American Vanguard Corp (AVD) 2023 Q3 法說會逐字稿

(technical difficulty) conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Vice President of Investor Relations. Thank you, Bill. You may begin.

（技術難度）電話會議。此時，所有參與者都處於只聽模式。正式演講後將舉行簡短的問答環節。 （操作員指示）謹此提醒，本次會議正在錄製中。現在我很高興向您介紹主持人，投資者關係副總裁比爾·庫瑟 (Bill Kuser)。謝謝你，比爾。你可以開始了。

Well, thank you very much, Alicia. Welcome, everyone, to American Vanguard's Third Quarter and 9-month earnings review. Our speakers today will be Mr. Eric Wintemute, the Chairman and CEO of American Vanguard; Mr. David Johnson, the company's Chief Financial Officer. Also assisting in answering your questions, Mr. Bob Trogele, the company's Chief Operating Officer.

嗯，非常感謝你，艾莉西亞。歡迎大家觀看美國先鋒集團第三季​​和 9 個月的獲利回顧。今天我們的演講嘉賓是 American Vanguard 董事長兼執行長 Eric Wintemute 先生； David Johnson 先生，該公司財務長。公司營運長 Bob Trogele 先生也將協助回答您的問題。

Before beginning, let's take a moment for our usual cautionary reminder. In today's call, the company may discuss forward-looking information. Such information and statements are based on estimates and assumptions by the company's management and are subject to various risks and uncertainties that may cause actual results to differ from management's current expectations. Such factors could include weather conditions, changes in regulatory policy, competitive pressures, and a variety of other risks that are detailed in the company's SEC reports and filings.

在開始之前，讓我們花點時間進行我們通常的警告提醒。在今天的電話會議中，該公司可能會討論前瞻性資訊。此類資訊和陳述基於公司管理層的估計和假設，並受到各種風險和不確定性的影響，可能導致實際結果與管理層目前的預期不同。這些因素可能包括天氣條件、監管政策的變化、競爭壓力以及公司向 SEC 報告和文件中詳細說明的各種其他風險。

All forward-looking statements represent the company's best judgment as of this date. Such information will not necessarily be updated by the company. With that said, we turn the call over to Eric.

所有前瞻性陳述均代表本公司截至目前為止的最佳判斷。公司不一定會更新此類資訊。話雖如此，我們將電話轉給埃里克。

Thank you, Bill. Hello, everyone. Thank you for joining our call today. This is a challenging time for American Vanguard and for our entire sector. Our stock price has been under heavy pressure as has that of our competitors. Accordingly, as per Slide 5, I want to first talk about what we are doing to improve our short and long-term profitability. I believe that growing profitability in current market conditions will require us to take strong calculated measures. We are preparing to take those measures, including cost margin improvement initiatives, digital transformation, and structural design review. We are confident that we and our investors will be rewarded by them. After a discussion of these measures, I will give detail on the full year 2023 targets and our '24 outlook.

謝謝你，比爾。大家好。感謝您今天加入我們的電話會議。對於美國先鋒集團和我們整個產業來說，這是一個充滿挑戰的時期。我們的股價和我們的競爭對手一樣承受著巨大的壓力。因此，根據投影片 5，我想先談談我們正在採取哪些措施來提高短期和長期獲利能力。我相信，在當前市場條件下不斷增長的獲利能力將要求我們採取強有力的、經過深思熟慮的措施。我們正在準備採取這些措施，包括成本利潤率改善措施、數位轉型和結構設計審查。我們相信我們和我們的投資者將得到他們的回報。在討論這些措施後，我將詳細介紹 2023 年全年目標和我們 24 年的展望。

In short, we expect to rebound in Q4 and are optimistic about the upcoming year. First, however, let's get into what we are doing to improve profitability. To start, a bit of background is necessary. Over the past 13 years, we have grown both in size and complexity. 13 years ago, we were essentially a domestic business that was largely dependent on the U.S. corn market. Since then, as you will see on Slide 6, predominantly through acquisitions, our operations have grown into 21 countries, including 6 manufacturing facilities and 3 R&D centers. We have developed or acquired over 500 pending or issued patents and have increased our market access into more than 50 countries with a broad, balanced product portfolio led by fruits and vegetables.

簡而言之，我們預計第四季將出現反彈，並對來年持樂觀態度。不過，首先讓我們了解我們正在採取哪些措施來提高獲利能力。首先，需要了解一些背景知識。在過去 13 年裡，我們的規模和複雜性都在成長。 13 年前，我們本質上是一家國內企業，很大程度上依賴美國玉米市場。從那時起，正如您在幻燈片 6 中看到的那樣，我們的業務主要透過收購擴展到 21 個國家，包括 6 個製造工廠和 3 個研發中心。我們已經開發或獲得了 500 多項正在申請或已頒發的專利，並透過以水果和蔬菜為主導的廣泛、均衡的產品組合，擴大了進入 50 多個國家的市場准入。

Due to our rapid growth, our next evolutionary phase is to strengthen the support of our enterprise with fully integrated systems and optimal organizational design. To that end, in the second quarter, we reached out to one of our Board members, Mark Bassett, who has a strong history of improving profits in a number of businesses, to take a look at our operations in consultation with our senior management team. Accordingly, over a 10-week period, Mark had open access to our day-to-day operations and met with executive leaders and business process owners. At the conclusion, Mark provided the company with a comprehensive set of recommendations, and senior management along with another Board member, Pat Gottschalk, crafted a transformation plan designed to drive growth while improving operating leverage. We are pleased to announce we have begun implementation of the plan as follows.

由於我們的快速發展，我們的下一個進化階段是透過完全整合的系統和優化的組織設計來加強對我們企業的支援。為此，在第二季度，我們聯繫了我們的一位董事會成員馬克·巴塞特（Mark Ba​​nkett），他在提高許多業務的利潤方面有著悠久的歷史，與我們的高級管理團隊協商，了解我們的營運情況。因此，在 10 週的時間裡，馬克可以公開了解我們的日常營運情況，並會見了執行領導和業務流程負責人。最後，馬克向公司提供了一套全面的建議，高階管理層與另一位董事會成員帕特·戈特沙克(Pat Gottschalk) 一起制定了一項轉型計劃，旨在推動成長，同時提高營運槓桿。我們很高興地宣布，我們已開始實施該計劃，具體如下。

First, as per Slide 7, we have reviewed the sales plan and operating expenses on a line item level with each of our department heads. We have focused on driving improvements in gross margin and achieving greater operational efficiency. Further, I have given each department a target that when achieved, would collectively add $15 million to operating profit and interest savings to our 2024 internal budget. We will make each manager responsible for these measures, track them over the course of the next year, and assess his or her performance based upon achieving these targets.

首先，根據投影片 7，我們與每個部門負責人一起審查了行項目層級的銷售計畫和營運費用。我們專注於推動毛利率的提高和提高營運效率。此外，我還為每個部門設定了一個目標，一旦實現，我們的 2024 年內部預算將總共增加 1500 萬美元的營業利潤和利息節省。我們將讓每位經理對這些措施負責，在接下來的一年中追蹤這些措施，並根據實現這些目標的情況評估他或她的績效。

These measures include a variety of parameters such as working capital management, greater factory efficiency, operating expense control, reduced raws and freight, and lower debt and interest expense. Second, as you will see on Slide 8, we are implementing a complete digital transformation across all business centers and processes. At present, we have 33 business centers throughout the world. It is imperative that these centers work seamlessly to provide real-time data based on universal standards. To that end, we have chosen QAD's adaptive ERP as our system of choice to drive end-to-end scalability, standardization, and integration across the globe.

這些措施包括各種參數，例如營運資本管理、提高工廠效率、營運費用控制、減少原材料和運費以及降低債務和利息費用。其次，正如您將在投影片 8 中看到的那樣，我們正在所有業務中心和流程中實施完整的數位轉型。目前，我們在全球擁有33個商務中心。這些中心必須無縫合作，提供基於通用標準的即時數據。為此，我們選擇 QAD 的自適應 ERP 作為我們的首選系統，以推動全球範圍內的端到端可擴展性、標準化和整合。

Further, we have retained global business consultant Kearney Management to help us define and more streamline an efficient future state for our process owners throughout the business. They will be asking, what do you need to do your job more effectively? To that end, Kearney and QAD are meeting with leaders of our major business processes, including sales and marketing, factory operation, finance, and human resources to establish a business vision, align on improvement and priorities, and to define the needs and identify the tools and processes that will enable us to meet our growth and business ambitions. This in turn will enable us to react faster and make better forecasts in the face of volatile markets, supply chains, climate, and geopolitical shifts.

