American Vanguard Corporation (AVD) Q1 2016 Earnings Report, Transcript and Summary

Greetings and welcome to the American Vanguard Corporation First Quarter 2016 Conference. At this time, all participants are in a listen-only mode. A question-and-answer session will follow our formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser. Director, Investor Relations for American Vanguard Corporation. Please go ahead, sir.

Well, thank you very much Kevin. And welcome everyone to American Vanguard's first quarter 2016 earnings review. Our speakers today will be Mr. Eric Wintemute, the Chairman and CEO of American Vanguard; and Mr. David Johnson, the Company’s Chief Financial Officer. And assisting in responding to your question Mr. Robert Trogele, our Chief Operating officer. 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 can include weather conditions, changes in regulatory policy, competitive pressures and various other risks that are detailed in the Company’s SEC reports and filings. All forward-looking statements represent the Company’s best judgment as of the date of this call and such information will not necessarily be updated by the Company. With that said, we turn the call over to Eric.

Thank you, Bill. And thank you all for joining us this afternoon. We appreciate your interest in and support for American Vanguard. I am pleased to report our improved performance in the first quarter of 2016 despite the difficult market conditions that we and many of our Ag industry peers have experienced. As our earnings release illustrates we have increased year-over-year first quarter revenues by 4%. And as David will highlight we significantly improved our profitability through streamline manufacturing costs, increased factory utilization and reduced operating expenses. In today's comments by providing an overview of our sales performance. Next, David will describe how we achieved improved earnings results and the strengthening of our balance sheet. Finally, I will discuss several key initiatives that we believe will enhance our future growth and profitability. In the first quarter we benefited from our participation in many crops across several global regions. Our corn soil insecticides or CSI sales during the quarter were on balance flat year-over-year. As a result I would characterize our CSI business as stable relative to the 2015 planting season. In the Midwest corn market, inventory levels and the distribution channel have declined to a level that should support more normal procurement pattern. At the end of April, we calculate that channel inventories for our CSI have dropped to about 21% of the 2013 and the seasonal level for these products. In our herbicides category demand for our post-emergent corn herbicide Impact remain strong. The two herbicides high bar and co bar that required from DuPont last April have helped extend our international business. In the licensing Sceptor from BASF late last year has allowed us to enter US soybean market. And as mentioned in earnings release we recorded an improved first quarter sales for our full year insecticide Dibrom driven by this year's rise in US cotton acreage. During the balance of this year, we expect our performance to be driven by continuing demand for our corn herbicide Impact, sales of our Thimet insecticide in potatoes, peanuts and sugarcane. Post harvest application of our industry leading soil fumigants, and the continued expansion of our international business which accounted for 28% of our total revenues in the first quarter. We should also benefit from stronger fruit and vegetable sales resulting from the improvement in Western US drought conditions and Dibrom mosquito adulticide sales which should get additional traction in light of the recent public health concerns over the Zika virus and other potential mosquito borne diseases. With that I'll turn this call over to David. David?

