of results, including reduced costs, improved efficiencies, emphasis on higher-margin products and better defined roles and responsibilities. As I've stated in our last call, we are confident that we will gain at least $15 million of annualized adjusted EBITDA by 2026 through this investment. In closing, during the quarter, we navigated our business through complex markets while improving operating efficiencies and growing sales. Further, the '24 market conditions are stable and I would argue, stronger than 2023. These conditions will serve to generate demand for our products and enable us to improve our inventory and working capital positions. In addition, having begun transformation initiatives in earnest, we are poised to generate even greater operating leverage. In short, we see promising opportunities for growth and are taking strong measures to ensure that we are positioned to capitalize upon them. So with that, I'll turn that back to you, Jessie. Thank you.
Operator: [Operator Instructions] Our first question is coming from the line of Scott Fortune with ROTH MKM.
Scott Fortune: Just want to follow up regarding transformation strategy. Nice to see that that's starting to be implemented here. It looks like that will really come through for most of the year. But I heard you say in your comments that any cost savings for 2024 here will be offset by some of the expenses to that. So really kind of factoring in more of a 2025 to expect that that $15 million in efficiencies, '25, '26 going forward here. Just want a clarification on that from the operations standpoint?
Eric Wintemute: Yes, Scott, that's true. So we do have cost to implement and go through this deep dive that we're going through an implementation right now. We hope to have -- we'll have some benefit certainly this year. But as I said, we're projecting that it will overshadow the amount of transformation. But as we go into '25, most of the heavy lifting will be done and we'll start seeing getting that $15 million of improved actual EBITDA.
Scott Fortune: And then just following up on your outlook. Obviously, bringing it down to the 6% to 9% from the 8% to 12% that sales side of it. Just kind of step us through, Dacthal was just getting back on the market from that standpoint. This kind of the size of that from a kind of a revenue standpoint that's driving that down a little bit? And are there other factors in that sales of 6% to 9% outside of Dacthal? And then just any color for timing from a historical standpoint kind of as you reregister this through the EPA, I know this is kind of unknown, but your sense of timing for Dacthal coming back on…
Eric Wintemute: So we submitted the revised label this week. It is a fairly restricted label. We expect EPA to respond fairly quickly. We've been in strong negotiations and discussions with EPA now for well over a year and we think we've kind of reached where we're going to be. And then we discussed pathways of additional information and data that would potentially let us get back at least some of the market that we're not going to have certainly in the short-term. So the timing of that, some pieces may be relatively quick, but others could be in that one to three year time line depending on the scope of the studies and then the timing for review. As far as scope, this is about a $15 million product. And we had about one third of that in the first quarter. And so what we've done is we've just made the assumption we're not going to sell anything more for the balance of the year and we'll factor that -- we'll have a much clearer picture of what '25 is going to look like soon, certainly before we come up with '25 numbers. And if anything were to change for '24, we'd certainly adjust it. But at this point, we're not anticipating anything material here in the balance of the year. As far as...
Scott Fortune: Follow-up on that -- as far as coming out of the registration process, does that position us even stronger to kind of be a bigger market for you or how do you look at that once you get through the process here for the competition and the opportunity for Dacthal?
Eric Wintemute: Well, Dacthal was growing nicely for us. It's a very, very niche herbicide kind of for cold crops and onions. I don't think we see going back into the onion market with the cold crops. And so yes, we don't have any assurance that we're going to get back any significant amount of that. But we really have to kind of wait and see. Again, this has been a long process. We've been discussing with EPA, had a very good call this week, but we're waiting to hear back from them their assessment of what we just submitted.
Scott Fortune: And then one last one for me. Any updates on kind of -- I know the growth kind of products for you, especially Green Solutions, we've seen a lot of generic pressure from China in that space, especially impacting Latin America. But the growth that you've seen for this year and expect in '24, can you kind of highlight the Green Solutions side and the ongoing product adoption from your standpoint?