此外，我們還聘請了全球業務顧問科爾尼管理公司來幫助我們為整個業務流程所有者定義並更加簡化高效的未來狀態。他們會問，你需要什麼才能更有效地完成你的工作？為此，科爾尼和 QAD 正在與我們主要業務流程（包括銷售和行銷、工廠營運、財務和人力資源）的領導者會面，以建立業務願景，協調改進和優先事項，並確定需求並確定使我們能夠實現成長和業務目標的工具和流程。這反過來將使我們能夠在面對動盪的市場、供應鏈、氣候和地緣政治變化時做出更快的反應並做出更好的預測。

Third, turning to Slide 9, we are launching an organizational transformation in which we evaluate closely the way we are structured, how we are incentivized to operate, and how best to gain greatest efficiencies and operating leverage. We will need dedicated resources to lead a structural transformation process. To that end, Shirin Khosravi, our recently hired Senior Vice President of Human Resources, is leading the search to hire an experienced Chief Transformation Officer. That person, working with our internal team and external business consultants, will evaluate and benchmark the capital requirements, staffing and performance of our various businesses. The CTO will in turn recommend appropriate organizational changes and in collaboration with Shirin will define key performance indicators and align functions and personnel to achieve business results. Through those efforts, over the course of the next 12 months, we will transform our current structure into a more efficient engine for growth.

第三，轉向幻燈片 9，我們正在啟動組織轉型，其中我們仔細評估我們的結構方式、如何激勵我們營運以及如何最好地獲得最大效率和營運槓桿。我們需要專門的資源來領導結構轉型過程。為此，我們最近聘請的人力資源資深副總裁 Shirin Khosravi 正在領導尋找一位經驗豐富的首席轉型長。該人員將與我們的內部團隊和外部業務顧問合作，對我們各項業務的資本需求、人員配置和績效進行評估和基準測試。技術長將建議適當的組織變革，並與 Shirin 合作定義關鍵績效指標並調整職能和人員以實現業務成果。透過這些努力，在未來 12 個月內，我們將把目前的結構轉變為更有效率的成長引擎。

Next, let's turn to David for his comments on our Q3 and year-to-date 2023 performance.

接下來，讓 David 對我們第三季和 2023 年迄今的表現發表評論。

Thank you, Eric. Before moving on, we will file our 10-Q this afternoon. Moving to Slide 11, with regard to our sales performance for the third quarter of 2023, the company's net sales decreased by 2% to $150 million as compared to $152 million last year. Within that overall decline in sales, our U.S. sales declined by 1% compared to prior year to $87 million, and our international sales decreased by 3% to $63 million. International sales accounted for 42% of total, which was in line with last year. The decrease in sales can mainly be attributed to destocking by customers managing their working capital levels due to high interest rates, the unavailability of one of our premium herbicides, and in our businesses in Central and South America the influence of low-cost generic products exported to multiple markets from China-based suppliers working within a strained economy.

謝謝你，埃里克。在繼續之前，我們將在今天下午提交 10-Q。轉向投影片 11，關於我們 2023 年第三季的銷售業績，該公司的淨銷售額較去年的 1.52 億美元下降了 2%，至 1.5 億美元。在整體銷售額下降的情況下，我們的美國銷售額與前一年相比下降了 1%，至 8,700 萬美元，國際銷售額下降了 3%，至 6,300 萬美元。國際銷售額佔總銷售額的42%，與去年持平。銷售額下降的主要原因是，由於高利率、我們的一種優質除草劑的缺貨以及我們在中美洲和南美洲的業務受到出口低成本非專利產品的影響，客戶管理其營運資金水平而減少庫存。在經濟緊張的情況下，中國供應商將產品銷往多個市場。

Turning to Slide 12, overall cost of sales, which include higher, slightly higher net manufacturing costs, increased by 4% and was 71% of sales in 2023 as compared to 67% for the same period of 2022. This resulted in a 13% decrease in gross profit to $43,084,000 in 2023 from $49,638,000 in 2022 and a consequent gross margin decline to 29% of net sales in 2023 from 33% in the same period of last year. The decline in gross profit for the 3 months ended September 30 is due to slightly lower sales as we manage through the global destocking process, unavailability of Dacthal for the US crop business, and pressure from low-cost Chinese produced generic products in Brazil and Central America.

轉向投影片 12，整體銷售成本（包括更高、略高的淨製造成本）增加了 4%，佔 2023 年銷售額的 71%，而 2022 年同期為 67%。這導致 13%毛利從2022年的49,638,000 美元下降到2023 年的43,084,000 美元，因此毛利率從去年同期的33% 下降到2023 年淨銷售額的29%。截至9 月30 日的三個月毛利下降的原因是，我們在全球去庫存過程中銷售額略有下降，美國農作物業務無法獲得Dacthal，以及巴西和中部地區中國生產的低成本仿製藥帶來的壓力美國。

On to Slide 13, which shows operating expenses for the quarter that were in line with the same period of the prior year. In the third quarter of 2023 as compared to the same period of the prior year, we experienced inflation-related higher wages, increased spending related to our SIMPAS system, and expanded state product registrations in Brazil, offset by lower legal expenses, reduced travel costs and incentive compensation expenses reflecting our financial performance.

投影片 13 顯示了該季度的營運支出與去年同期持平。與去年同期相比，2023 年第三季度，我們經歷了與通貨膨脹相關的工資上漲、與 SIMPAS 系統相關的支出增加以及巴西國家產品註冊的擴大，但被法律費用減少和差旅費用減少所抵消反映我們財務表現的激勵補償費用。

As you will see on Slide 14, as a result of factors Eric and I have discussed, our Q3 2023 operating income amounted to $4.2 million as compared to $11.2 million last year. We recorded significantly higher interest expense as compared to last year due to both higher average debt and higher interest rates. The increase in debt levels is primarily a result of customer decisions to slow down purchasing from buying early to now buying as close to time of use as possible, effectively pushing working capital pressure back to manufacturers such as ourselves as the markets are departing from the practice of holding greater safety stocks formed during COVID. Key market participants such as big distributors and retailers are now vigorously resetting business practices, such as inventory management, to get back to pre-pandemic practices in the face of significant escalation in global interest rates.

正如您將在投影片 14 中看到的，由於 Eric 和我討論過的因素，我們 2023 年第三季的營業收入達到 420 萬美元，而去年為 1,120 萬美元。由於平均債務較高和利率較高，我們的利息支出與去年相比顯著增加。債務水準的增加主要是由於客戶決定放慢採購速度，從早期購買改為現在盡可能接近使用時間購買，隨著市場背離這種做法，有效地將營運資金壓力推回給像我們這樣的製造商持有更多在新冠疫情期間形成的安全庫存。面對全球利率大幅上升，大型經銷商和零售商等主要市場參與者現在正在大力調整庫存管理等業務實踐，以恢復到疫情前的做法。

As the company has pointed out, this inflection point is driving markets we serve to extremely low levels of channel inventory that logically must soon start to refill in order to serve customer needs for the 2023/'24 season.

正如該公司所指出的，這一拐點正在推動我們服務的市場通路庫存水準極低，從邏輯上講，這些庫存必須很快開始補充，才能滿足 2023/'24 季節的客戶需求。

From a tax perspective, our effective tax rate increased to 158% from 31% last year. The change is primarily attributable to the low level of underlying profitability for the reasons just described, and as a result of losses incurred at certain entities, primarily in Brazil, which did not result in a benefit for income tax purposes as these entities continue to maintain valuation allowances against their net deferred tax assets. All these factors together resulted in a net loss of $325,000 this quarter compared to net income of $6.7 million last year.