Thank you, Eric. As a general observation for the first quarter of 2016 we have continued to exercise the same financial discipline that was at the core of the company's performance last year. And in addition, this quarter we have succeeded in increasing our sales in comparison to the same period of last year. As a result of increased sales, improved manufacturing performance, reduced operating expenses and lower interest charges, we've achieved a better gross margin and recorded a significantly improved bottom line performance. On the balance sheet, we said that inventories would increase in the first quarter and then did very close to our forecast. We are extremely pleased with our improved debt-to-cash position which provides us with much greater liquidity than this time last year. From my perspective, the financial issues are paramount importance to investors remained consistent with the last several quarters. First factory performance. During 2015, we put in place a more comprehensive sales inventory and operations planning process to improve the coordination of manufacturing operations with inventory and sales demand. By closely balancing the right dynamics we were able to improve manufacturing efficiencies thereby reducing the net cost of the factory from 9% of sales in the first quarter of 2015 to 6% of sales in this quarter. That resulted in $1.5 million improvements in gross profit. Our focus in 2016 is to continue to reduce under absorption. And this first quarter performance gets off to a great start. Second, during the first quarter of 2016 we've continued to exercise tight control over our operating expenses. In previous calls we've indicated that our overall expectation for this year is for this cost to increase in comparison to 2015. Whereas in fact our first quarter cost was 6% below last year. There are several drivers for this first quarter result. We have focused on our advertising spending and are concentrating on driving the best possible value for those dollars, resulting in low spending in Q1 as compared to last year. Secondly, some product development projects have started off a bit slower than in 2016. This is resulted in lower cost in this first quarter. Finally, our reduced freight and warehousing expenses reflect the particular mix of sales this quarter that were done in 2015 to lower inventories and projects completed last year to reshape our domestic logistics activity. Third, operationally our weekly tracking of inventories of all products in the Midwest distribution channel is showing us that our products are continuing to move from distribution to retailer and then on to growers. We have regularly updated investors in our quarterly calls on the status of these channel inventories which was determine to be higher than normal at the end of the 2012-13 growing season. The company has had a target to see the level of our granular products drop to 25% of the level recorded at the end of September 2013. And as of mid April we are pleased to be able to report that this has been accomplished. With regard to our inhouse inventory, we remain on track to get to $125 million by the end of 2016. Excluding of course any acquisitions. Fourth, with respect to margin performance and profitability. In the first quarter we've reported overall gross margins of 40% as compared to 37% this time last year. This improved performance is driven by the specific mix of sales in the quarter and by the reduced net factory cost I detailed a few moments ago. Together with the improved gross profit performance, the control of operating expenses and lower interest expense, our net income for the first quarter was $2.8 million, or $0.10 a share as compared to a breakeven performance last year. Fifth, the borrowing capacity under our credit line expanded to $65 million at the end of Q1, 2016 which is much improved in comparison to the $23 million we had available this time last year. This is a specially noteworthy when you consider that the intervening 12 months, we have spent approximately $46 million on fixed asset addition, product line acquisitions and other investments. From a capital spending perspective, our strategy is to keep spending at levels below depreciation while continuing to invest in developing the capabilities and capacity of our manufacturing facilities. We achieved that goal in 2015 and have started strongly in this first quarter of 2016. Lastly on interest impacts. We've maintained strong control on our cash and debt positions during this first quarter. And achieved lower interest cost as a result. Our effective tax rate for Q1, 2016 is approximately 26% as compared to a tax benefit we reported this time last year. At a summary level in comparison to this time last year we improved our domestic profitability. And at the same time maintained a profitable international business. With that I'll hand back to Eric.

