Greetings, and welcome to the American Vanguard Corporation Fourth Quarter and Full Year 2011 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Director of Investor Relations for American Vanguard Corporation. Thank you. Mr. Kuser, you may begin.

Thank you very much, Rob. Welcome, everyone, to American Vanguard's fourth quarter and full year 2011 earnings review. Our speakers today will be Mr. Eric Wintemute, Chairman and CEO of American Vanguard; and Mr. David Johnson, the company's Chief Financial Officer. Before beginning, let's take a moment for the 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, we'll turn the call over to Eric Wintemute.

Thank you, Bill. Good morning, everyone, and welcome. Thank you for joining us as we report on a very successful fourth quarter and full year 2011. David and I welcome this opportunity to tell you more about that record performance and the prospects that we see on our horizon. Before conducting the business of the day, I want to pause for a moment to acknowledge the passing of a member of our Board of Directors, Mr. John Miles. As you may have read in our announcement yesterday, John was a highly regarded and long-standing member of the board. His counsel on many of our product acquisitions contributed significantly to the growth of American Vanguard. His guidance to management was always properly balanced with his fiduciary responsibility to shareholders. He was a "roll up your sleeves and address the issues" kind of guy, and we are all better at what we do for having worked with John. As we indicated in the closing words of our announcement, we will dedicate ourselves to accomplishing the excellent performance and business success that he worked so hard to help us achieve. Thank you. I'm going to let David give you all of the operating and financial metrics. I want to start by providing an overview of this outstanding year for American Vanguard. Revenue's up 34%, gross profit margin expanding to 40%, operating expenses reduced to 28%, and the all-important bottom line net income double that of last year. As David will describe, our balance sheet remains very strong and shareholders' equity in American Vanguard increased this year by 12%. We had a game plan for 2011 and included a number of key factors which have been articulated in our earlier conference calls with you. The main factors included successfully integrating our new 2010 product…

Thank you, Eric. As Eric has already mentioned and as you will have read in our earnings announcement, sales for 2011 increased by 34% to $304 million as compared to $227 million in 2010. Within this number, our crop sales were up 35% to $275 million and our non-crop sales were up 24% to $29 million. In our 10-K filing scheduled for later this week, you will see a detailed description of sales by product groups. In summary, insecticides recorded sales of approximately 63% over the prior year. This group includes MOCAP, NEMACUR, and AZTEC 2.1, products which were acquired in December of 2010. Our other crop sales were up nearly 47%, primarily driven by FOLEX sales. The balance of our crop sales were up approximately 5%, primarily as a result of a strong performance from our herbicides. Our non-crop sales were up about 24%, mainly as a result of demand of our mosquito adulticide product and also as a result of increases in our pest strips business, offset by PCNB sales into the U.S. turf market which did not restart until the EPA-approved labels at the end of November 2011. After reentering the market, the products sold briskly for a short period until weather prevented further applications. I am pleased to be able to report that our newly acquired brands have performed quite well in 2011, notwithstanding some supply challenges. Sales of these products continue to contribute to the little more than 50% of our overall net sales gains for the year. These newly acquired brands also contributed to the 62% year-on-year increase in our export sales. Our gross margin in 2011 was 40% of net sales as compared to 38% for 2010. This was driven by both an improved mix of sales and better overall factory manufacturing performance.…

Thank you, David. For many years, American Vanguard has acquired a number of agricultural chemicals that many in our industry did not see of value, and which many observers of our industry deemed irrelevant. We believed that while newer genetic and chemical technologies would contribute to the advance of modern agriculture, there would always be a need for traditional chemistry. And indeed, while genetics and newer chemistries have contributed significantly to improved agricultural productivity, inevitably, weeds, insects and fungi will challenge new defenses. As tolerance to these new approaches has emerged, it has become increasingly clear to growers, academics and even regulatory officials that traditional chemical tools are still important, must be maintained and will play a vital role in addressing the ever-changing challenges of nature. AMVAC's product portfolio is well positioned to serve this need as a part of the integrated pest management approach that represents the future of modern agriculture in the United States and around the globe. We feel the value of our products is gaining wider recognition and our business has begun to reflect the demand that is emerging for a broad range of highly effective, proven, crop protection tools. Let's talk a little about corn, where we have substantial opportunities. The tendency for farmers to plant corn on the same acreage year after year, referred to as corn on corn, as opposed to rotating crops, has given rise to greater primary and secondary insect pest pressure. With each passing year of widespread glyphosate herbicide use, weeds and grasses tolerant to that chemical proliferate, leading to the increasing need for complementary herbicide use. As a result, we are seeing increased demand for our IMPACT herbicide, which addresses the glyphosate-tolerant weed challenge and our complete soil insect solution, which combines our portfolio of granular soil insecticides and…

[Operator Instructions] Our first question is coming from the line of Michael Cox with Piper.

