Bill Kuser - Director, IR and Corporate Communications Eric Wintemute - Chairman and CEO David Johnson - CFO

Tyler Etten - Piper Jaffray Brent Rystrom - Feltl & Company Chris Kapsch - BB&T Capital Markets Bruce Winter - Private Investor

Well, thank you very much Rob and welcome everyone to American Vanguard's second quarter and mid-year 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.

Before beginning, let’s take our usual moment for our 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 they 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, let me turn the call over to Eric.

Thanks Bill and thank all of you on the phone for joining us today. We appreciate your interest in our business.

As you’ve seen in our earnings release, during the second quarter our sales were down slightly but our profitability was up. In today’s call, I want to cover topline performance for the quarter and give our view into important markets during the second half of this year.

I will then turn it over David Johnson, who will cover working capital management, profitability and operational efficiency and I would like to close by building further on what we have discussed in our last call, mainly our commitment to technology innovation and market access. For the first time in many quarters, I can say that our sales performance was not driven by the Midwest corn market.

In fact sales have impact our post emergent herbicide during the quarter, was up over prior year and sales of our corn soil insecticide were flat. The decline in quarterly sales resulted from only two of our many products.

First Thimet declined as a result of timing of purchases by distribution. Second, we experienced reduced Bidrin sales due to the 15% decline in cotton acres planted this year.

Other than these two soft spots, our other insecticide products were generally equal to or slightly better than last year’s second quarter and we saw year-over-year quarterly sales increases in most of our other product categories including insecticides, herbicides, fumigants and growth regulators. I will talk further about our view of the corn market going forward, a past note that we seemed to have reached before at least for this reporting period.

We also achieved nearly 25% increase in our international business over the prior year’s second quarter and I would add that for the quarter, international sales accounted for 34% of our consolidated sales. As you know from prior announcements in April, we acquired two significant product lines, the European regional segment of our Nemacur insecticide product line from Adama and the Bromacil herbicide products Hyvar and Krovar from DuPont.

While we’ve not yet fully realized the benefit of additional sales to come from these products, at the time of the acquisition we indicated that we expect that they will increase our annual international sales by approximately 25%. As David will point out, thanks to prudent working capital management we were able to require these products without significantly increasing our debt position.

We had mentioned in previous calls that we would be focusing closely on cash generation as we manage the business through market headwinds. I’m pleased to report that we generated a record $44 million in cash during the first half of 2015.

Year-to-date we’ve recorded net sales of $133 million, which is down about 11% from a $149 million net sales that we recorded during the same period in 2014. This decline was primarily driven by soft market conditions in the Midwest market resulting in a $9 million decrease in sales of our corn products as compared to the first half of 2014.

In addition sales of our corn products decreased during the first six months due to a reduction in planted cotton acres. Further, as I mentioned above we experience lower sales of Thimet during the period related largely to timing of orders.

We expect to see a good portion of those sales carry over into the third quarter. On the upside, we continue to see strong sales of our fumigant products during the first half of the year.

Our international sales were essentially flat during the half. Now let me comment on our view into our markets for the balance of this year.

Our second half is largely driven by sales into potatoes, fruits and vegetables, cotton and vector control. Here's what I see ahead for these markets.

We expect that our sterile fumigant business will continue to grow. Fruit and vegetable segments will remain relatively flat due to continued water restrictions caused by drop in the Western United States.

Lower cotton acres will limit our Bidrin sales in the current quarter and weather in the autumn will determine our Folex harvest defoliant sales. Also we expect our mosquito adulticide product Dibrom to experience normal sales into the vector control market.

On the international front, we expect the second half sales will be up as we complete the integration of our two product line acquisitions. With respect to the corn market in years past, distribution [planted] [ph] their order well in advance of the season.

Since 2013 however, the channel has followed more of a just-in-time approach. We continue to see variable inventory of corn soil insecticides in the channel and our customers are exercising tight controls over procurement spending.

Additionally growers are weighing the commodity prices of both corn and soybeans to determine how much of each to plant and how much input cost they’re willing to invest in next year’s crop. We have seen the corn commodity price rise above $4 per bustle in recent months and then recede.

Based upon these factors and looking at the seasonal return of unused corn soil and insecticides from retail and distribution we expect that demand for our corn soil and insecticides will be flat to up in 2016 and then impact sales will continue to grow. As I will discuss towards the conclusion of our remarks, we are making efforts to improve our position further in this market.