從稅收角度來看，我們的有效稅率從去年的31%提高到158%。這項變更主要歸因於上述原因造成的基本獲利水準較低，以及某些實體（主要是巴西）發生的損失，這並沒有帶來所得稅方面的好處，因為這些實體繼續維持針對其淨遞延稅資產的估價備抵。所有這些因素共同導致本季淨虧損 32.5 萬美元，而去年的淨收入為 670 萬美元。

On Slide 15, you can see that for the 9 months of 2023, our sales are down 10% and gross profit decreased by 17%. Our domestic sales suffered a decline in sales of 14%, while our international sales were down 3% as compared to the comparable period last year. The reduction in gross profit for the 9 months ended September 30 is consistent with the 3 months and resulted from lower overall sales reflecting global destocking and availability of our premium herbicide Dacthal and the effect of Chinese produced low-priced generic products in our markets in Central and South America.

在投影片 15 上，您可以看到 2023 年的 9 個月，我們的銷售額下降了 10%，毛利下降了 17%。與去年同期相比，我們的國內銷售額下降了14%，而國際銷售額則下降了3%。截至9 月30 日的9 個月毛利減少與3 個月一致，原因是整體銷售額下降，反映出全球庫存減少和優質除草劑Dacthal 的供應，以及中國生產的低價仿製藥對中環市場的影響和南美洲。

Operating expenses during the 9 months to September 30, 2023, were flat as compared to the same period of 2022. We experienced an increase in wages due to inflation, increased travel activities at the start of the year that have since reduced, higher R&D expenses associated with infield activities in support of our proprietary delivery systems, and international product defense and registration expenses supporting strong expectations for sales growth in 2024 and beyond. These increases were offset by lower incentive compensation expenses related to our financial performance, lower legal expenses, as well as beneficial movements in foreign currencies in markets we operate versus the U.S. dollar.

截至 2023 年 9 月 30 日的 9 個月內，營運費用與 2022 年同期持平。由於通貨膨脹，我們的工資有所增加，年初旅行活動增加，此後研發費用減少，研發費用增加與支持我們專有交付系統的內場活動以及國際產品防禦和註冊費用相關，支持對2024 年及以後銷售成長的強烈預期。這些成長被與我們的財務表現相關的激勵補償費用的降低、法律費用的降低以及我們經營的市場中的外幣相對於美元的有利變動所抵消。

Year-to-date interest expense increased significantly to $8.3 million from $2.3 million due to average debt levels, which increased by 33% as a result of elevated working capitals and interest rates that were more than double last year's effective rates. Our effective income tax rate increased to 79% from 30% last year, primarily due to low underlying profitability, losses incurred at certain entities which did not result in a benefit for income tax purposes, as well as certain withholding taxes. Overall, net income amounted to $540,000 compared to $23.5 million last year.

年初至今的利息支出從 230 萬美元大幅增加至 830 萬美元，原因是平均債務水準增加了 33%，因為營運資金增加，而且利率是去年有效利率的兩倍多。我們的有效所得稅率從去年的 30% 增加到 79%，主要是因為基本獲利能力較低、某些實體發生的虧損並未帶來所得稅收益，以及某些預扣稅。總體而言，淨利潤為 54 萬美元，而去年為 2,350 萬美元。

On Slide 16 you can see that at the end of September 2023, we reported inventories at $248 million as compared to $184 million last year. Inventory management is a significant focus, but the unprecedented destocking of products in our industry more than offset these efforts. Furthermore, during the last 4 quarters, the company has suffered from some logistics challenges, resulting in the unavailability of 2 of our premium products, Aztec and Dacthal. Our top customers were unable to buy these products during this break in supply. This year, the company has dealt with those logistics and regulatory challenges and is in position to supply all market needs for the 2023/'24 season.

在投影片 16 上，您可以看到，截至 2023 年 9 月末，我們報告的庫存為 2.48 億美元，而去年為 1.84 億美元。庫存管理是一個重要的重點，但我們產業中前所未有的產品去庫存足以抵銷這些努力。此外，在過去 4 個季度中，該公司遭遇了一些物流挑戰，導致我們的 2 種優質產品 Aztec 和 Dacthal 缺貨。在供應中斷期間，我們的頂級客戶無法購買這些產品。今年，該公司已經解決了這些物流和監管挑戰，並有能力滿足 2023/'24 季節的所有市場需求。

The graph shows inventory expressed as a percentage of the trailing 12-month sales. We believe that we will be able to reduce inventory to more normal levels as sales demand normalizes.

此圖顯示庫存佔過去 12 個月銷售額的百分比。我們相信，隨著銷售需求正常化，我們將能夠將庫存減少到更正常的水平。

I'd next like to turn to the subject of cash and liquidity. As you are aware, and we have depicted on Slide 17, interest rates have risen sharply over the past 2 years. As Eric has mentioned, this has given rise to global destocking activity. In light of these higher rates, adverse market conditions, and supply chain disruption, about 45 days ago we approached our senior lenders led by BMO to negotiate an expansion of our financial covenants. As in the past, our lending group, which includes banks and farm credits that are very familiar with the global agricultural industry, was supportive and acted quickly to amend the senior credit facility to give us a secure runway through to September of 2024. During this period, interest costs will be 0.5 percentage higher than normal. However, we will be able to revert to lower interest rates before the end of the period as our financial performance improves.

接下來我想談談現金和流動性的問題。如您所知，正如我們在幻燈片 17 中所描述的，過去兩年利率急劇上升。正如艾瑞克所提到的，這引發了全球去庫存活動。鑑於利率上升、市場條件不利以及供應鏈中斷，大約 45 天前，我們與 BMO 牽頭的高級貸款機構接洽，協商擴大我們的財務契約。與過去一樣，我們的貸款集團（包括非常熟悉全球農業行業的銀行和農業信貸）給予了支持，並迅速採取行動修改了高級信貸安排，為我們提供了到 2024 年 9 月的安全跑道。期間，利息成本將比正常情況高0.5個百分點。然而，隨著我們的財務表現改善，我們將能夠在該期限結束前恢復到較低的利率。

I will note that for the duration of the amendment period, we will not be repurchasing shares of our common stock. Once we revert to the lower interest schedule, however, we will be poised to execute the 7.5 million share repurchase plan that the board had authorized earlier this year. We thank BMO and our lender group for their continued support. With that, I will hand back to Eric.

我要指出的是，在修訂期間，我們不會回購普通股。然而，一旦我們恢復到較低的利息計劃，我們將準備好執行董事會今年稍早批准的 750 萬股股票回購計劃。我們感謝 BMO 和我們的貸方團體的持續支持。說到這裡，我將把事情交還給艾瑞克。

Thank you, David. As we mentioned in our earnings release and as reflected in Slide 18, we expect to see a rebound in the fourth quarter. We are 70% complete on our production of Aztec, our leading corn soil insecticide, and sales are strong for the quarter. Similarly, we expect to begin supplying Dacthal to our customers this week. These will be our first Dacthal shipments in over a year. Again, these and other products are at historic lows with channel inventory. In light of market conditions and our sales trends, we are targeting full year 2023 revenue between $580 million and $590 million, gross margins of 30% to 31%, operating expenses between $152 million and $154 million, and adjusted EBITDA between $55 million and $59 million. We will suspend judgment on net income for now and in further analysis of our full year global tax impact.

謝謝你，大衛。正如我們在財報中提到的以及幻燈片 18 中反映的那樣，我們預計第四季度將出現反彈。我們領先的玉米土壤殺蟲劑 Aztec 的生產已完成 70%，本季銷售強勁。同樣，我們預計本週開始向客戶供應 Dacthal。這將是我們一年多來第一批 Dacthal 發貨。同樣，這些產品和其他產品的通路庫存處於歷史低點。根據市場狀況和我們的銷售趨勢，我們的目標是2023 年全年收入在5.8 億美元至5.9 億美元之間，毛利率在30% 至31% 之間，營運費用在1.52 億美元至1.54 億美元之間，調整後EBITDA 在5500 萬美元至59 美元之間百萬。我們將暫時暫停對淨利潤的判斷，並進一步分析全年全球稅收影響。

To put our performance in perspective and depicted on Slide 19, we reviewed recent financial statements of a set of our publicly traded peers and found that with respect to Q3 '23, those peers averaged decline in net sales of 21%, while we were down 2%. With respect to net sales for year-to-date, those peers averaged a decline of about 13%, while we were down about 10%. Extrapolating from our previous slide, we expect to be down about 3% to 5% year-over-year.