Eric Wintemute: So Green Solutions were up 14% this quarter. And most of the areas had growth. And so that seems to be going well. We have additional opportunities for product expansion as we continue to have companies coming to us and saying, hey, with your market access, would you kind of distribute this product and that product? So a number of companies there. We did sign up on a precision plant, a protein called [Herpen] for the Chinese market. I'm not sure how big that will be. But this is a product that has been around for quite a while. I know had it at one time. But yes, we see nice growth in that segment as adoption for green products continues to build. So that's kind of the piece on Green Solutions.
Operator: Our next question is coming from the line of Chris Kapsch with Loop Capital Markets.
Chris Kapsch: Yes, I have a couple. Just as a follow-up on the Dacthal discussion. Eric, if I remember correctly, was this the product that you mentioned you've been in discussions with the agency for over a year. If I remember correctly, that also manifested in disruption to your sourcing the AI for this particular product. And I thought that the outcome of that was that you came to a resolution. So it's a little surprising to hear this cautious stance in reregistration now. I'm just wondering what are the risks associated with getting this to a favorable outcome? And how are you managing that?
Eric Wintemute: Yes. So two different issues. One was supply and we didn't have supply for a year. And so that we have resolved and we have actually two supply sources. So the supply side was certainly taken care of. On the reregistration process, a different path with EPA. And we're not necessarily in agreement on their assessment. But rather than push that further with them, we went as far as we think we can go for right now and we believe we've submitted a revised label that they should accept, but that will be certainly a reduction of the market that we've had. So as far as -- yes, the timing is kind of as I anticipated, we've got different stages of pieces that we would like to reinstate and first piece, as I mentioned, I think will be relatively short. The next two kind of run between one and two years and then maybe between two and three. And I'm not sure that we're going to wind up doing all of it. We'll assess the market and as we get further information from EPA.
Chris Kapsch: And the costs associated with these [Technical Difficulty] studies and reregistrations, is that just sort of normal course of business and factored into your R&D spend, your normal R&D spend?
Eric Wintemute: That's correct.
Chris Kapsch: And then so just curious about this year's sort of the mood of the growers and the trends in the Midwest. And we came off of what was described related to another company I follow, as the most mild winter in like 25 years. And so sometimes when that happens, there's the infestation of the insects is greater. So I'm curious if you -- if there's any evidence that was the case for corn rootworm pressure this season? Are you seeing any indications that you could have an uptrend in demand for your [Technical Difficulty] insecticides?
Eric Wintemute: I'll let Bob add some color, but I'll just say in talking with my people, yes, there are wet conditions, particularly in -- so planting at this point is maybe in the 50% range with the south there, but there's large parts of the corn and soybean markets that have not been planted yet. So it is an extended period. But Bob, your color?
Bob Trogele: I would say, Chris, the mood has been very cautious by the growers in the Midwest in the U.S. I think there's been this past week, a little bit of a pickup in the July corn and soybean pricing, which people are locking into that and averaging out better if they're doing forward pricing and contracting. So the moves picked up. So I think there's more optimism out there. But you do have pockets right now where people were planting -- someone told me this morning, a grower told me, it was like April 16th, he had about 90% of his planting done. And since then, he hasn't been able to get back in the field because it's been wet. So 10% to go. That's a long window of not -- of stop and go. So it's a little bit of that, but that's novel for the ag markets, weather is weather.
Eric Wintemute: With regard to the corn rootworm pressures. So Aztec, under some degree of counter in force, are primarily used in that heavier pressure corn rootworm area. We haven't really participated in the kind of mild to mid-corn rootworm pressure. But we have a new products that we put out a couple of years ago, but we just haven't had enough material. We make it internally, but demand has gone faster than we've been able to produce. But we had good production and sales in the first quarter up until -- I think we were up until April 17 to 18 or whatever we were selling product. And we're building inventory now for kind of the fourth quarter because we do have -- we did have a stronger demand than what we had supply. But we're thinking we can kind of dramatically increase. And this is, again, it's a liquid material. So it kind of competes with bifenthrin in that market. And so that's an upside for us going forward. Much more acreage covered are treated for a mild to medium corn rootworm pressure than heavy pressure.