But before I get to that, let me turn the call over to David to provide you with some financial specifics. David?

Thank you, Eric. From my perspective the financial issues of paramount importance to investors remain consistent with the last several quarter and are first factory utilization, second, operating expenses, third, inventory levels, fourth, margin performance and profitability, fifth, liquidity and finally, interest and tax.

On the first subject of the factory performance, we had a much improved quarter this year in comparison to 2014. Overall, the combination of lower factory costs and improved efficiency despite restrained manufacturing output generated a 43% improvement in fixed cost under recovery.

By this I mean that we reduced the negative impact of underutilization of our factories by approximately $3 million in comparison to last year and more than offset the slightly reduced sales Eric just discussed. The first half of the year has also gone well and year-to-date we have reduced the cost of underutilization by $5.4 million.

Looking forward we have a plan to hit around $18 million of underutilization this year as compared to $24 million in 2014. However, making that number depends on how sales roll out as we start up the 2016 growing season this fall.

This is a constant balancing act between inventory levels, material availability to meet customer needs and income statement cost recovery. Second with respect to operating expenses, in Q2 of 2015 we ended at $23.9 million as compared to $25.3 million for the same period of the prior year.

Our sales and marketing spending dropped about $1.9 million as we sharpened the focus of our media campaigns. Our administrative and technical cost categories were up about $1.2 million as a result of increased amortization expenses following the completion of two acquisitions, increased expense related to long-term incentive stock-based compensation and cost associated with key business development projects.

Our freight costs have decreased by about $5.8 million as a result of lower volume and increased sales of impact which has low freight cost. On a year-to-date basis, we have achieved the goal which we set ourselves that is to keep our operating spending at or below the 2014 level.

So far we are $2.3 million below last year or 5%. Looking forward, we do usually have heavier spending in the second half as compared to the first half of the year.

However at this point halfway through the year; we’re on track to hit our goal. We plan to maintain tight controls on operating expenses as we work through the balance of this year.

Third, with respect to inventory, as I've discussed in previous conference calls, we have been working diligently to manage inventory levels in the face of soft conditions in the Midwest corn market. When we compare to June of 2014, we ended $10 million lower which is encouraging but nothing up to start to relax our efforts.

It is particularly encouraging to be able to report that the closing inventory continues to be closely aligned with our forecast position, which gives us confidence that we understand the drivers. As we look forward towards the end of the year, we are still focused on the level of about $140 million including the newly acquired product lines, but that is very dependent on how the third and fourth quarters play out.

I think it is also good to look at the cash flow statement and understand that whereas during the first half of 2014, inventory increased by $35 million. During the same period in 2015, we have remained flat, during what is usually the inventory building phase of our annual cycle.

Fourth, with respect to margin performance and profitability during the second quarter, we have reported overall gross margin performance including the impact of factory under recovery fixed cost of 38%, which is in line with last year. Before the loss on the factories we earned 33% on international sales, which accounted for 34% of our sales this quarter and 50% on our domestic sales.

Together these generated at an average of 45% gross margin before the impact of factory under recovery. In the second quarter of 2014, we earned the same 33% on international sales, which last year accounted for 27% of our business.

Domestic margins last year were 52%. That generated an average margin of 47%.

The change in year-on-year domestic gross margins came as a result of a change in mix of products. I told a moment ago about the improvement in $3 million in recovery of fixed factory cost that does have the effect of reducing the impact on gross margins from a 9% reduction in 2014 to a 7% reduction this year.

Looking at the first six months of 2015, we've reported 37% both this year and last. The year-to-date performance is quite comparable to the fact that drove the quarter’s performance.

Together with the performance on factory utilization and control of operating expenses, we earned $781,000 or $0.03 per share as compared to a $145,000 or $0.01 per share last year. The year-to-date net income performance is down at $832,000 this year as compared to $2.3 million last year.

That variance was driven by comparatively strong first quarter sales in 2014. Fifth, with respect to liquidity, we're continuing to maintain a close watch on our cash and is pleasing to be able to report that we were able to acquire product lines, continue with key capital expenditures and at the same time keep debt flat with the position at the start of 2015.

When looking at our cash flow statements you will see that in the first half of 2015, we generated $44 million from our operating activities as compared to using up approximately $29 million in the first half of 2014. Comparatively speaking that is a $74 million improvement.