為了正確看待我們的業績並在投影片19 中進行描述，我們審查了一組公開交易同業的最新財務報表，發現就23 年第三季而言，這些同業的淨銷售額平均下降了21%，而我們的淨銷售額下降了2%。就今年迄今的淨銷售額而言，這些同業平均下降了約 13%，而我們則下降了約 10%。從我們先前的幻燈片推斷，我們預計將年減約 3% 至 5%。

Before turning to '24, I want to give a few quick thoughts on the other growth initiatives. As you may have noticed from our press release yesterday and appearing on Slide 20, our Green Solutions business has announced an expansion of its partnership with NewLeaf Symbiotics, by which we will be collaborating to bring innovative biological solutions to key markets in Argentina, Brazil, Ukraine, and China. NewLeaf brings to us its proprietary microbial library, proven research and development capabilities, and best-in-class product offering of naturally occurring microbes. I also note that we expect that sales of our Green Solutions business will increase by about 10% in 2023 as compared to '22. The addition of NewLeaf products will bolster Green Solutions growth in future years.

在談到「24」之前，我想快速思考其他成長舉措。您可能已經從我們昨天的新聞稿和幻燈片20 中看到的那樣，我們的綠色解決方案業務部門宣布擴大與NewLeaf Symbiotics 的合作夥伴關係，透過這種合作，我們將合作為阿根廷、巴西、巴西等主要市場帶來創新的生物解決方案。烏克蘭、中國。 NewLeaf 為我們帶來了其專有的微生物庫、經過驗證的研發能力以及一流的天然微生物產品。我還注意到，我們預計 2023 年綠色解決方案業務的銷售額將比 22 年成長約 10%。 NewLeaf 產品的加入將促進綠色解決方案在未來幾年的成長。

On the SIMPAS front, as per Slide 21, we're delivering 18 units to Brazil, which will be used by several of the largest growers in the country in this upcoming December/January planting. Further, we anticipate that north of 250 SIMPAS units will be utilized in the United States to deliver SIMPAS applied solutions in the upcoming planting season.

在 SIMPAS 方面，根據幻燈片 21，我們將向巴西交付 18 台設備，這些設備將由該國幾家最大的種植商在即將到來的 12 月/1 月種植中使用。此外，我們預計美國將使用 250 台以上的 SIMPAS 裝置，在即將到來的種植季節提供 SIMPAS 應用解決方案。

Let's close with my thoughts on the '24 outlook. Within our industry, there has been a great sense of optimism about '24. That said, I note that some of our peers have indicated continued channel inventory headwinds in certain geographical locations. However, according to a survey conducted by Umpqua Bank of 1,250 executives at small and middle-market agricultural companies, over half of the respondents expect improvement in overall economic conditions. Nearly 60% of that group expect increased revenues over '24 and nearly 70% expect improved profitability during that same period. Granted, surveys are not the final word on how the future will unfold.

讓我們以我對 24 世紀展望的想法作為結束語。在我們的行業中，人們對「24」充滿了樂觀情緒。儘管如此，我注意到我們的一些同行已表示某些地理位置的通路庫存持續面臨阻力。然而，安普誇銀行對 1,250 名中小型農業公司高層進行的調查顯示，超過一半的受訪者預計整體經濟狀況將會改善。該群體中近 60% 的人預計 24 年收入將增加，近 70% 的人預計同期獲利能力將提高。誠然，調查並不是未來將如何發展的最終結論。

However, there is good reason for sharing this optimism as we have in Slide 22. First, the farm economy is strong, with relatively stable commodity pricing. Second, although the distribution channel has shifted its procurement patterns closer to time of use and they, and more important, growers, need crop inputs to meet the demand for food, which is unchanged. Third, as a result of the '23 destocking activity by our customers on the whole, channel inventory of many of our products remains low. Fourth, while not immune to the pressure of generic products, we feature a range of higher-margin proprietary products that have kept their value and appeal in variable market conditions.

然而，我們有充分的理由分享幻燈片 22 中的這種樂觀情緒。首先，農業經濟強勁，商品價格相對穩定。其次，儘管分銷管道已將其採購模式轉變為更接近使用時間，但他們（更重要的是種植者）需要農作物投入來滿足糧食需求，而這一點沒有改變。第三，由於23年客戶整體去庫存，我們許多產品的通路庫存仍然較低。第四，雖然不能免受仿製藥的壓力，但我們推出了一系列利潤率較高的專有產品，這些產品在多變的市場條件下仍保持了其價值和吸引力。

In short, while there has been a recalibration of markets in certain regions and a shift in timing of sales order, the market is sound. Consequently, based upon recent sales activity preceding the '24 planting season and the factors that I have just discussed, we're targeting 8% to 12% growth in net sales and 25% to 35% growth in adjusted EBITDA for full year '24.

總之，雖然部分地區市場出現調整，銷售訂單時間發生變化，但市場狀況良好。因此，根據 24 年種植季節之前的近期銷售活動以及我剛才討論的因素，我們的目標是 24 年全年淨銷售額增長 8% 至 12%，調整後 EBITDA 增長 25% 至 35% 。

A closing note, after measuring our performance initiatives, getting a more definitive sense of Q4, and refining our outlook on '24 and beyond, we'll be holding a call in January to provide a further update. With that, I'll turn the call over to our operator, Alicia, for any questions you may have.

最後，在衡量我們的績效計劃、對第四季度有更明確的認識並完善我們對 24 世紀及以後的展望之後，我們將在 1 月舉行電話會議以提供進一步的更新。這樣，我會將電話轉給我們的接線生艾莉西亞（Alicia），以解答您可能有的任何問題。

(Operator Instructions) Our first question comes from the line of Brandon Rogers with ROTH Capital Partners.

（操作員說明）我們的第一個問題來自布蘭登羅傑斯（Brandon Rogers）和羅斯資本合夥人（ROTH Capital Partners）的線路。

This is Brandon Rogers on for Jerry Sweeney at ROTH Capital. I just had a few questions around the destocking progress. Do you have any visibility into how this is progressing? And do you feel you're through the majority of it? And what will it take to get inventories to expand again? Is it purely low interest rates or do service requirements come into play?

我是羅斯資本 (ROTH Capital) 的布蘭登羅傑斯 (Brandon Rogers) 代表傑瑞斯威尼 (Jerry Sweeney)。我只是對去庫存進度有一些疑問。您是否了解此事的進展？你覺得你已經經歷大部分了嗎？怎樣才能讓庫存再次擴大？純粹是低利率還是服務要求在運作？

Okay. Good question. With regard to inventories, and I can start with the U.S., we have pretty good visibility of what is in the channels. We counter that with ABI, which actually went out to the retail levels. And use of our products were up in '23 versus '22. Brandon, maybe you might go on mute because we can hear your typing. I think it's you.

好的。好問題。關於庫存，我可以從美國開始，我們對通路中的庫存有很好的了解。我們用 ABI 來反駁這一點，它實際上已經擴展到了零售層面。與 22 年相比，23 年我們產品的使用量有所增加。布蘭登，也許你可以保持靜音，因為我們可以聽到你的打字聲。我想是你。

Apologies.

道歉。

No problem. And as such, again, we know our corn soil insecticides are extremely low, particularly our Aztec was down to about 7.5% and normal is probably in that 27%, 28% range. Dacthal, we mentioned that's been out. We haven't had product for sale for over a year, so we know that's very low. As we look across our cotton products, again, it was a decent year and we do not have much left in the channels. Our herbicide impact, I think we do have some inventory in the channel there. That's we did have some purchases, but I think the initial issues of where inventories were large globally, I think herbicides were kind of up there along with Nutrition.

