American Vanguard (NYSE:AVD) lowered its 2026 revenue and earnings outlook after a third quarter marked by weaker international demand and higher transportation costs, though management expects sales and adjusted EBITDA to rise in the fourth quarter.
The agricultural products company reported third-quarter sales of $108 million, down 9% from $119 million a year earlier. Adjusted EBITDA was approximately break-even, a decline of $8.3 million from the prior-year quarter.
CEO Dak Kaye said difficult agricultural market conditions have kept distributors and retailers buying as needed and maintaining lean inventories. Adverse weather associated with El Niño has particularly affected the company’s international business, he said.
Lower Full-Year Forecast, Higher Fourth-Quarter Expectations
American Vanguard now expects 2026 revenue of $500 million to $530 million, down from its prior range of $530 million to $550 million. It reduced its adjusted EBITDA forecast to $36 million to $40 million from $44 million to $48 million.
Kaye attributed the reduction primarily to weaker-than-expected international results and the company’s inability to raise prices quickly enough to offset higher fuel and raw material costs.
For the fourth quarter, management projected net sales of approximately $166 million, up 10% from a year earlier, and adjusted EBITDA of $21 million, up roughly 25%. Kaye said the forecast assumes higher volumes and a better sales mix, improved manufacturing cost absorption and savings from the closure of the company’s Los Angeles plant.
The comparison includes more than $11 million in upfront royalty income that benefited both sales and adjusted EBITDA in the fourth quarter of 2025. Kaye also cautioned that the company still has substantial work to do to achieve its fourth-quarter expectations.
“I cannot say that it is all baked in,” Kaye said in response to an analyst’s question about the outlook. “It is just not the way the business runs, the industry runs, especially here in the U.S.”
International Sales and Margins Under Pressure
International sales fell 17% in the third quarter and 14% for the first nine months, CFO Matt Horwath said. He attributed the declines primarily to poor weather in Latin America related to El Niño. Higher soil fumigant sales and growth in Ecuador partially offset the weakness.
Kaye said drought on Central America’s Pacific side and excessive rain on its Atlantic side hurt business, while low crop prices and competition from generic products pressured sales and margins in Mexico. In Brazil, political uncertainty, higher copper prices and delayed purchasing decisions contributed to weaker-than-expected sales, he said.
U.S. crop and specialty sales each declined 2% in the quarter. For the first nine months, U.S. crop sales rose 3% and specialty sales increased 6%. Companywide sales for the nine-month period fell 4% to $349 million.
Third-quarter gross margin narrowed to 24.2% from 28.7% a year earlier. Horwath said manufacturing performance improved, but the benefit was more than offset by freight costs, higher raw material costs and lower fixed-cost leverage. Increased freight costs reduced gross margin by approximately 250 basis points, he said.
Cost Savings and New Products
American Vanguard has completed the closure of its Los Angeles manufacturing operation and shifted synthesis production to its Axis, Alabama, facility. Kaye said the move is expected to save at least $4 million annually, with the third quarter marking the first full quarter of savings. A headquarters relocation to Irvine is expected to save approximately $500,000 a year.
While the manufacturing savings were achieved at the operational level, Kaye said rising transportation costs more than offset them. The company is implementing price increases where possible to address higher fuel costs, he said.
At the end of the quarter, American Vanguard acquired four U.S. brands and registrations from Syngenta and entered a distribution agreement with Sipcam Agro. Management expects the additions together to contribute $15 million to $20 million in annualized revenue over the next 12 months.
Kaye said the Syngenta acquisition cost $9.5 million, including $5 million paid upfront and $4.5 million due in another year. The company also plans to launch Duro LQ, a liquid corn insecticide, in the U.S. during the fourth quarter. Its longer-term goal remains 50 new product launches generating $100 million in annualized revenue by 2030.
Cash and Debt
American Vanguard ended the quarter with $84 million in cash, up $40 million from the prior quarter, driven by customer prepayments. Kaye said prepayments rose 44% from the year-earlier quarter.
Total debt was $267.7 million and net debt was approximately $183.8 million. Horwath said the company’s gross leverage ratio for its first-lien term loan covenant was 6.5 times, compared with a maximum of 6.7 times. Management expects leverage to decline by year-end based on its fourth-quarter guidance and anticipated cash generation.
Kaye reiterated the company’s goal of reaching an annualized sales run rate above $600 million by the second half of 2028, while prioritizing a move to a double-digit EBITDA margin as soon as possible.
About American Vanguard (NYSE:AVD)
American Vanguard Corporation, doing business primarily through its AMVAC subsidiary, develops, manufactures and markets specialty agricultural products. The company’s portfolio includes crop protection products such as insecticides, herbicides, fungicides, nematicides and soil fumigants designed to help growers manage pests, weeds and plant diseases.
In addition to crop protection, American Vanguard serves the professional and consumer markets for turf and ornamental care, golf course management, pest control and public health.