Thank you, David. Now let's turn to several key initiatives that we are pursuing. American Vanguard has grown substantially over the last 25 years by acquiring or licensing established niche products, equipment systems and manufacturing facilities. Today we continue that pursuit. In 2015, we acquired two products from DuPont, one from Adama and licensed one for BASF while still improving our cash position and borrowing capacity. In 2016, we are reviewing several additional possibilities and with the debt-to-equity ratio of under 0.25 we are on a strong position to acquire or license such products going forward. Additionally, we have invested in several paths for new product development with our ownership position in the natural oil, technology of Envance and more recently our equity position in the European Research and Commercial Development firm Bi Pa. Over the course of the next several years, we are looking forward to commercializing throughout the Americas both in existing Biba fungicides for fruits and vegetable crops as well as other biological products from their pipeline. We also anticipate potential technology benefits from our relationships with other key international partners. We've been building our global presence significantly over the last five years starting with doubling of our international sales in 2011 following the acquisition of Mocap and Nemacur in insecticides from Bayer Crop Science. In 2012, we established a wholly owned subsidiary in the Netherlands to exclusively manage our non US business. And staff this operating unit with highly experienced personnel. Over the last year, several key executives have jointed American Vanguard, each of whom has extensive global credentials. AMVAC CEO [Obancha Gill] is pursuing several market access and technology initiatives which will expand our world by present. Our new Head of Global Marketing and Commercial Development, Peter Ehlers and our new director of business development, Martin Peterson is also contributing to these efforts. And just this past week we announced the establishment of an operating unit in Asia Pacific region based in Singapore managed by another prominent new hire Lawrence Yu. Lawrence will spearhead a number of collaborative partnerships that we've exploring in Asia which will allow us to participate and enhancing agriculture productivity in this growing region. Next, I'd like to comment on the development of our precision Ag equivalent technology. Over the last year we've spoken about our initiative to transform and broaden the existing smart box granular insecticides delivery system into a more comprehensive multi product, yield enhancing, at planting time, treatment system. This system is capable of dispensing the precise amount of crop protection or plant nutrient to optimize crop yield. It will be the technology that enables an agronomous prescription to be applied to a particular field in a single pass. Much as an inkjet printer paints an intended image on paper, Simpass will paint the field with just the right dosage of inputs to maximize yield and profitability for the grower. I can tell you we are making significant progress and a plan on providing greater detail at our annual shareholders conference call scheduled for June 8. Finally, let me address our mosquito control business. Recently there has been considerable concern about the rapid global spread of the Zika virus and various mosquito control method to limit this disease. There are many approaches used for mosquito control including larvicide, , ground level chemical fogging and aerial applications of adulticide for comprehensive wide area coverage. AMVAC is an exclusive producer of Dibrom, the most effective product for such aerial applications. Since Dibrom has been used more selectively than other products, the potential for developing mosquito resistance to Dibrom remains low. Dibrom is relatively odorless and highly effective and is the preferred choice among aerial applicators. In light of the Zika virus threat and many other mosquito borne diseases such as West Nile and Dengue fever, we expect our Dibrom product will experience increase in the future. We also exploring the expansion of our mosquito control product line with additional larvicide, biological and natural oil chemical combinations. Going forward, we will borrow from --word from us last year. Control operating expenses, inventory and manufacturing costs through financial discipline. Acquire license accretive products for managing cash and optimizing borrower capacity. And continuing to invest in precision Ag technology, international expansion and top managerial talent. We believe that these are the elements of our future success. And with that we'll be happy to entertain any questions you have. Kevin?

[Operator Instructions] Our first question today is coming from Jim Sean from SunTrust Robinson Humphrey. Please proceed with your question.

Hi, this is Mathew Stephenson on for Jim. Want to ask about quantification of the upside potential from Zika. My understanding is if you don't have the registrations in Latin America for public health spraying and there maybe some issue using Dibrom for the Aedes aegypti mosquito down there. So is your projection entirely or you saying projected increased Dibrom sales, is that entirely US?

That's right.

And do you have any sort of feel for the magnitude of that increase?

It's going to range it is not huge amount but maybe some $500,000 to maybe $2.5 million over this next year or this year.

Got it. That's really helpful. And then in the corn market when you say the corn market remain stable, is it the underlying demand remain stable or is that influenced by the -- as you mentioned the draw down in distributor inventories.

As of right now the retail sales of our corn soil insecticide are equal to where we round up in 2015. So over -- the season isn't over yet. So we know there will be additional retail sales that will occur and there also be returns at the end of the season. So at this point we say if the additional sales equal the returns then we would wind up being flat as far as usage 2015 season. And we'll have better color on that June 8 but probably have a more firm number for our conference call that would be after second quarter first of August. But I think overall we are pleased with the way the season is developing.

Thank you. Our next question today is coming from Brent Rystrom from Feltl. Please proceed with your question.

Hi. Thank you. Just a couple quick ones. Do you guys have a sense of what tax rate you are thinking for the year?

The way we calculate tax rate is based on estimate for the year. So we would be expecting somewhere in the region of the current rate. I mean it will go up if the US business does a little better than I am expecting during the year. And so on so forth versus the international. So that's how we calculate. That's how we present the tax rate based on our prediction for the year.

But I guess to answer his question 26 what we got forecasted this month.