沒問題。因此，我們再次知道我們的玉米土壤殺蟲劑含量極低，特別是我們的 Aztec 含量降至 7.5% 左右，正常情況可能在 27%、28% 範圍內。 Dacthal，我們提到它已經過時了。我們已經一年多沒有銷售產品了，所以我們知道這個價格非常低。當我們審視我們的棉花產品時，再次發現，這是一個不錯的一年，我們的管道已經沒有太多了。我們的除草劑影響，我認為我們的通路確實有一些庫存。我們確實有一些採購，但我認為最初的問題是全球庫存量很大，我認為除草劑和營養品一樣。

We have a little effect there, but across the vast amount of our profit lines in the U.S., again, inventories are low. As we go outside or let's just say in the U.S. with our non-crop business, our distributors have gone again as we mentioned, from maybe 120 to 180 days stocking down to 20 to 40 days. Their inventories are very low. We're seeing lots of orders coming in each day, but they're they add up to be nice, but there are a lot of smaller orders. Seems similar in Brazil, what we might --and we'll probably triple the orders that we're seeing on a daily basis. People are ordering kind of just what they need. And that's okay.

我們在那裡的影響不大，但在美國的大量利潤線中，庫存仍然很低。當我們走出去，或者說在美國開展非農作物業務時，正如我們所提到的，我們的經銷商再次將庫存時間從 120 到 180 天縮短到 20 到 40 天。他們的庫存非常低。我們每天都會看到大量訂單進來，但它們加起來很不錯，但也有很多較小的訂單。在巴西，我們可能會遇到類似的情況，我們可能會將每天看到的訂單增加兩倍。人們訂購的正是他們需要的東西。沒關係。

As long as the demand actual use is normalized, then it just means that we've got a lot more individual orders. I think globally, I'd look at some of the comments of our peers. And I think that there is still pressure probably in Central and South America. We have seen more challenge to our margin in the last couple of cycles as lower cost goods or goods that are oversupplied move through the channel. I don't know if I answered your question.

只要需求實際使用正常化，就代表我們的個人訂單多了許多。我認為在全球範圍內，我會看看我們同行的一些評論。我認為中美洲和南美洲可能仍然有壓力。在過去的幾個週期中，隨著成本較低的商品或供應過剩的商品透過通路流動，我們的利潤率面臨更多挑戰。我不知道我是否回答了你的問題。

Thank you for that color. And then if I could just ask one more kind of going off that, so the Aztec and Dacthal low inventory impacted 2023 results. You said that you have or are in position to supply Dacthal and Aztec for 2024. Can you quantify the total impact for 2023? And do you believe this is recoverable in 2024?

謝謝你的那個顏色。然後，如果我能再問一種解決辦法，那麼 Aztec 和 Dacthal 的低庫存影響了 2023 年的表現。您說您已經或有能力在 2024 年供應 Dacthal 和 Aztec。您能量化 2023 年的整體影響嗎？您認為 2024 年可以恢復嗎？

'23 on Dacthal was in the $3 million range. Normal for Aztec might be in the $45 million to $50 million, maybe $50 million range. We had zero Dacthal available since third quarter last year. We did have a pretty good third quarter last year, which definitely affected this year's profitability if you look at the margins. And then on Aztec, we basically had nothing available in Q4, and we had just under 30% of the market that we needed or the volume to service the '23 season. Those are kind of the sales numbers. And the $20 million for Dacthal is probably a little higher than norm because we were having a supply channel issue, and so it might be more normalized in the $15 million to $16 million range. But combined, it's a big number when you look at a company our size.

'23 Dacthal 的售價約為 300 萬美元。 Aztec 的正常價格可能在 4,500 萬至 5,000 萬美元，甚至 5,000 萬美元範圍內。自去年第三季以來，我們的 Dacthal 供應量為零。去年第三季我們的業績確實相當不錯，如果你看看利潤率，這肯定會影響今年的獲利能力。然後在 Aztec 上，我們在第四季度基本上沒有任何可用的產品，並且我們擁有我們所需的市場份額或 23 賽季服務量的不到 30%。這些是銷售數字。 Dacthal 的 2000 萬美元可能比正常水平稍高一些，因為我們遇到了供應管道問題，因此在 1500 萬至 1600 萬美元範圍內可能會更加正常化。但綜合起來，當你看看我們這樣規模的公司時，這是一個很大的數字。

Our next question comes from the line of Chris Kapsch with Loop Capital Markets.

我們的下一個問題來自 Loop Capital Markets 的 Chris Kapsch。

I've got a few buckets of questions, I guess. But curious on the gross margin degradation on a year-over-year basis, 33% to 29%, if you have a sense for this was mostly a function of, I don't know if you can parse it, but a function of your volumes being lower? Or was it a function of the competitive pressures from either the industry conditions or the aggressive exporting of the Chinese generics and that having an effect on your prices and therefore compressing gross margins? Any way to parse that? Just -- and I'm just curious more generally if you feel this pressure is purely transient and cyclical and unique? Or is it something more structural in nature?

我想我有幾個問題。但我對毛利率同比下降感到好奇，從 33% 下降到 29%，如果你意識到這主要是一個函數，我不知道你是否可以解析它，但它是一個函數你的音量較低嗎？還是由於行業狀況或中國仿製藥的積極出口帶來的競爭壓力，從而影響了你們的價格，從而壓縮了毛利率？有什麼辦法可以解析嗎？只是──我只是比較普遍地好奇，如果你覺得這種壓力純粹是短暫的、週期性的、獨特的？或者它本質上是更具結構性的東西？

Thanks, Chris. If you look at the let's use the 9 months to date, we're looking at about $25 million in margin differential. About half of that is due to strictly the $43 million of sales that we didn't have and a lot of that driven by the 2 products that we talked about. And then with those products, again, those are higher-margin products. And as such, without those in our mix and we're in the 60% plus range, that definitely weighs down the average. There were, from the Chinese pressures, yes, we saw that certainly in Central America. And we've got a number of unique products, but there are more generic products that they have they have products that come again from China.

謝謝，克里斯。如果你看看迄今為止的 9 個月，我們會看到大約 2500 萬美元的保證金差異。其中大約一半是由於我們沒有實現的 4,300 萬美元銷售額，其中很大一部分是由我們談到的 2 種產品推動的。然後，這些產品又是利潤率較高的產品。因此，如果我們的組合中沒有這些，而我們處於 60% 以上的範圍內，這肯定會降低平均值。來自中國的壓力，是的，我們在中美洲確實看到了這一點。我們有許多獨特的產品，但他們也有更多的通用產品，他們的產品又來自中國。

In Brazil, we have a kind of an oil product that is a pretty big volume for us, but margins on that were high. And then also, we have copper products that come from Norway, and there was strong generics products in copper that affected their margins down there. I would say, and looking as you look, I mean our greenhouse spot margins were holding strong. Australia was has had pressure as well. They don't have a lot of generic pressure, but they do have generic similar chemistries that put pressure on their margins also.

在巴西，我們有一種石油產品，對我們來說產量相當大，但利潤很高。此外，我們還有來自挪威的銅產品，銅中存在強大的仿製藥產品，影響了他們在那裡的利潤。我想說，正如你所看到的，我的意思是我們的溫室現貨利潤保持強勁。澳洲也面臨壓力。他們沒有太多的通用壓力，但他們確實有通用的相似化學物質，這也給他們的利潤帶來了壓力。

That being said, I think it is a region-by-region recovery based upon what kind of channel inventories there are. It does look like the cost of generic products coming out of China seem to have stabilized. I would expect that we would see as inventory does clear the channel, and again, there are some pockets of inventory in various areas, I think some certainly, and Bob, you might comment on this if Asia or Europe we don't anticipate any degree. It's not a big area for us, but just maybe some color.

話雖這麼說，我認為這是一個逐地區的復甦，基於有什麼樣的渠道庫存。看起來來自中國的仿製藥的成本似乎已經穩定下來。我預計我們會看到庫存確實清理了渠道，而且各個地區都有一些庫存，我認為肯定有一些，鮑勃，如果亞洲或歐洲我們預計不會有任何庫存，你可能會對此發表評論程度。對我們來說這不是一個很大的區域，但也許只是一些顏色。

Yes, hi, Chris. You have to realize that over 50% of our business is in the U.S. and we've got a pretty good view there, transparent view on what the channel inventory is. Eric has described it. That's a real positive for us going into 2024, especially with the 2 products he described. We have a very light footprint in Eurasia where you have a lot of geopolitical disruption and some trade disruption. We don't have any exposure there, so that's a positive for us.