In fact this year’s first half performance on cash generation is the best performance in company history. As a result of carefully managing our balance sheet, we were able to improve our debt position to $62 million, which was a reduction of $23 million during the quarter and $38 million year-to-date.

We then paid $27 million in cash on the acquisitions during the second quarter, in addition to taking on the seller note to $10 million. This left debt lower than at the start of 2015.

When thinking about liquidity, we look at the availability to increase borrowings under our credit facility. At the end of the first quarter of 2015; we reported capacity to increase borrowings by $23 million.

At the end of the second quarter, this improved to $27 million and as we look forward over the next four quarters, we believe that we have the liquidity necessary to support our business. Finally a few words first on interest and then tax, you will see in our 10-Q that our average borrowings were marginally higher than the first half of 2014.

This is due to the acquisition of two product lines. However interest expense was lower than last year despite this higher average borrowings level.

This was due to the fact that we do not have an interest rate swap in place this quarter. Looking forward, having completed two key acquisitions, we're likely to have a relatively higher debt balances for the rest of the year.

We do not have a requirement to put in place an interest rate swap contract on the loan, but we will be giving thoughts about over the next quarter or two. On tax, you will see that we have continued to report an unusually -- an unusual effective tax rate of 73%, in this case a benefit for the quarter ended June 30, 2015.

This arises from the fact that the tax benefit on domestic losses exceeds the tax liability on international profits. Our mix of international profits and domestic losses is different for the six months and as a result, we have a different benefit rate of 339%.

These rates move around quite a lot as a result of small changes in profitability when you are operating close to breakeven. In summary, we're seeing the positive effect of tight control over working capital, factory utilization and operating expenses as we record improved profit despite lower sales for the quarter.

With that I will hand back to Eric.

Thanks David. As I mentioned earlier, I wanted to be sure that we covered our strategic approach of technology innovation, market access and operational efficiency.

David has already given us his insights on operational efficiency, which I’ll reiterate enabled us to improve our profitability despite lower sales quarter-over-quarter. On the technology front, we will be launching our new high concentration granular soil insecticides in both Aztec and SmartChoice doubling and tripling their potency.

This will provide growers with improved economy and ease of use. We will be modifying our existing SmartBox post delivery systems with advanced meters to dispense these newly registered formulations.

This represents a key step towards the development of our multi-product SIMPAS platform and enabling technology for prescription planting. With respect to market access, as we noted in our recent press release on August 1, we are adding Peter Eilers to our team to head up Global Marketing and Business Development.

Peter has 25 years experience in marketing and sales throughout the EU and Asia and served as their Head of Mergers and Acquisitions. In addition to knowledge of the markets, Peter brings a network of international connections with potential customers and suppliers as well as sources of new product lines and technology.

Further as we integrate the Bromacil and Nemacur acquisition, we're extending our reach into a number of areas particularly Japan, Thailand and the Philippines. We have also just received approval in Canada for a new registration of Thimet, which should enhance our sales of this product particularly in potatoes.

In closing over the past few years, you will have seen us place an increasingly greater emphasis on our international markets. We've done so primarily because that is where the greatest growth is expected to be found.

As that business has grown, we have allocated additional resources to it. We expect this investment will continue to pay dividends in the form of increased sales, tax advantages and broader network of global contacts for market access and new technologies.

With improved global reach, we identified a number of opportunities to collaborate with peers in other regions potentially creating a mutually beneficial relationship. Such arrangements would allow AMVAC to gain market access to world regions we do not currently have a strong presence while providing manufacturing, regulatory and marketing services to our partners in the NAFTA regions.

We are of course very committed to building our domestic business and will continue to vigorously serve the global markets, but I must say, I’m very excited about the opportunities that we’re beginning to see as we expand globally. Now we’ll be pleased to respond to any questions that you may have, Rob?

Good afternoon, everybody and welcome Peter. I guess my first question would be on the international side, it’s good to see some growth there.

I was wondering what regions particularly are you having success in and maybe what products those maybe?

Well the potato -- I am sorry, the pineapple and sugarcane and banana markets are certainly enhanced Bromacil has both hit the pineapple market. We do have some vegetation market in Japan that we’re seeing as well as part of that.

And of course the Nemacur piece will be expanding our market in vegetables into Europe.

