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Microsoft PowerPoint - Copy of Shareholder 2007 Presentation.ppt by tamir13

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									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.




                                                          3
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



                                                     6
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

                                                    7
Market Performance 2007
       (Distributor level – average exchange rates - Nominal US$)
Year                  Crop           Non-Crop      GMO       Conventional
                    Protection     Agrochemicals   Seed         Seed
                       ($m)            ($m)         ($m)        ($m)
1998                   28995                       1653         14324
1999                   28090                       2172
2000                   27830                       2434         13799
2001                   25760                       2839         13365
2002                   25150           4270        3314         12890
2003                   26710           4445        3940         13290
2004                   30725           4675        4700         14300
2005                   31190           4905        5296         14456
2006                   30425           5150        6050         14290
2007                   33390           5365        7275         14435
2007/2006 %                 +9.7       +4.2        +20.2         +1.0



              Agrochemicals = $38,755 +8.9%          Seed = $21,710 +6.7%

                                                                            8
Source Phillips McDougall
   Crop Protection Market 2007
 NAFTA
 Increase in soybean area
                                               GLOBAL                                     Europe
 Increase in wheat and sunflower areas
                                               Increased crop prices                      Zero set aside
 Reduced cotton and maize area
                                               Higher fuel and fertiliser costs           Increase in cereal and rapeseed acreages
 Increase in GM area and number of GM traits
                                               Higher prices of Chinese agrochemicals     Reduction in sugarbeet area
 Glyphosate price improvement
                                               Doha Round of WTO                          Mild wet winter and spring in North
 Strengthening Farm Economy
                                                                                          Adoption of Single Farm Payment
 US Dollar remains weak
                                                                                          Shift in Market to new EU member states
 Energy and fertiliser costs
                                                                                          Re-registration
 Registration review
 US Farm Act




                                                                                                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          Africa / Middle East
Higher soybean areas in Argentina and Brazil        Continued economic and Political problems
Growth in Developing countries                      Infrastructure requirements
Increase in use of sugarcane for bioethanol         Development of specialty crop markets for export
Energy and fertiliser costs                         Cotton prices improving
Higher agrochemical prices in Brazil                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                             1998-2008 Prices
                     500

                    450                                                                          Soybean
                                                          Annual Average
                    400
                    350

                    300

                    250
                                                                          Rice
                    200                                                                                       Maize
                                                                                        Wheat
                    150
                                                                                                            Cotton
                    100
                                                                                                          ($/100kg)
                      50
                            1998   1999   2000    2001    2002       2003     2004     2005   2006    2007   2008
 $/Ton                                                                         $/Ton
1350                                                                          550
                                                                              500
1150
               Monthly Average
                    Monthly Average                      Palm Oil                                    Monthly Average                        Rice
                                                                              450
                                                                              400
 950
                                                                              350

 750                                                                          300
                                                                              250                                                            Maize
 550
                                                                              200
                                                  Rapeseed                                                   Wheat
                                                                              150
 350
                                                                    Soybean   100                                                 Cotton cents/kg
 150                                                                           50
         J FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ JASONDJFMAMJ JASONDJ FM               JASONDJFMAMJ JASONDJFMAMJ JASONDJFMAMJJASONDJFMAMJ JASONDJFM
         2004            2005            2006        2007         2008              2003  2004           2005         2006          2007


                                                                                                                                              10
       Source Phillips McDougall
 Market Forecast 2007 to 2012


% p.a.          Herbicides      Insecticides   Fungicides   Others   Total CCP   AgBio   TOTAL
Latin America      5.0               5.1           4.3        6.6       4.9      11.5      6.1
NAFTA              0.9               1.0           4.2        0.3       1.3       3.6      2.3
Europe             1.9               0.7           1.7        0.8       1.6      11.4      1.6
Asia               3.8               2.3           2.1        1.6       2.8      10.5      3.4
MEA                3.7               2.8           4.2        2.9       3.3      27.5      4.6
World              2.6               2.4           2.6        1.8       2.5       6.0      3.2




                                                                                            11
    Source Phillips McDougall
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                            13
 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


                                                                 14
 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)




                                                           15
 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®
                                                                          16
  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




                                         17
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
                                                        18
Source Phillips McDougall
Cost Recovery Management



        FREIGHT
         M AE R R I
               TE
 R A W E N and G YA L S
 It’s quite a ride
     WAREHOUSE


                           19
Serve numerous high-valued markets
Opportunities for Growth
► Manufacturing
► Consolidation
► Product Development
► Advertisement/Promotion
► Label Expansion
► Product Combination
► Regulatory Defense
► Innovative Technology

                            21
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%
                                                                                       22
  market share position
Innovative Improvements
           SmartDrop™ Chemigation




                                    23
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
                                                                             24
Acquisition Growth - Revitalizing Mature
Products




                                           25
► Great Brand Name
► Product Strength
► Wide Market
    Specialty
    Cotton
    Soybean
    Tobacco
    Fruit & Vegetable
Strengthening Existing Product Line




                                  27
Strengthening Existing Product Line




                                  28
Strong Regulatory Defense




                                      29
 Pest Control Technology March 2008
Strong Regulatory Defense




                            30
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




                                            32
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


                                                                35
SmartBox Low Rate Application
Only granular application tool that can accurately
apply low rates and can easily be turned on/off
from tractor cab.




                                                     36
  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     $13.9 Million      7.3% of sales
     2006     $17.2 Million      8.9% of sales
     2007     $32.9 Million     15.2% of sales
► Drivers
       2006 Acquisitions
       Latin American Initiatives
► Crops
       Vegetables
       Non Crop
       Potatoes
       Corn
       Bananas
       Wheat
       Coffee
                                                 40
                     Realized Growth
                          ty          & le s        n                        s
                      ial          uit etab      tto                      oe
                    c            Fr            Co            or
                                                               n        at
                  pe                   g                   C         Pot
                 S                   Ve
                                                                                 79%
Insecticides


                                                                                 -9%
Fungicides

                                                                                 29%
 Growth
Regulators

                                                                                 440%
Herbicides

                                                                                 21%
  Soil                                                                              07
Fumigants                                                                       - 20 wth
                                                                              03 gro
                                                                            20 of
2003-2007                                                                     %
% of growth    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




                                                 42
Come Grow With Us




                    43

								
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