是的，嗨，克里斯。你必須意識到，我們超過 50% 的業務都在美國，我們對美國有很好的了解，對渠道庫存情況有透明的了解。艾瑞克（Eric）對此進行了描述。這對我們進入 2024 年來說是一個真正的積極因素，尤其是他所描述的兩種產品。我們在歐亞大陸的足跡非常少，那裡有很多地緣政治幹擾和一些貿易幹擾。我們在那裡沒有任何曝光，所以這對我們來說是積極的。

Our Green Solutions business, as Eric has mentioned, we're launching new products, doing new deals, more to come here potentially in the next few weeks. Our technology is expanding. In the SIMPAS area, Brazil, I'm excited about Brazil simply because that's a great market access tool for us. And as the systems go down there, we're going to see the yield results in the spring. As you know, they're in a different cycle than we are.

我們的綠色解決方案業務，正如艾瑞克所提到的，我們正在推出新產品，進行新交易，未來幾週可能會有更多產品出現。我們的技術正在不斷擴展。在巴西的 SIMPAS 地區，我對巴西感到興奮，因為這對我們來說是一個很好的市場准入工具。隨著系統在那裡運行，我們將在春季看到產量結果。如您所知，他們處於與我們不同的周期。

We expect good results. And so there will be a lot of potential going into the end of 2024 in Brazil. And then the market is down, so if you really read some of the text of the market in general, I think we're going to see good acquisition opportunities, both on the business front, but also on the talent front because some people will be downsizing, so we can strengthen our team where necessary. Lots of good things happening I think for us in that sense. I mean we're cautiously optimistic simply because there is still a different buying behavior in the channel, and the market has to reset with the higher inflation. And we're in the process of doing that. Eric, I'll hand it back to you.

我們期待好的結果。因此，到 2024 年底，巴西將有很大的潛力。然後市場下跌，所以如果你真正閱讀了市場的一些文本，我認為我們會看到很好的收購機會，無論是在業務方面，還是在人才方面，因為有些人會縮小規模，以便我們可以在必要時加強我們的團隊。從這個意義上來說，我認為對我們來說，發生了很多好事。我的意思是，我們持謹慎樂觀態度，只是因為通路中仍然存在不同的購買行為，而且市場必須隨著通膨的上升而重置。我們正在這樣做。艾瑞克，我會把它還給你。

Chris?

克里斯？

Yes. Question on -- thanks for that color, by the way. But focused on sort of the progression in fourth quarter and then into next year, the implied sales run rate is one that's never been achieved before for the fourth quarter against the backdrop where the buyer behavior is closer to time of use. I want to reconcile that. But then even if you do say have that strong fourth quarter and then you've given a preliminary indication of EBITDA expectations or growth expectations for next year on a recovering EBITDA.

是的。問題是——順便說一句，謝謝你的顏色。但重點關注第四季度和明年的進展情況，在買家行為更接近使用時間的背景下，第四季度的隱含銷售運行率是以前從未實現過的。我想調和這一點。但即使你確實說第四季度表現強勁，而且你已經初步表明了 EBITDA 預期或明年 EBITDA 復甦的成長預期。

I'm curious about the visibility around the fourth quarter, but then on '24, if you take the midpoint of your range on EBITDA growth for next year 30%, that would imply if you reached the call it $57 million in EBITDA this year, you'd get to 30%, $74 million next year. I'm curious so that's a $17 million improvement. You're expecting 15, I think, from the transformation plan. Maybe that's not day 1, January 1 for a full run rate. I'm just wondering if you could sort of parse these numbers. How much of the visibility and confidence around the fourth quarter run rate and what if you achieve that level by just the options, what needs to happen to meet that 30% EBITDA growth? And how much of this expected savings from a transformation plan feeds into that?

我對第四季的能見度很好奇，但在 24 年，如果你取明年 EBITDA 成長範圍的中點 30%，那就意味著今年的 EBITDA 達到了 5700 萬美元，明年你會得到30%，即7400萬美元。我很好奇，這相當於 1700 萬美元的改進。我想，您對轉型計畫的期望是 15。也許 1 月 1 日的第一天並不是完整運行率。我只是想知道你是否可以解析這些數字。第四季度運行率的可見度和信心有多大？如果您僅透過選項達到該水平，需要做什麼才能滿足 30% 的 EBITDA 成長？轉型計劃的預期節省有多少投入其中？

Again, fourth quarter, again, having not hit our estimates for the last 4 periods, again we emphasize to our team, you've got to put more focus into understanding those numbers, communicating more with our customers, getting commitments, doing supply plans. And obviously, can't predict geopolitical problems that may occur, but just taking the fact that we had no Aztec in the fourth quarter at all, and that's really generally our biggest quarter for Aztec, not having Dacthal for the last 4 quarters, those 2 alone lead us to be very strong on what we're going to see in Q4.

再一次，第四季度，在過去的四個時期沒有達到我們的預期，我們再次向我們的團隊強調，你必須更加關注理解這些數字，與我們的客戶進行更多的溝通，獲得承諾，制定供應計劃。顯然，無法預測可能發生的地緣政治問題，但考慮到我們在第四季度根本沒有 Aztec 的事實，這實際上是我們 Aztec 最大的季度，在過去 4 個季度沒有 Dacthal，那些僅憑2 點就讓我們對第四季將要看到的情況非常有信心。

I will say in October in our OHP and our AMGUARD lines we saw very strong quarters. We saw a good strong quarter in LatAm and Mexico in October. We've got pretty good optimism of outlook for Q4. Moving forward, yes, the $15 million, there are some areas that we've identified that will be in place by January 1, but a number of them will be implemented during the course of the year and phased in so that we would see kind of the full effect of that in the '25 year. We also we have a plan. We are we have we're kind of really into our third year of trying to get our entire fleet on board with the same QAD system. We're now focused more on pushing forward at a faster rate on that in '24 so that by the time we get that in '24, we'll be essentially where we want to be.

我想說的是，10 月我們的 OHP 和 AMGUARD 系列產品的季度表現非常強勁。十月份，我們在拉丁美洲和墨西哥看到了強勁的季度表現。我們對第四季的前景非常樂觀。展望未來，是的，1500 萬美元，我們已經確定了一些領域將在 1 月 1 日之前到位，但其中一些領域將在今年內實施並分階段實施，以便我們看到良好的結果25 年的全部影響。我們也有一個計劃。我們已經進入第三個年頭，努力讓我們的整個機隊都使用相同的 QAD 系統。我們現在更專注於以更快的速度推進 24 年的目標，這樣當我們在 24 年實現這一目標時，我們基本上就能達到我們想要的目標。

Yes, there are potential upsides in what we've mentioned. If we're more attuned at implementing these cost-saving measures as well as we'll have a better outlook of how well the '24 year is going to unfold, which is why we're scheduling that call probably the later half of January so that we can update on kind of the KPIs we've put in place to measure how we're tracking versus that $15 million, what that outlook looks like for the balance of the year. And then as well, our team gives a forecast, every business unit does the 10th of each month.

是的，我們提到的有潛在的好處。如果我們更善於實施這些節省成本的措施，我們將對 24 年的發展有更好的展望，這就是為什麼我們將電話會議安排在 1 月下旬這樣我們就可以更新我們已經制定的KPI 類型，以衡量我們如何追蹤這1500 萬美元，以及今年剩餘時間的前景。然後我們的團隊也會給予預測，每個業務部門都會在每個月的 10 號進行預測。

With regards to our '24 outlook, again, kind of budgets are done in July of the previous year. We've been tuning that budget based upon the measures that we're taking. But then as we get into January, we'll know what happened in Q4, at least as far as revenue is concerned, and have a much better view of how that '24 year is going to shape up.

關於我們的 24 年展望，預算是在前一年 7 月完成的。我們一直在根據我們正在採取的措施調整預算。但當我們進入 1 月時，我們就會知道第四季度發生了什麼，至少就收入而言，並且對 24 年將如何發展有更好的了解。

Okay. That's helpful. And also, maybe just a quick one for David. On the covenant amendments, if you achieve that $74 million, I'm assuming you're in full compliance with the pre-amendment covenants. Is that accurate? I'm just wondering like what the nature of the amendments were and what you see in terms of what needs to happen in order to get fully back in compliance? And just if you could just talk about what the cost is for these amendments.

