American Vanguard Corporation Reports 5.5% Decline in Net Sales and $126.3 Million Loss for Fiscal Year 2024

American Vanguard Corporation (AVD) reported a significant decline in its financial performance for the fiscal year ending December 31, 2024, with total net sales of $547.3 million, down 5.5% from $579.4 million in 2023. The company experienced a net loss of $126.3 million, or $4.50 per share, compared to a net income of $7.5 million, or $0.27 per share, in the previous year. This downturn was attributed to several factors, including a 40% drop in sales of its granular insecticide Aztec and the voluntary recall of the herbicide Dacthal, which negatively impacted revenue and profitability.

The company's cost of sales increased by 7% to $427.0 million, resulting in a gross margin decline to 22% from 31% in 2023. This increase was driven by higher raw material costs due to inflation, as well as expenses related to the Dacthal recall, which included approximately $12.2 million in customer credits and $3.2 million in inventory write-downs. Operating expenses surged by 42% to $221.9 million, primarily due to non-cash asset impairment charges and costs associated with the company's ongoing digital and structural transformation initiatives.

In terms of strategic developments, AVD has engaged third-party consultants to facilitate a comprehensive business transformation aimed at enhancing operational efficiency and profitability. The company also appointed Douglas A. Kaye III as its new CEO in December 2024 to lead these efforts. AVD's transformation plan includes optimizing manufacturing processes, reducing supply chain costs, and implementing a global digital platform in collaboration with ERP provider QAD. The company incurred nonrecurring charges totaling $117.4 million in 2024, largely related to these transformation efforts and asset impairments.

Operationally, AVD's international sales increased slightly by 1% to $236.6 million, representing 43.2% of total net sales, while domestic sales fell by 10% to $310.7 million. The company reported a decrease in employee headcount, with 755 employees as of December 31, 2024, down from 845 in the previous year. The concentration of sales among its top three customers remained significant, accounting for 38% of total sales in 2024, compared to 37% in 2023.

Looking ahead, AVD anticipates a gradual recovery in the agricultural economy, although it acknowledges the challenges posed by persistently low commodity prices and high input costs. The company expects to realize the benefits of its transformation initiatives by 2026, with a focus on improving operational efficiency and enhancing shareholder value. However, the ongoing economic backdrop and market conditions may continue to impact sales and profitability in the near term.