Company: AVD
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001193125-25-273381
Chunk: 5

Company: AMERICAN VANGUARD CORP
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 2
Chunk 5
---
 2024: 

Overview of the Company’s Performance

The agricultural economy is caught in the middle of countervailing influences. On the one hand, a strong harvest (adding to already elevated inventories of soybeans), lower commodity prices,  trade tension, the government shutdown and a weak labor environment are creating an uncertain near-term outlook for the sector. On the other hand, lower channel inventories for the Company’s products, the likelihood of decreasing interest rates, and the possibility of additional government support for growers, provide bases for optimism in the medium-term. 

Against this backdrop, overall sales for the third quarter of 2025 increased by 1% compared to the third quarter of 2024. From a regional perspective, our domestic sales increased by 8%, while our international sales decreased by 6%. Demand for our soil fumigant products were impacted by a slow potato market and were down 31%. We expect some of those sales to come through in the final quarter of 2025 or possibly into the first quarter of 2026. Within our Specialty/non-crop business, our OHP business, that sells to ornamental and greenhouse markets, was down 36% in part as a result of the product liability claims and is expected to rebound in the final quarter. Our herbicide business was an area of strength and increased by 82% (driven by both crop and Specialty/non-crop products). The balance of our portfolio saw positive and negative movements that broadly offset, as compared to the same period in the prior year. 

Efforts by management to transform the business into a more efficient operation led to lower cost of goods sold, which were down 15%, as compared to the same quarter of 2024. In 2024, the Company recorded expenses associated with the Dacthal recall in the amount of $16,191 that did not recur in 2025. This, coupled with lower transportation costs and improved factory performance, led to an improvement in average gross margins to 28% of net sales, up from 15% in the same period of 2024. 

Operating expenses declined by 11%, as the Company continued to manage expenses closely. Our performance included the anticipated strong reduction in transformation costs that was offset by the charge pertaining to product liability claims. Operating expenses as a percent of net sales decreased to 34% for the quarter, down from 39% in the comparable period of 2024. Operating loss decreased to $6,505 for the third quarter of