My first is on the revenue timing for the soil insecticides portfolio. Will that primarily hit here in the first quarter or is that because of the planting season coming more in the second quarter? And then also, just what level of volume are you targeting for 2012 for that set of products?

Mike, I think you were asking the soil insecticides, which is both corn and a multitude of other crops. So the -- there of course is the international piece which goes on both sides of the equator. Within the United States, the corn market, there are certainly sales in the fourth quarter and we had sales in the fourth quarter. First quarter is also usually a strong quarter. And then second quarter, depending on the time of planting, there can be some sales there as well. But predominantly, you're talking fourth and first quarter. With regard to THIMET, the sugarcane sales usually occur somewhere in the third and certainly by the fourth quarter. Peanuts, which is another big market, occurs kind of fourth quarter, first quarter. As far as -- I think your question was targeting what kind of volume, were you looking for a total dollar number of our projection of soil insecticides for 2012?

I guess I was actually referring more specifically to the corn and the rootworm and belowground in terms of volume expectations on that particular product for family?

I think we've basically increased the volume a little over 50% for this upcoming year and I think we believe that we will achieve those results.

Okay, great. As you look across the portfolio of kind of products and chemicals, could you estimate what the average price increase is for the 2012 season?

Across our portfolio of all products?

Right.

It's a good question. I haven't done that. I'm going to speculate that we're somewhere in the 5% to 6% on average.

Okay, that's very helpful. And then you noted the strength of export sales in the fourth quarter and continued the trend from all of 2011. Could you talk or speak to the specific regions that you're seeing the -- perhaps the strongest areas of growth and what you're doing to continue to expand into those markets?

Well, Europe had a big uptick for us with MOCAP that came on. Again, we were limited on the amount of MOCAP that we had. The Mexico market grew a few million for us. The Central America, where we've got our base in Costa Rica, was up pretty dramatically for us. I mean, we had good increase in Asia as well. I mean, all of the markets essentially, except for Canada, have had worthwhile gains. In Canada, just because of the lack of PCNB was the only reason.

Okay. And then one last question if I could. Gross margin was a little bit lower in the Q4 versus the last year and also versus Q3. Can you speak to what resulted in that lower margin, perhaps just mix and what sort of expectation should we have for 2012 gross margins?

I think the main factor is the timing of manufacturing performance in Q4 of 2011 versus Q4 of '10. There was a slightly lower absorption, a low overhead cost.

And I think to -- we're still a little bit behind on our passing through costs on our soil fumigant, which is barely significant in the Q4. So that's a little bit lower margin than where it was the previous year.

[Operator Instructions] Our next question is from the line of Daniel Rizzo of Sidoti & Company.

Could you just give me the crop -- versus non-crop number one more time, please?

Sorry, yes. So crop was up 35% to $275 million, our non-crop was up 24% to $29 million.

Okay. And then you did a remarkable job with inventories. Is that what we can use as a projection going forward, as a percent of sales, which you did in the fourth quarter or was it more of a one time thing?

There was nothing of a one time thing about it. It's just driving for -- driving on the inventory level and I would expect us to continue to work on that.

And I think we were also hoping to -- break into the significant part of that inventory which is PCNB. So that we will see pretty lowering over the course of this year.

Okay, great. And then just something that was kind of touched on before. What are we seeing so far for like spring plantings and the demand for corn and I guess even peanuts going into the spring here, is it more normalized, is it late, is it early?

Well, I think everybody is thinking that this is going to be an earlier planting. Obviously it's been a mild winter. And so all the conditions kind of seem to go that it might be an earlier planting. Demand for corn, obviously, is very strong. The 93 million acres that I think is projected is going to put pressure on the other crops. Cotton, planting-wise, may be down a little bit from where it was last year. However, 4 million out of the 13.5 million acres that were planted last year didn't get harvested due to drought. So if there aren't strong droughts, we would see improvement in our BIDRIN product. Although our FOLEX product line did extremely well even with the drought last year. With peanuts, peanuts growers did very, very well. That didn't have contracts and have the -- I think the planting went down. There was 25% of peanut farmers actually had contracts and the balance were happy that they didn't because the price of peanuts was very, very strong. So the positive view's the American farmers are in the best shape financially than they've been in probably ever.