Okay. Great.

Thanks. I was also wondering about corn soil insecticides in the increased concentration.

I was wondering what kind of selling strategy you will go to the farmers with considering you’re selling more chemicals in a condensed version and what kind of pricing that would look like?

Well, we haven’t determined all of it, but basically what we’re offering the grower is convenience of either half or a third of what he is normally used to taking field. So, we feel essentially that’s the benefit that we would offer.

Obviously there is an increased efficiency with us in production and logistics from this that we would hope to capture.

Okay. And just one more before I jump back in queue.

Have you guys revisited the opportunity to lower pricing to be more competitive in this sort of environment and help move some of these channel inventories?

We’ve looked at it. We don’t see that there is particular elasticity in the corn soil insecticides.

We haven’t seen discounting from the limited competitors we have in that market. So at least at this point it’s based upon the demand does not seem to be quite as price sensitive and so we have not made adjustments.

Okay. Thanks.

I’ll get back in queue.

Good afternoon. Couple of quick things, can you give us a sense maybe ranking by states, which states are your most important for corn soil insecticides?

Yes, so well, I will say three states, Iowa, Illinois, Indiana. We have -- Minnesota is probably in there is fourth and then maybe Nebraska maybe comes in.

All right. So from a simplistic perspective you know there has been a little buzz the last couple of days about the impact on the larva portion of the lifecycle for earthworm and really the states that are most risk I would assume for that issue as far as reducing future demand would be Illinois and Indiana, we have had a lot of standing water.

Have you seen significant differences in those markets as far as you know what people are thinking this fall or is it too early to tell.

I would say, it’s too early to tell. I think they’re obviously ways away from determining yields and depending on how those yields are and they look at 2016 as maybe a year they can [skin it] [ph] down.

On the other hand if yields are not strong and if corn gets into that $4 per bushel range, it will make our message that the enhancement with the uses of soil insecticides makes a lot more sense.

Okay. Refresh me if you could, so we are looking to be in a very strong El Niño this fall, which they think will run through maybe February timeframe.

So last time we had an El Niño, you were in the segment that was 2009 and that El Niño ended in March of 2010. I don’t think you were in the statement back in 98 when we had the really big one before that, can you remind us of how the problem developed in 2010 as El Niño ended?

Well 2010 marks the first that we saw an increase in corn soil insecticides from 2005. So 2006 was really when GMO came and deploy and we saw relatively steady decreases from 2006 to 2009, but in '10 that’s when we started to see the volume increase and as you know that continued through 2013.

But really I saw and there is not a great ability to tell how much of that was driven by BT resistance and how much was actually driven by just higher instance of outbreaks since that was probably the first year then?

Right, so I think there was discussion of resistance in 2009, but early as 2007 our message that despite market conditions your investment in the corn soil insecticide would deliver return -- worthwhile return on investment from the yields increase that you would see. And, in the primary states we've seen over a seven year period an average of 20 bushels increase when you combine both corn soil insecticides with the generic trades.

Okay. Another question David I am just curious what level of additional sales would be required to basically eliminate the factory under absorption?

Well, before you start that David I'll answer, eliminate is potentially unachievable. We ran -- from the time we switched over to standardized cost we basically tracked at about 10 million of under-absorption through a five or five year period.

It was just in 2014, when we significantly stopped production that we rose to 24. So what we’re targeting is to get back to that 10.

Now having said that we've got greater visibility and I don’t know that we would figure out how to continue to drive that down, but right now 0 is 10, is that correct David?

That’s correct.

So, anything you want to add to that as far as…

What would be -- given the 50% and 33% domestic and international, what rough planted sales rate would you think that you need to get to reduce that down to 10%?

I don’t think it’s a function of whether it’s international or domestic. It’s really a function of our overall output and I don’t think it really matters where it comes from.

As we mentioned before, we’ve been taking products that we’ve told on the outside and bringing those into the factory which is increasing. We’re also looking to increase our tooling for third parties as we'll, as well as of course getting through the cycle where we will see increased demand for once we choose our inventories.

So is there a dollar amount that you would drove $75 million or $100 million, is there a number that you would say this added amount of sales would help to fair back to normal?

Again we produced to slightly over half of our product sales what I guess is active it’s maybe more than that if you take our formulation, so it’s not a clear dollar sales because again it will be on what that mix of sales orders that were sales of products that we manufacture.

