Greetings and welcome to the American Vanguard Corporation Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bill Kuser, Director of Investor Relations with American Vanguard Corporation. Thank you, you may begin.

Thank you, Bob and welcome everyone to American Vanguard’s third quarter and nine month year-to-date 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 Mr. Bob Trogele, American Vanguard’s Chief Operating Officer is available to assist in answering any questions that you may have at the end of our prepared remarks. 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 as 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, I will turn the call over to Eric.

Thank you, Bill. Good afternoon and thank you all for joining us today. We certainly appreciate your interest in American Vanguard. As you have seen from our earnings release we have posted your-over-your revenue growth in virtually all of our reporting categories for both the third quarter and first nine months of 2016. Also, earlier today, we filed our form 10-Q, so you can immediately see additional details of our quarterly and year-to-date performance. The company's third quarter sales increased 14% to $82.5 million from $72.5 million, as compared to 2015. This is a time of the year when sales of our corn products are typically light. Our quarterly sales gains were driven by some of our key products in other categories. Compared to the prior year third quarter, we saw significant increases in our cotton defoliant Folex. This was due in-part to an increase in planted cotton acres of 17% on average and as high as 50% in the mid-South region, which is a key market for this excellent harvest aid. Further, sales of our soil fumigants Metam were also up as growers prepare the field prior to the onset of colder weather, primarily in potatoes and high-value fruits and vegetables. In addition, we enjoyed strong sales of our insecticides Mocap and Nemacur that are sold primarily into the international markets. Finally, our toll manufacturing business was up during the third quarter. During 2015, we have conducted this campaign in the second quarter. While tolling is a low margin business, it does serve to absorb factory overhead cost. Our year-to-date revenues were up 9% to $225 million from $206 million during the comparable period last year. This $19 million overall year-over-year revenue gain was led by the following product lines. Sales of our corn herbicide impact and our console and corn soil insecticides increased 18% over the comparable period. As I will discuss later, channel inventories are down and we are experiencing more stable demand for these products in the Midwest market. In addition, our recently acquired Bromacil and Scepter herbicides performed well year-to-date, as have a number of our non-crop products. While our quarterly and year-to-date sales were up 14% and 9%, respectively Ag industry leaders are reporting quarterly and year-to-date sales on average down 3% and 9%, respectively. David will elaborate on our profitability in the third quarter and nine-month period, as well as on other financial and operational metrics of interest to our shareholders. After his comments I will return with the report on Zika and our mosquito control business, and update on SIMPAS, and outlook into the 2017 planting season, and some closing thoughts on our international initiatives. I will now turn the call over to David.

Thank you, Eric. Good afternoon everybody. Earlier today, we filed our Form 10-Q for the three and nine month periods ending September 30, 2016. Everything I’m going to cover here in brief is included in more detail in that document. Furthermore, you will notice that we have added a table to our earnings release, so that you have the key sales numbers immediately at hand. With regard to the financial results as Eric just detailed, the company's sales for the third quarter 2016 increased by 14% to $82 million, as compared to $72 million last year. Within this number, our crop sales were up approximately 15% to $73 million and our non-crop sales were up 6% to $9.4 million. Year-to-date sales were up 9% to $225 million, as compared to $206 million this time last year. Within that number, our crop sales were up 7% and our non-crop sales were up 30%. From my perspective, the financial issues of paramount importance to investors remain consistent with the last several quarters. First, we continue to carefully manage our factory activity, as we balance recovery of overhead cost with demand and inventory levels. In the third quarter, our factory costs were up primarily because we expanded production at one side, which has been on a periodic maintenance shutdown this time last year. Notwithstanding the year-over-year increase in the current quarter, compared to this time last year, in both quarters the factories performed at or slightly better than our targets of 3% of sales. On a year-to-date basis, factory costs are down 1.5% and at the same time output has increased. This has resulted in an overall improvement in the recovery of factory costs. Consequently, those costs have decreased to 4% of sales in the first nine months of 2016, as compared to…

Thank you, David. Now I would want to touch on four additional topics. The development of Zika and our mosquito control business, progress on our SIMPAS descriptive planting system, a preview of the 2017 Midwest planting season, and comments on our international initiative. Like many of you, we have been following the Zika story closely for the past several months. This subject has attracted a great deal of media attention and as has the use of our mosquito adulticide Naled, which we market under the name brand name Dibrom. As we have noted on many prior occasion, Naled has been used for mosquito control domestically for over 50 years. In that time, it has proven to be the most effective aerially applied mosquito adulticide on the market. It is not lad to resistance among any species of mosquitoes, including Aedes Aegypti, which carries the Zika virus. This is because the Naled breaks down so rapidly within 24 hours that the mosquito, which has a seven-day lifespan does not need to mutate in order to survive. During our last call, we reported that Porto Rico had rejected CDC’s strong recommendation to spray Naled for Zika control. And that this rejection would likely have adverse consequences. We also reported that domestic customers would likely show strong support for our product in-light of this viral epidemic. Since that time, the number of reported cases of Zika virus in Porto Rico has increased from 7,200 to 32,000 and is estimated that only about one-fifth of the actual cases get reported. Further, some public health agencies estimate that number of cases in Porto Rico could reach 300,000 by year-end. With the spread of Zika in Porto Rico mosquito control districts in the United States took note and in many areas began spraying in earnest. With…

Thank you. [Operator Instructions] Our first question comes from the line of James Sheehan with SunTrust Robinson Humphrey. Please proceed with your question.

Thanks. Could you give us some more color on your channel inventory situation and do you see that playing out in the fourth quarter?