Thank you. I was curious you guys have any comments on the pace technology that's been mixed into BT?

What technology?

The pace technology that's going to mix of the toxicology of BT. and just continuous have evolution. Basically it's going to increase the lethal capabilities, and this sudden which is came up at Harvard and Monsanto last week. Have you guys seen that?

I haven't. You are not talking about -- you are talking about an enhancer to the current price.

Yes. It is going to bypass the receptor related resistance.

Have not seen that.

Great. I am assuming if such product was available you would still see a natural migration in probably your type of corn soil insecticide simply to avoid future resistance from developing, would that be a reasonable expectation?

Yes. Our position is that with or without the trades we are going to deliver an economic return for the grower by utilizing and when trades have no resistant we still saw benefits in the 8 to 20 bottles per acre so our position is that chemicals with the trait are the best bet.

Good. And could you repeat that benefit how many bottles per acre?

8 to 20 depending on the pressure on the field.

All right. And I am curious one of the distributors and retailers I am still talking to are telling me that with the drier spring we are having here in the corn belt that the application season doing a lot better for pretty much everything and then specifically they are seeing -- the farmer in that muddying your product and like they had to the last three years. And I have an assumption that the last three years as farmers were forced to quit the product and then left the ideal conditions that probably compounded some of the returns that you face with the end of the season, sort of the channel phase. Are you hearing similar things that the application season going better than last few years as far as getting product in the ground and do you think that might imply less returns?

Brent, hi. Brent, this is Bob Trogele. I would say that it's too early to make a call on that. We will give you an update in August when we pass the season. As you know on May 1 only 40% of the corn has been planted. So it's hard to gauge that at this moment.

Thank you. Our next question today is coming from Chris Kapsch from BB&T Capital Markets. Please proceed with your question.

Yes. Good afternoon. Just had a question on the gross margin percentage and just wondering if you could talk a little --elaborate a little bit more on how are you seeing that metric for the balance of this year. And specifically how so you have a little bit more international sales how that's affecting mix, also how the factory utilization might have affected mix during the first quarter and how that plays out. And also I guess if given still the pressures for grower, is there any -- for your product do you have a little bit sort of less competition for your niche products but are you seeing any discounting that could be consider as affecting your gross margins. So if you could just talk about some nuisances there with the effect on gross margins. Thanks.

Okay. I'll make a couple comments and then maybe David if you got to follow up on. I think there were -- there certainly were number of programs in the fourth quarter and through previous quarters from competition to try to make numbers. We've been essentially very disciplined through 2014, 2015 and we continue in 2016. And we feel throughout our system that inventories are where they need to be short of 140 that we've got in inventory, we like to see that lower. But as far as our customers and I think they appreciated that and from margin again Dave will comment a portion of that certainly we will be improve factory performance. Going forward we are tracking well with decrease in raw material cost which will start playing a bigger role as we move through the year. And overall yes we did not increase prices on our corn soil insecticide but we took kind of similar normal price increases in other markets selectively where we could. So with that David what thought you might have for balance of this year.

Yes. I think we have the strong manufacturing quarter in the first quarter but overall the year we are not expecting not necessarily to be the same improvement every quarter. We are expecting to be a little better this year than we were last year which would give us a small improvement in our gross margin along with the raw material price reduction that you mentioned. I'd think similarly in the band between high 30s and 40 would be where we would expect to trend I think hope for the rest of the year.

Just a follow up on that David so that the strong factory performance I think in the fourth quarter you given the draw down in inventories and maybe there is concerted effort again to throttle back but so in the first quarter what was the sort of the utilization rate and based on your visibility with your order books are you suggesting that you might tamper the rate moving forward versus it was in the first quarter?

Yes. We had a strong first quarter and I mentioned in my prepared remarks that whereas last year's expected cost is 9% of sales, this year it was only 6% of sales. So we made a material difference in the gross margin because of that factory performance. And it isn't going to be the same every quarter. You are quite right the full quarter will likely be a fairly low manufacturing quarter. We manage our inventories towards the end of the year. But we have a quite long, long way for making that final decision at this point in time.