好的。這很有幫助。而且，也許對大衛來說只是一個快速的。關於契約修正案，如果您實現了 7400 萬美元，我假設您完全遵守了修正案前的契約。準確嗎？我只是想知道修正案的性質是什麼，以及您認為需要做什麼才能完全恢復合規？如果您能談談這些修正案的成本是多少。

Just to sort of clarify for David, so the amendments are essentially giving us more leeway on the debt-to-EBITDA ratio. I guess we've set this up purposely so that if our Q4 goes according to plan that we're in a position to pull ourselves out of that, which would save us 0.5%. Again, kind of a function too of how much cash we collect at the year-end will determine what our debt-to-EBITDA ratio is. And then as far as the charge, go ahead and --

只是為了向 David 澄清一下，所以修正案本質上是給我們在債務與 EBITDA 比率方面提供了更多的迴旋餘地。我想我們是故意這樣設定的，這樣如果我們的第四季按計劃進行，我們就能夠擺脫困境，這將為我們節省 0.5%。同樣，我們在年底收到的現金數量也將決定我們的債務與 EBITDA 比率。然後就收費而言，繼續——

The cost was about $400,000 and then 0.5% on the interest rate for the duration of the amendment period, which as Eric just described, could be as long as through September of 2024, but we could exit it early if our forecast for Q4 and the start of 2024 come through well.

成本約為 40 萬美元，然後在修訂期間以 0.5% 的利率計算，正如 Eric 剛才所描述的，修訂期間可能會長達 2024 年 9 月，但如果我們對第四季度的預測和2024 年伊始一切順利。

And that $400,000, just so you know it's not a hit in Q4. It's amortized over the life of the remaining and takes us through '26.

那 40 萬美元，只是為了讓你知道它在第四季並不受歡迎。它會在剩下的人的生命中攤銷，帶我們度過 26 年。

Our next question comes from Wayne Pinsent with Gabelli Funds.

我們的下一個問題來自 Gabelli Funds 的 Wayne Pinsent。

Eric, you touched on it a little bit there, just curious on how quickly we'll be achieving the $15 million of cost savings. You mentioned you'll probably see the full amount in 2025, but just the cadence there. How much of it because I saw in the press release you mentioned it was operational but also interest savings. What's the breakdown there? And then have you identified any one-time or ongoing costs with that program?

Eric，您剛才提到了一點，只是好奇我們多久才能實現 1500 萬美元的成本節約。您提到您可能會在 2025 年看到全部金額，但只是那裡的節奏。其中有多少是因為我在新聞稿中看到你提到它是可操作的，而且還可以節省利息。那裡有什麼故障？然後您是否確定了該計劃的任何一次性或持續成本？

Yes. Well, there'll be some capitalization certainly as we move faster on the QAD system. That is capitalized and kind of amortized over a 5-year period. If I mean if you look at each one of those comes with a different piece as far as phase in them, so let's just take raw materials for example. We've identified some contracts that we're going to have that will go in place in the first quarter.

是的。嗯，隨著我們在 QAD 系統上進展得更快，肯定會有一些資本化。這是資本化的，並在 5 年內攤提。如果我的意思是，如果你看看其中每一個都帶有不同的部分，那麼我們就以原材料為例。我們已經確定了一些將在第一季生效的合約。

And as those benefits occur in manufacturing, we actually will see that pick up, and it would be in margin, but we would see that occur as it gets sold. And normally, we kind of figure there's like a 90-day delay time from manufacturing to sale, but obviously it depends on each SKU. With regards to onetime charges, we're looking at that now. I think with our bank and our agreement with them, we can do each year I think it's $5 million of onetime charge which does not affect our adjusted EBITDA with regards to the bank. I don't know if that gives you the color or whether you've got a clarifying question on that?

隨著這些好處出現在製造業中，我們實際上會看到這種情況有所回升，而且會出現在利潤率方面，但我們會看到這種情況在銷售時發生。通常情況下，我們認為從製造到銷售大約有 90 天的延遲時間，但顯然這取決於每個 SKU。關於一次性收費，我們現在正在考慮。我認為透過我們的銀行以及我們與他們的協議，我們每年可以收取 500 萬美元的一次性費用，這不會影響我們對銀行調整後的 EBITDA。我不知道這是否為你帶來了色彩，或者你對此有一個澄清的問題？

Okay, so that's kind of what we could expect you going at, that $5 million or under run rate and cost for this going forward. Okay, thank you.

好的，這就是我們對您的預期，即 500 萬美元或低於運行率和未來的成本。好的謝謝。

(Operator Instructions) Our next question is from [Steve Helton,] a private investor.

（操作員說明）我們的下一個問題來自私人投資者 [Steve Helton]。

I just had a quick question with the recent kind of business agreement between AGCO and Trimble, does this complicate your sales program with your SIMPAS equipment?

我剛剛對 AGCO 和 Trimble 之間最近簽訂的業務協議有一個簡短的問題，這是否會使您的 SIMPAS 設備銷售計劃變得複雜？

That's good question. Bob and I have had discussions with AGCO, but Bob has followed through and has probably better insight on that than I do.

這是個好問題。鮑伯和我曾與愛科進行過討論，但鮑伯堅持了下來，並且可能比我有更好的見解。

Yes, so 3 quick points, Steve. We see that as a positive. It expands our distribution network. AGCO has over 2,000 distribution points, so therefore we see much more opportunities. We don't have to wait until that deal goes through. We've already started that process. Two, we see a lot of cross-selling opportunities between precision planting and our systems. We've been working with AGCO for 8 years, so there is already a relationship in place. We'll just reinforce that. And then I think 3, there's an action list we've already agreed with management to start in 2024 for the 2025 season. I hope that gives you color if you have a follow-up question.

是的，史蒂夫，我簡單說三點。我們認為這是積極的。它擴大了我們的分銷網絡。愛科擁有 2,000 多個分銷點，因此我們看到了更多的機會。我們不必等到交易完成。我們已經開始了這個過程。第二，我們看到精準種植和我們的系統之間有很多交叉銷售機會。我們與愛科合作已有 8 年，因此已經建立了合作關係。我們只會加強這一點。然後我認為 3，我們已經與管理層商定了一份行動清單，將於 2024 年開始，持續到 2025 年賽季。如果您有後續問題，我希望這能為您帶來啟發。

Yes. No, that helps a lot. I was just kind of curious. I didn't know if AGCO had exactly something similar to the SIMPAS equipment or if you guys might fit in well with them.

是的。不，這很有幫助。我只是有點好奇。我不知道 AGCO 是否有與 SIMPAS 設備類似的東西，或者你們是否適合使用它們。

We're symbiotic.

我們是共生的。

Our next question comes from Chris Kapsch with Loop Capital Markets.

我們的下一個問題來自 Loop Capital Markets 的 Chris Kapsch。

Yes, I had a couple of follow-ups. Just as you look through the fourth quarter and next year, just curious if you achieve these levels, like how much of your inventory will you be able to sort of liquidate and therefore, working capital can be turned to or generate sorry, become a source of cash? And what are the implications for your debt position either end of this year if you have that strong fourth quarter or through '24?

是的，我有幾個後續行動。正如您回顧第四季度和明年一樣，只是好奇您是否達到了這些水平，例如您將能夠清算多少庫存，因此，營運資金可以轉向或產生抱歉，成為來源現金？如果第四季或整個 24 年表現強勁，那麼到今年年底，對您的債務狀況有何影響？

That's a very good question. I mean I think we're looking to reduce about $30 million in Q4?

這是一個非常好的問題。我的意思是，我認為我們希望在第四季度減少約 3000 萬美元？

$34 million, $35 million, something like that.

3400萬美元，3500萬美元，類似的東西。

Okay, in inventory in Q4. I can tell you that part of the process that we're doing is understanding where we're deploying our working capital. It's not that it's something we shouldn't have been focused on at all times, but it's a completely different picture when you're paying 7% interest versus 2.75% interest. As such, there's been a strong look at each of our inventory items globally and targets that are set to bring those down dramatically from where they have been.