Yes. I think we are comfortable with where the channel inventory is. Not just in corn, we’ve done this across all of our products, I mentioned the Dibrom as well, so not just crop, but it is an initiative that we’ve equipped to try to take the burden of caring our inventory to us, while we are managing down our own inventory, so that we are delivering more at time of need. So I guess with that we do expect good sales in fourth quarter and first quarter, let’s say for the corn products if that was kind of what you were leading towards.

Great. And in terms of the operating cost and where they stand as a percent of sales do you expect that to decline in the fourth quarter relative to the third quarter?

David?

Not materially. I think it'll be about at the level of the third quarter rate.

Okay.

We haven't thought any sharp forecast for that period yet.

Okay. And could you discuss your sales of Dibrom year-to-date, and I understand that there might be some upside in the fourth quarter, but in terms of any order patterns you are seeing today that’s not materialized yet, is that correct?

Well let say yes. So you're saying any upside have not materialized through the three quarters, is what you're saying?

Well in terms of what orders that you have seen for October, November, any, what you have seen so far? You’re not anticipating any jump in sales for the fourth quarter, is that right?

I think, we may see an increase quarter-over-quarter from fourth quarter last year to fourth quarter this year.

Okay. And what were your sales of Dibrom year-to-date?

So far this year, we are just about 10.5, which is about where we were last year through the three, but the difference is that our primary distributor has drawn their inventory down by maybe 20,000 gallons from where it was this time last year.

Great, thank you very much.

Thank you. Our next question comes from the line of Tyler Etten with Piper Jaffray. Please proceed with your question.

Good afternoon guys. And I'm sure I speak for all of us, because I thank you for filing the 10-Q early. I guess one thing that’s on the mind of a lot of people right now is the consolidation in the industry, is there any potential businesses that look compelling at this time or have you been approached for any divestitures out of maybe deals going on right now?

So, the answer to both those questions is yes. But as far as discussion on specifics, we are not at liberty to discuss that at this point.

Okay. I guess - fair enough. I guess building half of that if there is some sort of your capital allocation priority switch, have you guys been on a great job at drawing down debt, would that be put on hold in order to absorb some sort of divestiture in one of these deals.

That’s on strategy, I mean we buy stuff, we work hard to drive down the debt, and then we buy something again. That’s part of our strategy. So, yes.

I guess, would you change the strategy right now of drawing it downward, would you need to raise more debt?

No, I mean we have no problem in increasing debt for the right acquisitions or investments. So, we review - the opportunity is they come across us, but I mean it’s nice to drive ourselves to zero debt, but on the other hand we’re in the business to grow. So, we have no problem in increasing. I mean, our leverage is so small now, I think our debt to equity ratio is like 0.15 and we know of companies that are in that six to seven times debt-to-equity, I’m not comfortable with that, but certainly a is few times debt-to-equity would put us in the 500 million to 600 million range.

Got it. Yes that was what I was looking for. And then just maybe one more from me. Dividends is back, any thoughts on what do you, I guess you guys have thoughts around it and is this something that you guys are comfortable keeping for a while? Thanks.

Yes, I mean dividends have been a long history with the company. We felt with Fort Worth Basin in 2014, into 2015 that we needed to make sure that we were not restricted in any way of meeting the objectives. We worked hard on getting the balance sheet and I think we look at the future and see the bright upside. So, we could look forward to continue to pay dividends and increasing those as we improve our performance.

All right, thanks guys.

Thank you. [Operator Instructions] Our next question comes from the line of Jay Harris with Axiom Capital. Please proceed with your questions.

I've got several questions. First for David, our revenues were $82 million in the September quarter and our receivables are over 90, what causes that?

Well we have longer than 90 day terms on some products, some part of our business.

Could you provide a little more detail on that?

Well our international debts range up to 150, 160 days. So it’s a balance of the exact point in the quarter when the sales occur and the mix of international business and domestic. Majority of our domestic businesses is on relatively short terms. We do have a couple with slightly longer deals.

I mean the Metam, which is going strong, you know definitely it’s a little bit longer, right. And then we have much in the way of corn soil so we are a little bit and those tend to go terms to June.

I don't know, I haven't got the September Q from last year in front of me, but I think that debts where, the AR was to similar sort of level.

All right. Eric you guys have done a very commendable job in growing revenues in 2017, I mean 2016, 2015 was a second year in a row when farm income dropped, this year again farm income will be below where it was last year, could you just go over in a little more detail where you think you will have product lines that will show revenue growth in 2017 and those which may not?

I think the cotton business is looking good. So, I think we’re, I mean we did have a - we’re having a very good Folex season and in fact we are still selling as they are still defoliating, but the Dibrom certainly could have upside, I think we talked about, I mean largely because we’ve driven inventories down to really low levels and channel. We think even if there are as we always see whether related or otherwise down demand, we still should be strong going forward in 2017 because of the fact that, I mean in corn for instance, I think corn inventories drove down $11.5 million out of channel at our level this last year. So that’s a little bit of buffer going into the 2017 season. But again, we’ve tried to take that approach obviously if there was pain in 2014 and 2015 to do this, you know even 2016 we continue to manage that down, but we feel it’s the best to zero odd inventories and build from there. And of course, we've got initiatives that are pushing for increased market share across all of our portfolio products.

Did I hear you correct that, I know you - there was a downstream inventory reduction this year in Dibrom, are you saying the same thing occurred in corn, as well as cotton defoliants?

That’s correct.

Okay. And so that provides a buffer for any change in crop acreage for next year?

That’s correct.

Okay, thank you.

Thank you. [Operator Instructions] There are no further questions at this time. I’d like to turn the call back to Eric Wintemute with closing comments.

Okay, well thank you all for joining us today and thank you for the questions. We look forward to reporting our progress as we move along and we will talk with you soon. Thank you very much.

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