And I'll say that we made the decision recently to increase the granular manufacturing capacity. It's actually kind of double where we have been. That looks to continue through November at this point. So we are feeling good about the improvements in factory utilization on a go forward basis.

Eric, sorry could you just elaborate on that. Did you say that you have I guess expanded or did you biomark your capacity for SAI for granular soil?

Yes. For granular soil insecticide we are essentially brought on another shift which I think makes three but I think we are planning on running seven days a week, 12 hours a day right now through November and then we will see when we get to November where we are at that point.

I mean just want to understand the rationale behind that. Is that to suggest that you I mean you talked broadly about inventories and channel but it sounds like more explicitly as it relates to granular insecticide that were normalized here and you will see the point of you sale it sounds like.

Right. Yes, so we are expecting a bigger volume of granular insecticide going forward but additionally in certain of our products where our inventories down. We still have some products where we got material a good portion of our formulated granular material are at inventory close to a levels that we would normally have. So that allows us now to start production at a greater level.

Okay. And then if I could just follow up on your comments about Dibrom also it just sounds like there wasn't really any incremental demand in first quarter but sounds like you have good visibility assume that means quarter on the book and you spoke about the magnitude. Is that the type of sale given the seasonality that would mostly happen in this upcoming second quarter? That's one question and then also the comments about Latin America are you -- you admit commented publicly about working within an aerial spray company to position this product as a potential solution in Latin America where you don't have the authorization. Is any conclusion on those efforts? So that's two questions.

Yes. So Brazil was what we were talked about and we do have a one of our customers who is working with the government to put together a program to begin spraying in the regional area. That has not occurred at this point, I think that their general thought is they are going towards the winter season and they are probably not going go forward with that at this point. With regard to Puerto Rico which was the other spot that we talked about. We do think there is a fairly good possibility that we would be involved in spraying there kind of for the first time. So that's been ongoing but things are heating up there. So that would -- that is not in the projections I gave. I was mainly looking for something from based upon our current US customers that are saying that mosquito in adjacent district that normally use Dibrom are going to want to make sure that they do not have Zika outbreak in their region and they are probably going to be taking some extra efforts to ensure that it does not grab a foothold here in the continent of United States.

Great. And the timing of that incremental level fails is likely from a seasonal standpoint that second and third quarter spread out or -- if you think about that because it is such a high margin product so I just want to understand if it flows through --

So again I mean the biggest, I mean there is a much bigger upside of course from potential of tropical storms. We haven't really experienced and we have a little bit in 2012 but it's really been 2008 since that was really a factor. I think with El Nino there have been projections that this could be a stronger storm year. So that's not included in my discussed but that's typically August through October. But I think as we are moving through dig the season I think we are just I mean generally the spring does get heavier in the third quarter when people buy, the stage is based upon their municipal budget.

Thank you. Our next question today is coming from comes Jay Harris from Axiom Capital Management. Please proceed with your question.

Good afternoon, gentlemen. I'd like to go back to your comments on corn soil insecticide shipments being having shipped in the March quarter or maybe up to the time of this conference call as much as you shipped last year. Comments about how much corn has been planted, what percentage of the acreage planned in heavily infested soils has been planted. And Bob mentioned 40% of the corn crop is sent but I am not sure he meant just in areas where corn soil insecticide was a target pest. And what happens as additional acreage is planted. I presume corn soil insecticide goes on the ground at time of planting. So could you sort of round that out a little and give us a little more insight.

Okay. Well, as far as planting, planting start usually in the south although they did have some wet conditions and delay things. But as you kind of go up where the planting moves. I don't know Bob maybe just commented on the 40% whether that's a good target or good number for across our higher pressure areas. That's a national; those are national statistics that's published by the USDA this week just over 40%. So I would say the percentage is much lower in the -- or they heavily infested areas of where our products are applied. That doesn't mean though that farmers have not gotten ready to do the planting because the sooner they see the window the weather breaks they will want to be ready to plant. As Brent mentioned the conditions are much better for us this year because it is drier. So right now we are just in the middle of that. Therefore again it's very difficult to gauge what that means for our business. We didn't see delay decision making. And we did see some our CSI sales slip into April. So I don't know if that answers your question.