好的，第四季的庫存。我可以告訴你，我們正在做的過程的一部分是了解我們在哪裡部署營運資金。這並不是說我們不應該一直關注這一點，但當您支付 7% 的利息與 2.75% 的利息時，情況就完全不同了。因此，我們對全球的每個庫存項目都進行了嚴格的審視，並製定了目標，以將其從原來的水平大幅降低。

Particularly concerning our products that we may be storing that are lower-margin products. And I think all along, as we've acquired some of these distribution businesses, we've told them essentially we really are not focused on topline and all we're driving is bottom line. If you've got low-margin products, let somebody else sell them, focus on building higher margin volume products. We need to we're going to need to improve working capital and deployment across. We'll give a little more granular view and target specifically to each of the entities. And as we mentioned, we'll hold them accountable to get to those numbers.

特別是對於我們可能儲存的利潤較低的產品。我認為，一直以來，當我們收購了其中一些分銷業務時，我們基本上已經告訴他們​​，我們實際上並不專注於營收，我們所追求的只是獲利。如果您有低利潤產品，請讓其他人銷售它們，並專注於開發利潤率較高的產品。我們需要改善營運資金和部署。我們將針對每個實體提供更精細的視圖和目標。正如我們所提到的，我們將要求他們負責取得這些數字。

Sorry, just as a follow-up to that, and I don't know if this is there any part of the transformation plan that examines and looks at your product SKUs where there might be some that aren't, just simply aren't profitable and therefore might be candidates for rationalization? Or is the transformation plan really just focused more on operational measures?

抱歉，作為後續行動，我不知道轉型計劃中是否有任何部分檢查和查看您的產品 SKU，其中可能有一些沒有，只是沒有有利可圖，因此可能是合理化的候選人？或者說轉型計畫其實只是更注重營運措施？

We're focused on all aspects, including margin, justification of products that we would have in inventory. Again, our customers, a number of our customers kind of have gone to being stocking distributors to the billing side. And so as such, we've got to kind of reevaluate what we're going to do with our products. We're not a bank. We're not set up to be a bank, and we need to make sure that as we deploy capital, we're getting the best return on our capital that we can. So yes, we're examining all aspects.

我們專注於各個方面，包括利潤、庫存產品的合理性。再說一次，我們的客戶，我們的許多客戶已經開始向計費方庫存分銷商。因此，我們必須重新評估我們將如何處理我們的產品。我們不是銀行。我們的目的不是成為一家銀行，我們需要確保在部署資本時，我們能夠獲得最佳的資本回報。所以是的，我們正在檢查各個方面。

Okay. And then one other question. Sort of I perused Bayer Monsanto results, I think it was this morning. And it was interesting, the season trade business is up and healthy and positive pricing and hasn't been subjected to this downbeat sort of backdrop. And then obviously for them, some pretty pronounced pressures on let's say another crop chemistry. But they so curious, is there any sort of bifurcation in your portfolio along those lines where some of your products are more subject to those pressures than others? That's one question.

好的。然後還有一個問題。我仔細閱讀了拜耳孟山都的結果，我想是今天早上。有趣的是，季節貿易業務正在上升，定價健康且積極，並且沒有受到這種悲觀背景的影響。顯然，對他們來說，另一種作物化學物質面臨一些相當明顯的壓力。但他們很好奇，您的產品組合中是否存在任何類型的分歧，導致您的某些產品比其他產品更容易受到這些壓力？這是一個問題。

Then the second was, they also mentioned that, and this is pretty well understood I guess by the broader market, that given the corn to soy ratio, that there will be a shift in acreage most likely from corn to soy. Just wondering what the net implications of that, if any, on your portfolio in a normal year. Thank you.

第二個是，他們也提到了這一點，我想更廣泛的市場對此已經很好地理解了，考慮到玉米與大豆的比例，種植面積很可能會從玉米轉向大豆。只是想知道在正常年份這對您的投資組合有何淨影響（如果有的話）。謝謝。

Sure. As far as kind of general, there's not a product that has more generic pressure than glyphosate I believe globally. And that's not a product that we play in. They have geoplasm historic that's associated with that molecule. I think from a seed standpoint, that remains healthy, which tells you that demand is still there for planting and the crop inputs. But we do not have a great deal of exposure to the generic. We're not immune to it. Obviously, as I said, we're seeing Central America maybe is having more pressure than some of our other areas. But with regard to the second part of your question, I'm sorry, what was the second piece? I missed it.

當然。就總體而言，我認為全球範圍內沒有一種產品比草甘膦具有更大的整體壓力。這不是我們玩的產品。他們有與該分子相關的地質歷史。我認為從種子的角度來看，這仍然是健康的，這告訴你對種植和作物投入的需求仍然存在。但我們對仿製藥的了解並不多。我們也不能倖免。顯然，正如我所說，我們看到中美洲可能比其他一些地區面臨更大的壓力。但是關於你問題的第二部分，我很抱歉，第二部分是什麼？我錯過了。

Just on the acreage shift from corn to soy.

只是種植面積從玉米轉向大豆。

Yes. I mean we're effectively with our corn, we're effectively on those are high-pressure areas, which typically tend to be corn on corn. They don't shift like you would see in some of the areas where there are acres of maybe let's say in the South that corn, more corn/soybean shift or even in the cotton. We have a growing portfolio of products on soybeans, and we have our SIMPAS Applied Solutions products on soybeans as well.

是的。我的意思是，我們有效地利用了我們的玉米，我們有效地利用了那些高壓地區，這些地區通常是玉米對玉米。它們不會像你在某些地區看到的那樣變化，比如說在南方，玉米、更多的玉米/大豆甚至棉花都發生了變化。我們擁有越來越多的大豆產品組合，我們也擁有針對大豆的 SIMPAS 應用解決方案產品。

I think that was part of our strategy was to add to our portfolio for SIMPAS soybean products as well as cotton products and peanut products so that people using our SIMPAS system could produce it on multi crops. But yes, there's I mean going from 90 million acres of corn to 88 million acres of corn on the 2.5 million acres that we're involved in with our corn soil insecticide really doesn't have much of a play. And it's more ours is more based upon corn rootworm pressure. And one of the things we're happy about this year launching into a -- well, I think, are we getting off this year with our BioWake product?

我認為我們策略的一部分是增加 SIMPAS 大豆產品以及棉花產品和花生產品的產品組合，以便使用我們的 SIMPAS 系統的人們可以在多種作物上生產它。但是，是的，我的意思是，在我們使用玉米土壤殺蟲劑的 250 萬英畝土地上，從 9000 萬英畝玉米種植到 8800 萬英畝玉米種植，確實沒有太大作用。我們的更多的是基於玉米根蟲的壓力。今年我們很高興推出的一件事是——嗯，我想，我們今年會推出 BioWake 產品嗎？

Yes.

是的。

BioWake product that will also be for low corn rootworm pressure. And again, this is our first real commercial line. As you know, we did a trial launch last year and moved a fair amount of product in a very short window. But in addition to corn and soybean specific, we have peanut and cotton BioWake products and then our new product, which would be controlling in light rootworm pressure areas.

BioWake 產品也可用於降低玉米根蟲壓力。再說一遍，這是我們的第一個真正的商業產品線。如您所知，我們去年進行了一次試推出，並在很短的時間內推出了相當多的產品。但除了玉米和大豆之外，我們還有花生和棉花 BioWake 產品，然後是我們的新產品，它將在根蟲壓力較輕的地區進行控制。

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Eric Wintemute for closing comments.

謝謝。目前沒有其他問題。我想請埃里克溫特穆特 (Eric Wintemute) 發表結束評論。

Okay. Well, I hope this is the last quarter for some time to come where we do not meet expectations. It's been a time, and I appreciate pressure that is upon us and the performance of our company. But we believe we've taken a very nice corrective approach for, as we've headed into Q4 into the '24 season, and look forward to giving you an update report when we get together in January. With that, thank you very much for attending. Bye-bye.

好的。好吧，我希望這是未來一段時間內我們未達到預期的最後一個季度。已經有一段時間了，我很感激我們所承受的壓力以及我們公司的表現。但我們相信我們已經採取了非常好的糾正方法，因為我們已經進入 24 賽季的第四季度，並期待在我們一月份聚會時向您提供更新報告。在此，非常感謝您的出席。再見。

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。