American Vanguard
Annual Shareholder Meeting
“Come Grow With Us”
June 6, 2008
Any forward-looking aspects of this presentation, should be considered in light of potential risks and uncertainties that can cause actual results to differ from assertions about the future that may be referenced here. Such risks and uncertainties are fully described in the Company’s filings with the SEC, and should be considered by investors before making equity ownership decisions.
Rational for Investing in American Vanguard
► Healthy, demand-driven global agricultural
market.
► Efficient, world-class facilities give us a distinct
competitive advantage.
► Positioned to serve numerous high-value markets. ► Equipped to serve surging U.S. corn sector. ► Increased international market presence.
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Healthy, demand driven, global market
Industry Overview
► Major Demand Drivers
Food, Feed, Fiber, Fuel create tight global supply/demand balance, leading to higher commodity crop prices
► Technology Trends
Have been dominated by genetic modification of seeds & plants to tolerate specific herbicides & mitigate insect infestation. Additional genetic advances seek to provide more comprehensive insect defenses, address plant nutrient and moisture requirements and improve output traits.
► Opportunities
History suggests and recent experience demonstrates that significant gaps in GMO performance exist and that certain synthetic chemicals applied in a safe, efficient and economical manner can effectively provide solutions that mitigate resistance development and contribute to enhanced productivity. 5
Industry Overview – Ag Sector
► Increasing world population
over 6 billion today; 8 billion by 2030 ► Emerging nation consumers migrate toward protein-rich meats each lb of meat requires 10 lbs of grain input improved diets extend life expectancy ► World Bank expects global food demand to double in the next 20 years
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Industry Overview – Biofuel Sector
► 2007 US Energy Bill mandates 36B gallons of renewable fuels by 2022 ► European Union want biofuels to account for 10%
of its 2020 fuel requirements ► International Energy Agency predicts 50% increase in global energy needs by 2030 ► Today 30% of US corn crop used for ethanol production ► Even if ethanol zeal diminishes, global nutritional demand for corn will steadily increase
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Market Performance 2007
(Distributor level – average exchange rates - Nominal US$)
Year Crop Protection ($m) 28995 28090 27830 25760 25150 26710 30725 31190 30425 33390 +9.7 Non-Crop Agrochemicals ($m) GMO Seed ($m) 1653 2172 2434 2839 3314 3940 4700 5296 6050 7275 +20.2 Conventional Seed ($m) 14324 13799 13365 12890 13290 14300 14456 14290 14435 +1.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2007/2006 %
4270 4445 4675 4905 5150 5365 +4.2
Agrochemicals = $38,755 +8.9%
Source Phillips McDougall
Seed = $21,710 +6.7%
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Crop Protection Market 2007
NAFTA Increase in soybean area Increase in wheat and sunflower areas Reduced cotton and maize area Increase in GM area and number of GM traits Glyphosate price improvement Strengthening Farm Economy US Dollar remains weak Energy and fertiliser costs Registration review US Farm Act GLOBAL Increased crop prices Higher fuel and fertiliser costs Higher prices of Chinese agrochemicals Doha Round of WTO Europe Zero set aside Increase in cereal and rapeseed acreages Reduction in sugarbeet area Mild wet winter and spring in North Adoption of Single Farm Payment Shift in Market to new EU member states Re-registration
Asia Reduction in rice area in Japan Increase GM uptake in China and India Improved weather situation in Australia Increased investment in grains in China Biodiesel drives palm oil demand
Latin America Increased GM uptake in Region Higher maize areas in Argentina and Brazil Higher soybean areas in Argentina and Brazil Growth in Developing countries Increase in use of sugarcane for bioethanol Energy and fertiliser costs Higher agrochemical prices in Brazil
Africa / Middle East Continued economic and Political problems Infrastructure requirements Development of specialty crop markets for export Cotton prices improving Developing public health market Increase in maize and sunflower in South Africa
Growth Markets
Static to Slow Growth
Static to Decline 9
Source Phillips McDougall
Indicative Global Trade Commodity
$/Ton 500 450 400 350 300 250 200 150 100 50 1998
$/Ton 1350 1150 950 750 550 Rapeseed 350 Soybean 150 J FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ JASONDJFMAMJ JASONDJ FM 2005 2006 2007 2008 2004
1998-2008 Prices
Soybean
Annual Average
Rice
Wheat
Maize Cotton ($/100kg)
1999
2000
2001
2002
2003
2004
$/Ton 550
2005
2006
2007
2008
Monthly Average Monthly Average
500
Palm Oil
450 400 350 300 250 200 150 100 50
Monthly Average
Rice
Maize Wheat Cotton cents/kg JASONDJFMAMJ JASONDJFM AMJ JASONDJFMAMJJASONDJFMAMJ JASONDJFM 2006 2003 2004 2005 2007
Source Phillips McDougall
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Market Forecast 2007 to 2012
% p.a. Latin America NAFTA Europe Asia MEA World
Herbicides 5.0 0.9 1.9 3.8 3.7 2.6
Insecticides 5.1 1.0 0.7 2.3 2.8 2.4
Fungicides 4.3 4.2 1.7 2.1 4.2 2.6
Others 6.6 0.3 0.8 1.6 2.9 1.8
Total CCP 4.9 1.3 1.6 2.8 3.3 2.5
AgBio 11.5 3.6 11.4 10.5 27.5 6.0
TOTAL 6.1 2.3 1.6 3.4 4.6 3.2
Source Phillips McDougall
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Well positioned world-class facilities
Factors Driving Manufacturing to India/China Key Advantages
► Labor
Little advantage due to automation
► Cost of Construction
Assume plants with minimal investment
► Environmental Regulations
Advantage not sustainable
► Raw Materials
Swinging to favor U.S.