It just occurs to me that with delay shipping the distributors are moving product that they are receiving from you right after retail and that if just to pick numbers out of the air that if only 30% of the acreage in the highly infested areas have been planted that you have a considerable upside right now in terms of product going outdoor to service acres that will be planted over the next three weeks.

I think we are uncomfortable making that call at this point. We have heard our customers are pleased with the way corn soil insecticide market is laying out this year. That wasn't necessary the feeling last year. So but it's we are really right at the test right now. We saw pretty good sales up until last week from our standpoint that's going out the door but it is slowdown. Whether we will get a -- we kind of get a weekly report of what gets moved to the channel and that still happening then we think our customers inventories are fairly low and so it -- we will see how it goes forward. So but -- I think we have a much better -- I mean we have better sense for this at June 8 because by then everything open down and we will start to see some of whatever might get return. We won't have a really clear picture until maybe our August first call we'll have a pretty good view at that point. Although it's never absolute until we -- I think it cuts off for the most part in September so --

How about impact there? Did you ship more impact in the March quarter than you did a year ago?

We did. Maybe about 15% maybe.

And what's the significance of that in terms of total demand you will see during this planting season?

Well, again our people remain optimistic on impact. They will continue to grow that year-over-year. We grew -- we have grown in each of last three years and we are -- that of course sales for that generally continue through June into sometimes into July.

Right. But that leads to my next question. And that is I have a sense from the strength of international sales that your domestic sales comparisons may have been down in the March quarter.

So just want to put Q3-- probably-- we are up a little bit yes.

And so there were profits both on the domestic and on the international side of the business?

Yes.

And how does the gross margins on products sold internationally compared to gross margins sold domestically. Are they roughly the same, a little higher, a little lower?

Yes. No, they are lower. I mean we tended to use 30 to 35 international and 40 to 45 domestic but again it -- that's just kind of like at each quarter varies by product mix. So you really can't take that but overall year tends to be -- I think that the new products that we acquired I mean the high bar, co bar have some pretty good margins to them. So we will look to try keep improving margins and as I said we are getting some benefits from raw material decrease to cost that are starting to play out as well.

Yes. I am really comfortable in the first quarter.

Right. Yes.

I have now forgotten my next question but that's not unusual.

We are always here for you Jay.

Thank you. Our next question today is coming from Joseph Reagor from Roth Capital Partners. Please proceed with your question.

Good afternoon, guys. And thanks for taking the questions. I guess most of the stuff I want that's -sorry you can hit on but on the potential for Dibrom specifically in Brazil, ahead of the Olympics, have you guys made any headway there as far as getting the public health use licensing and do you guys have like kind of like heart stop date that you would need to get it by in order to be able to produce enough for --

We have stock more planning to have and we do each year have safety stock because we never know exactly how strong the tropical storms will be. So we have ample material based upon what we would think they would do which would be spraying largely the Rio areas and in the more populated areas. But again we are not optimistic at this point that they are going to move forward before the Olympics. We've been providing information, participating in conference calls with our customers, applicator and at this point it doesn't look -- I mean obviously is subject to any media that comes out and you have negative side of things but I think it's pretty political at this point.

Okay. Is there some alternative that you are looking at using instead or is it just a matter of their slow going and I guess just go without --

Yes. We don't see them going forward with area at this point. Mexico had its first confirmed death from Zika virus this last week, don't know whether that's going to start and Dibrom is registered in Mexico for number of crops so that's probably not as bigger hurdle for them. And obviously aerial -- we got aerial ability from US to go down to Mexico if that were an issue. But at this point I mean we are -- I mentioned before we develop the three year program measuring and showing the effectiveness of this as it was started to deal with Dengue fever. And the disease itself is getting stronger and stronger. And so it's not going to get better the way things are going.