Okay. And then one final question. With the bed bugs spray that -- I think it was new then, that was something that offered a lot of upside potential, at least making an [indiscernible] versions what you guys talk about, is that still on the pipeline or am I missing...

Yes, the EPA was looking for additional testing, which we've been doing predominantly at the University of Florida and West Virginia. And those studies are ongoing. We have obviously seen a surge and I think it was mentioned in the pest strip used under the new hemline, we also launched it -- launched those products into -- within our ag retailers as well. So we do see a considerable growth with that. I think Spectrum also is launching this quarter a retail pest strip for bed bugs which would -- they sell -- would sell through Home Depot and Wal-Mart, Lowe's that would have a enclosed container, or a plastic bag that you could put the strip in the plastic bag. And so we're excited about the opportunity. I mean, bed bugs are no longer on the front page of the paper everyday. At some point, you get a media burnout, but the problem has not diminished at all.

Our next question is from the line of Jonathan Richton with Imperial Capital.

I guess my question is just more basic in terms of your acquisition strategy and new chemistries that you guys are looking for. You also made a small amounts of acquisitions last year, and I was wondering how you're thinking about that going forward, are you reaching a point where you're more hunkering down on -- with the portfolio you have and then looking to continue to grow that more organically or you're still actively out there looking to find new things to add to your portfolio?

No, we're definitely out there looking for new products and we're constantly evaluating those products and those opportunities that come available. Certainly the last batch of acquisitions we've had and the opportunities in the changing market have provided probably greater growth opportunities for our existing lines than we've ever seen before. But we've got a whole other team that focuses on acquisitions and licenses and they're charging ahead. So yes, we don't see slowing down in that arena. In fact, coming out of 2009 where everybody is trying to understand the economy, where it was going and again, our focus was balance sheet-driven. Given where we are today, we're probably poised and better positioned than we've ever been to make more substantial acquisitions.

And then are you seeing, in terms of proposing or getting, I guess, more farmers on board with the mix of GMOs and the chemistries, are you seeing any major pushbacks at all from that perspective or anything that's going on specifically with the larger guys that can cause that trend to kind of taper off a little bit?

Well, certainly, trait technology is always working to improve as there are opportunities for them to do so. We've had many meetings with the trait companies and I think there's a general understanding that chemistry can provide a benefit for the traits going forward. It doesn't mean that they won't continually work to improve the traits and that possibly can have an effect on the position. But I think that when 2006 hit, we saw the reduction in corn soil insecticides continue to go down until 2010 when it started moving back up. 2011 was up significantly prior to any university statements of any limitation on the trade. So our message is not about any issue with the traits, it's that if you're looking to maximize yield, taking the best trait technology and combining it with chemistry is going to give you your best yields, and the downside to using the soil insecticides is it's a lot easier just to plant seed. But given where farm yields need to go, farmers, I think, they're adapting the concept that we need to do everything we can to maximize and it's a combination of all the tools that are available to us to make that happen.

Our next question is from the line of Jay Harris of Goldsmith & Harris.

First 2 quarters last year, you had exceptional organic growth. You didn't mention that in the third quarter. What did the whole year look like in terms of organic growth?

Well, so I think we said that half of our increased sales came from the new products and the other half came from -- so that would effectively come out to -- what do we add here, 3 -- 17% each, right. Well, there you go.

Okay, excellent. And do you have a sense that the numbers in 2012 could be as high or higher?

Jay, you're talking about -- you want to know what our budget is for 2012, right? And that's guidance and that's something we don't do. And I think we've reflected that we see, I think, a very strong 2012 ahead of us. Our soil insecticide business is going to be up pretty dramatically. And then as we mentioned, we've got MOCAP, that we think with better availability will be up and obviously PCNB. So we're very strong on this year.

Where are you heading in terms of inventory objectives for the end of 2012?

Well, I would be happy if we wound up where we are currently or where we stated at the year end. We may have had a little tightness in a couple of areas. I mean, I think it's more important that we forecast and project where we think growth can be and make sure that we've got the materials to meet that objective for 2013. But as I mentioned, of that $71 million, 25%, 30% of that is sitting in our PCNB products. So I think we've got some opportunity to shave that down and still take care of what we see could potentially even stronger growth in 2013.