Phosphorus Sulfer Potassium
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Manufacturing – Los Angeles, CA
► Efficient manufacturing
Peer companies of similar size only formulate Allows for cost and quality control and improves reliability
L.A. facility produces approximately 80 million lbs. of active ingredient per year
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Manufacturing – Axis, AL
► Increased capabilities and effectiveness
Allows for more complex manufacturing opportunities Location lends geographic diversity Shared services for the common operational requirements of units reduces expenses 25 acres on a 510 acre complex (one of three units)
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Manufacturing – Hannibal, MO
► Organophosphate Production
Counter / Thimet
► Strategic Location
80% of U.S. corn market within 500 mile radius Excellent barge, rail and truck transportation
photo use courtesy of BASF®
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Manufacturing – Marsing, ID
► Increased Formulation Capabilities
Flowable products Seed treatment segment
► Seamless Transfer of Operations
Multi-year supply agreement with Bayer CropScience
► Logistical Advantages
Positioned to meet demands of Northwestern US and Western Canada
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Chinese Agrochemical Production
► Increasing Industry Regulation
Environmental concerns Focus on manufacturing into 4 zones Impossible for smaller companies to relocate No planning consent until Olympics over
► Reduction in tax rebate on exports ► Rising raw material costs
Oil price Energy crisis Hard winter affecting coal production and transport
► Shortage of phosphorus affecting glyphosate and
organophosphates ► Greater price awareness
Source Phillips McDougall
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Cost Recovery Management
FREIGHT R A W E N and G YA L S M AE R R I TE It’s quite a ride WAREHOUSE
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Serve numerous high-valued markets
Opportunities for Growth
► Manufacturing ► Consolidation ► Product Development ► Advertisement/Promotion ► Label Expansion ► Product Combination ► Regulatory Defense ► Innovative Technology
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Acquisition Growth - Revitalizing Mature Products
Metam
15x Increase
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1991 Market Conditions: • Market cluttered with 4 other competitors Key to Growth: • Acquired market leader’s (Zeneca-Vapam) position in 1996 and market rights of #3 competitor in 1997 • Large product development and regulatory efforts and the hiring of strong, knowledgeable sales force have both expanded market and lead to a 60% market share position
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Innovative Improvements
SmartDrop™ Chemigation
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Acquisition Growth - Revitalizing Mature Products
Dacthal® 6x Increase
1999
2000
2001
2002
2003
2004
2005
2006
2007
1999 Market Conditions: • Product sales discontinued in 1998; alternatives were well established by 2000 Key to Growth: • Strong product development and advertising efforts have rebuilt a non-existent market in light of 40% price increase
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Acquisition Growth - Revitalizing Mature
Products
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► Great Brand Name ► Product Strength ► Wide Market
Specialty Cotton Soybean Tobacco Fruit & Vegetable
Strengthening Existing Product Line
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Strengthening Existing Product Line
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Strong Regulatory Defense
Pest Control Technology March 2008
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Strong Regulatory Defense
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Equipped to serve the surging U.S. corn sector
Participant in Surging Corn Market
AMVAC responds to genetics driving corn market ► 2 major initiatives
Resistance Management “Refuge Acres” Yield Enhancement
► IMPACT
Glyphosate Partner
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Monsanto endorsement “Respect the Refuge”
Cooperative effort with key industry players
Yield Enhancement
Major university field studies demonstrate significant yield boost using dual technology approach
Current Granular Products in SmartBox
Chlorethoxyfos (AMVAC) Tebupirimphos plus cyfluthrin (Bayer) Tefluthrin (Syngenta) Phorate (AMVAC) Terbufos (AMVAC) Chlorpyrifos (Dow)
Farmers current cost/acre, at full rate, ranges from $12 to $18
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SmartBox Low Rate Application
Only granular application tool that can accurately apply low rates and can easily be turned on/off from tractor cab.
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IMPACT for Tough-to-Control Weeds
Roundup® Ready Corn Glyphosate resistant weeds and grasses
IMPACT Glyphosate Partner
Glyphosate 0.75 lb ae/A + NIS 0.5% v/v + AMS 8.5 lb/100 gal
Impact 0.5 fl oz/a + glyphosate 0.75 lb ae/A + NIS 0.5% v/v + AMS 8.5 lb/100 gal
Increased international market presence
International Expansion Potential
► Substantial Gains
2005 2006 2007 $13.9 Million $17.2 Million $32.9 Million 7.3% of sales 8.9% of sales 15.2% of sales
► Drivers
2006 Acquisitions Latin American Initiatives
► Crops
Vegetables Non Crop Potatoes Corn Bananas Wheat Coffee
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Realized Growth
ty ial c pe S & le uit etab Fr
g Ve s
n tto Co
n or C
s oe at ot P
79%
Insecticides
-9%
Fungicides
29%
Growth Regulators
440%
Herbicides
21%
Soil Fumigants 2003-2007 % of growth
07 20 wth 03 gro 20 of %
30%
53%
108%
107%
33%
New Initiatives
► Implement a new 5 year strategy in 2008 ► Focus on organic growth of existing products ► Expand acquisition activity to include companies
in addition to products
► Bring development compounds to market ► Focus on financial metrics
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Come Grow With Us
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