Chris Kapsch: And then last question. So your herbicide impact is often used sort of to complement some of the workhorse broad-spectrum herbicides. And just curious like given what had happened with the global supply chain and the supply chains with glyphosate globally and the spike in those prices and sort of outside demand for alternative herbicides, I'm curious how that's played out now that sort of everything has kind of normalized in terms of pricing and availability and some of the cash from crop herbicides? And then how that affects your impact sales? And how does that play out in your guidance and expectations this year?
Eric Wintemute: I mean, I think you recall that herbicides were kind of a glut that prices were high in '22 and came down in '23 and there was a high inventory and high price out there, seems to have improved. But if I look -- looking at larger peers, first quarter was not good for them. So I think there's probably still some hangover into that herbicide market. We don't have the kind of large bulk scale, although we do have impact with glufosinate as a product. And so yes, again, impact has been more a tank mix partner than a main horse. But it looks improved versus last year.
Chris Kapsch: Is there any way to quantify that, the improvement? Like what's factored into your outlook on that particular product? And then I'll leave at that.
Eric Wintemute: So we were up about -- yes, we were just about even to last year. I think we had good fourth quarter sales versus the prior year. It looks like we're about even in the first quarter. And then second quarter looks -- yes, second quarter looks considerably stronger than last year's second quarter.
Operator: [Operator Instructions] Our next question comes from the line of [Andrew Lester] with [Harley Capital].
Unidentified Analyst: If I'm reading it correctly, and forgive me if I'm off by this, 18 months ago or 24 months ago, you sounded very optimistic. You laid out some exciting time lines and information. And even in the last year or so again, you sounded very clear on ways to enhance value to board refreshers, all sorts of things that we are pointing to as milestones to lead to significantly better results. But when I listen to you today, you sound very tentative, equivocal and really uncertain and looking for really a more significant improvement without quantification for like a year from now. Is that a fair read? Have you become much more cautious about your prospects?
Eric Wintemute: Well, I would say that we are pointing towards improvement with -- through the transformation process, but that has an expense of transforming now it's onetime expense. But yes, as we've mentioned before that we've grown through acquisitions of companies since 2017 and we did not get the benefit of incorporating those the way we wanted to and hampered certainly during COVID, but the process now is that we put underway is to get all the systems on the same page so that we can do better management and where we deploy working capital and improve the quality. And as I said, we're -- our target here, I think we're maybe 11.5% of EBITDA to sales. What we're looking through this transformation process is to improve that EBITDA margin to 15%.
Unidentified Analyst: If I look at things, this is a follow-up, on a sort of more mercenary basis as a shareholder, I'm probably down over 40% in the past year. How do you think or when do you expect things to translate into better equity performance?
Eric Wintemute: Well, I think we're up a little over 14% so far this year. As we mentioned last year, we were hit with two supply issues that really hurt us. One was our biggest insecticide and the second was the supply of Dacthal that we mentioned. So we've improved the sourcing or the sourcing on both of those. We have ample material of Aztec going forward. And so that was really a hit to fourth quarter of '22 and certainly to the '23 and we were unable to meet demand. Supply-wise, we're in a different position and we're back to moving Aztec and now Index and Force and SmartChoice back up into the corn market. So I guess -- I mean, I look at what -- where our peers have been discussing. They forecasted downsides in Q1 and that turned out to be the case. We did have improvements in Q1. And so yes, we've made the forecast based upon the best that we can see at this point.
Operator: [Operator Instructions] Ladies and gentlemen, it appears we have no additional questions at this time. So I'd like to turn the floor back over to Mr. Wintemute for any additional closing remarks.
Eric Wintemute: Okay. So thank you for -- all for listening in today. Slide updates as we have them, but I guess the next scheduled time would be our shareholders' meeting, which I believe is June 6 or 7. 6, yes. Okay. Thank you and have a good evening. Bye.
Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.
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