Okay. And then switching gears to touch -- what are you guys seeing on potential acquisition for both domestic and for international it is kind of like separate answers.

Well, again what we are pleased with our international expansion is that four divestments were definitely in the running for international as opposed in the past. People might have looked at as more domestic. So we think our scope is broader than it has been in the past. Obviously there are consolidations that are going on and that have taken place. So we think the opportunity for acquisition is robust and we will continue to be strong over the next several years.

Thank you [Operator Instructions] Our next question is coming from Tyler Etten from Piper Jaffray. Please proceed with your question.

Good afternoon, guys. And thanks for taking my question. I was hoping if we could talk about impacts you said it's going to be a key to success this year. Have you seen any impact to pricing or just I guess we've seen herbicide pricing come down specifically glycosides and some of the mixes that go with glycosides, has that been a headwind for demand or I guess where are we year-over-year for impact?

It's -- we are not seen strong price pressure. I mean we do have a competitor in our supplier BASF but this is a patented product that will remain on patent for the next several years. And so we think the value impact is very unique and we would expect to continue with profitability with the product going forward and growth.

Okay. So you didn't expect significant by having to take down pricing on impact?

We are not seeing that.

Okay. All right. If we could talk a little bit about the international progression what region where you guys seeing the most success and what products are driving the most growth in the international business?

Okay. There have been a number of key objectives in Asia which Bob is spearheaded with our international team. I think he mentioned this is about 25% of our business now within Asia. So we thought that was a good foothold and Lawrence has great experience in the area for a number of year. So a key person for us in that, I think you may see us and we are looking again to develop more in Brazil. So that maybe another key direction for us in the near future. And of course with the Biba products that we have right to, the Americas too will probably build out more in Central South America and Mexico.

I'd just like to add on top of what Eric has just covered is that as we move our precision application business domestically into the international arena, we need to have a network in place to do that. So we are working on, building our business on the chemical side but also building our future business to make sure we have the people in place to implement that strategy.

Okay. Great. Thanks. And then one for me. Could we just in clarity on where we are for Dibrom orders this year? I know there is a lot of potential in the US and certainly if there is a regulatory approval in Latin America but where are we at for actual orders year-over-year?

So I think for the quarter we were down a little but that we had a nice order come in on the 31st that shipped in April. Typically our key customer places -- we get order for June, they are moving to inventory now. So again overall for the year I think we will see an increase over what we've seen in the last few years.

Thank you. Our next question is a follow up from Jay Harris from Axiom Capital Management. Please proceed with your question.

Eric, I guess what I like to hear you talk about is what has to happen if anything for distributors to turn to return to the kind of buying habits they had several years ago as opposed to what I think is sort of hand and mouth buying attitude today?

Yes. So the inventory that was there for corn soil insecticides and is impacted the time, the corn market, it wasn't just about corn. And particularly corn certainly put a big stress on most of the companies and I think a number of companies were struggling to try making quarter so they were pushing products in other market. And with that then you round up with our customers sitting long in inventory and they push back and to continue to keep those high inventory levels there was lot of discounting that would -- to keep those products going. So I know that our customers are pleased the way the inventory of our products is with them today. I think they are going to continue that discipline for some period. I think to answer your question is to what would it take to turn the corner, I think on a general level it would take increased commodity prices. I think as they came down there was some sense to how far low can this go. I think more recently there has been some growth in the commodity price so I think there is some level of optimism. But I think through this year and maybe in the next there will be -- they will be watching their inventories to try to bring them down to the low level. When demand starts moving and they get a concerned that maybe if they don't buy they may not have material to sell that's probably when you get starting into the more aggressive buying pattern.

Thank you. The next question is going to be follow up from Jimmy Sean from SunTrust. Please proceed with your question.

Hi. This is Mathew on again for Jim. Two quick questions. The first is you mentioned having a benefit in this quarter from the delay of a couple project start ups. Can you quantify that benefit that was in the first quarter?