Have you made any progress in restoring the label in Canada?

No. I think we're viewing that as potentially a 2-year process. I mean, at current, they're asking us to go ahead and resubmit which will put us into -- pushing close to a 2-year timeline.

Okay. And cotton acreage, let's say, it's $12 million this year, up from a harvested $9 million last year. Is there -- as we enter the year, is there much of your product in inventory channels or do you get that kind of a percentage of improvement in opportunity in 2012?

Good question. With our FOLEX product line, there's not much in the channel. With BIDRIN, there is more than normal, probably twice normal. So though we believe BIDRIN will be up reasonably significantly in 2012. It will probably be more like '13 before we hit maybe the levels that we've hit at max in the past.

Our next question is from Bruce Winter, a private investor.

My questions are about the triangle that you had on your corporate presentation on your website, which -- a very nice presentation, I enjoyed it a lot. On existing molecules, can you comment on the orange situation?

On the -- what situation?

The orange.

Oh, the citrus cyllid, right. So this -- I mean, yes, so that's a product that we -- when -- a product that got removed and we were looking at, okay, we've got a pretty good portfolio of products and looked at each crop which is -- there's cotton, peanuts, citrus and potatoes. We looked at citrus and said, what do we have that fits that market? And we started positioning DIBROM this last summer and saw that we learned a little bit more about how devastating this cyllid is. And I think you saw in the video that their cost had basically doubled because of this pest and it is devastating, you go in and they used to take one tree out and then the surrounding trees around it because, again, this citrus cyllid puts this virus in -- that basically will essentially take the tree out. And so they -- we saw the amount of spraying and all that the chemistries, I mean, there was no classic chemistries such as DIBROM that was being used. So we're real excited about the opportunity for that going forward. We think we'll see a very considerable ramp-up in 2012. In addition, the cyllid has now penetrated into Mexico citrus and into California citrus. The disease itself has not translocated. But within Mexico, they have government programs now, which we're participating in, on finding solutions to try to keep this from becoming an epidemic. So we think we've got a unique chemistry that will work well in combinations with sprays as kind of an integrated pest management with the existing portfolio that's there.

On the new molecule side of the triangle, as far as I can tell, there have been no new molecules that have generated revenues, just cost. We keep getting press releases about granular soil and fumigants and some biotechnology-type products and potato sprout. Just generally, when is the new molecule side of the triangle going to really kick in for shareholders?

Well, IMPACT was actually a brand new molecule that we launched in the -- we launched that in, I think, it was 2005. So that's contributed very well to us. We expected SmartBlock to be in the marketplace at this time, in this quarter. And EPA asked for additional data which we're generating and I think we'll turn in, in August. So that's going to push back revenue there until next year. The kind of pipeline of new chemistries that we've got, typically they're in a kind of 3- to 5-year mode that we're doing that. And I think one of the advantages that we see to new chemistries that have already been adapted is that our -- although you're not -- you were going to wind up certainly with failures that you spent money on, and you wind up having to buy that over the total. But with the products, let's say, the SmartBlock that we're getting close to, obviously, impact the actual investment that we're making in these products before they come to market is generally a lower investment than it would be to acquire an existing molecule. So I think it's kind of the balance and I think that's what we tried to show with that triangle, that we're not just dependent on organic growth of our existing product line, although it's a great opportunity for us. We're not dependent on divestitures, which is not necessarily under our control. And looking at the new technologies that there are a number of nice technologies there that we think would have a fit for us going forward and we think we have the expertise to successfully obtain the registrations and launch the product commercially.

Yes, I think this has huge potential in the future. On the acquire existing molecule side of the triangle, just can you comment on -- the FMC acquired 2 products from BASF, they were -- I forget what they were called, but this is the first time I've seen anyone acquire old chemistries from the big chemical companies. Did American Vanguard look at that acquisition?

We -- just say that we pretty much see most every divestment that there is. There are -- we kind of started making acquisitions in '89 and certainly it's been a major part of our business model, but for most of our acquisitions, there are a number of other companies that are in the bidding process. So there have been -- we feel proud of the success record that we've had, but we've passed on a number of chemistries, we've been outbid on a number of chemistries and there are a number of other companies that compete with us for those divestments.

There are no further questions at this time. I would like to turn the floor back to management for closing comments.

Okay. Well, again, thank you very much for participating and we look forward to our next quarter announcement, which will be not all that far away from a time standpoint. But, again, thank you very much and we're very pleased to be able to present these results to you.

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