While he is doing that, this is be just product development. So these are field trials which we schedule and those are schedule really before the beginning of the year. And as -- it's just a matter of what gets done when and the invoices are going so our product development team, they put out their budget and say here is where -- here is what it's going to be each quarter and I think what -- I don't think it's a large number --

It is a few hundred thousands.

Yes. Just a few hundred thousand dollars that would just result from just timing of the billing.

Got it. That's really helpful. And then the last thing would be on Puerto Rico you mentioned the likelihood of maybe doing some Dibrom spraying there. Can you quantify the potential for that in terms of sales?

I mean if there was one spray with just some kind of peak residential areas, it is probably just a few hundred thousands if they -- I think there is 2 million acres there and we would not expect them to go for the program over in the 2 million acres but it will be a function of how many sprays they would do. There is 14 day cycle on spraying. So upside couple of million something like that.

There was a report recently that at least in Puerto Rico I am not sure if it is the case in Brazil or other places but is it particular mosquito the 80s mosquitoes tends to be indoors more so perhaps mosquitoes were more familiar within United States. Does that may be impede the effectiveness or the potential utilization Dibrom like maybe you have to use that in combination with larvasite or something to that effect?

Well, the program is a variety thing but from the aerial level this was the study that we've done with CDC, USDA and Florida and Louisiana where they've got great concern over Dengue fever coming into the United States. And that very question was asked given that Aedes aegypti is really feeds kind of early in the morning and feeds kind of late in the afternoon. You got a couple of hour window. If you were to spray Dibrom during those traffic times or just at night would you get control at night and the results over the three years were yes. You would get control if you sprayed at night because of the fuming actions of the Dibrom molecule. That if we go as you pointed out this tends to be underneath buildings or into bushes and that sort of thing that it would still be effective. So that was the study that we submitted which we were just finishing up as the issue with Zika started blossoming. So one of the concerns that it is there is that Aedes aegypti is the carrier so far. There has been concern that the Aedes albopictus which is much more prevalent in the United States and Aedes aegypti is really throughout the United States as opposed to the aegypti which are concentrated in a few states. And Mexico had its first confirmed Aedes albopictus Zika virus. They have not confirmed at this point that species can transmit the disease but the fact it is in is another alarming point.

Thank you. Our next question is follow up from Chris Kapsch from BB&T Capital Markets. Please proceed with your question.

Yes. Really just housekeeping just curious when we should expect the Q and the reason I am asking I am just -- there seems like the typical detailed segment revenue for example I don't think you spoke to that in your formal remarks. So just curious when that we might have some of those details around the income statement. Thanks.

Yes. So it will be filed tomorrow morning. I don't think we won't be filing today. But it will be filed tomorrow morning.

No, got it, thanks. I just wondering because I don't think you disclosed the sales by product line either by insecticide, herbicide, and other non crop -- do you have that or is that something we should just look for in the Q? Thanks.

I do have it. Insecticides numbers were about $33 million compared to $34 million last year. And herbicides were quite up significantly at $24.7 million as opposed to $21.8 million last year. And our other products were flat at $3.3 million versus $3.3 million and our non crop revenues were up $8.4 million versus $7 million of last year. So those were the differences and then from a US versus international we have US revenues of $50 million for this year and $49 million last year. And international revenues of $19.5 million this year and $17.3 million last year.

That's helpful. Thanks. And then just about since you -- the non crop was up almost 20%, can you just remind us what might be feeding in there? Looks like maybe timing but any elaboration. Thanks.

We had strong sales in all -- we had good demand from our farmer product. And we build some revenues from our Envance subsidiary and the sale of right for some of the usages and as Eric mentioned earlier on offsetting that with the slightly down on our mosquito adulticide in the quarter.

We reached end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Okay. Again thank you for participating and like to invite you to participate in our webcast that we will do on June 8 and we even have pictures for you. So look forward to our next discussion and thank you.

Thank you. And that does conclude today's teleconference. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.