If you took a balance here probably another $50 million to $60 million would average to that million dollar on the recovery right.

And then that’s very helpful. Thank you.

Is Bob on the call?

He is not. He is listening, but he is in an airport and we thought about having him come on but the background noise was so loud that we thought even --- he pulled out from it wouldn’t be all that pretty.

Well then I’ll ask you quickly, when I was out for a meeting in June had pretty interesting conversations with folks about a lot of little projects to grow sales $2 million, $3 million, $4 million, $5 million in four or five different spots, any particular updates on any of those initiatives?

Well the Smart Lock piece in Europe we’re looking for registration in the '16 timeframe. So that’s a piece that would I think ultimately we’re looking to generate $15 million in sales there.

The Canadian Thimet, may be a couple million more in sales there. We’ve got a cotton defoliant that would be bringing on hopefully still in time for this year, so that’s another few million and I’m trying to think what would be other you remember the other projects it was there we’re talking.

I mean those were three of the projects right there. So and basically it was kind of a discussion focused on looking at extending licenses on current products into other areas if you use them, formulating new products just a variety of kind of initiatives, it’s kind of movement not just in the acquirer of products but one that actually develops.

And I mean there is one that I didn’t mentioned is our PCNB with -- our PCNB and turf for Gulf Coast has been primarily a follow-up application but we’re now looking there are two other, three other applications to fungicides on golf courses that we would look to expand and aim a significant dent into our PCNB inventory.

Okay. Thank you very much.

Sure.

Hey thanks for taking my follow-up guess. I guess one of my questions I have is about production since corn soil insecticides are now expected to be flat to up next year, do we expect just a longer suppression of production being low or could we expect another late down on production?

Well on some of the inventories, we’re at a production level I think we’re also going to manufacturing the high concentrate on both the Aztec and on the SmartChoice, so that will be through inventory as well and I think on the bag business which has been a 2.1% we’re going to be moving that to the 4.67 business. So that will put us probably in a more completive position on the bag business which is again adjunct again to our SmartBox business.

Okay. And I was wondering if you could also talk about excuse me consolidation in the industry, how guys are looking at that and maybe how it affects you?

Well consolidation is usually a good thing for us because there are overlapped product lines that need to find a home somewhere and so that should spur on greater activity for our acquisition side of things and generally it’s that during that consolidation time that people are integrating, it’s often difficult to pick a plus b to take hold two times sometimes some erosion during that process, so again that create to a more market access opportunity for us.

All right, great. Could you talk about maybe what is kind of pressure you guys are seeing on the ground?

Well again that varies by region, I think from what from a pest pressure standpoint the wetness in the Mid-West has created the little bit more demand for rescue herbicide use and that bodes well for our impact, no as far as touch pressure in the south in cotton I think that’s relatively normal. I don’t see anything unusual there that was more affected by the fact that there is 15% acres that have dropped.

No in the vegetable market tends to be relatively stable low effect certainly in California with the issue both from planting vegetable and from pest pressure that is kind of the domestic scene outside of that in the International piece I’m afraid on not up to strength on that.

Okay. And just for -- did you mentioned the domestic side for insect pressure?

Well it’s the same here in cotton, in cotton it looks to be a normal year, it’s just the acres what are affecting our volume. So yes I was talking about insects and I was talking about fruits and vegetables in the southern market.

Okay, great and then just my last question is with more muted growth in corn soil insecticides next year, what sort of products you’re looking towards for growth and if what sort of growth would be reasonable overall?

So I missed the first part, you said with use -- what was it with more…

With corn soil insecticides having more muted growth or flatter growth?

Right. So what are we looking for growth in that market?

Are you looking for any other products?

Right. So again we have impact which is our herbicide we indicated that, we expect that to continue to grow in 2016, we’re looking at participating probably in a larger segment in the bag business with our Aztec 467 that will come out with this year in a bag.

And then our high concentration granules will see what kind of for people who are looking at the convenient side of not having to grow where the corn soil insecticides again the fact that they will be able to use half or third as much those people have might be on the sense of deciding whether they wanted to acquire or not, we think we can drive some of that business over to utilizing the corn soil insecticides.

All right thanks and then last question I promise in terms of impact month in promotional partnership is that fairly intact or could you just run through a refresh of the details on that?

Well again were partnered with Roundup and continue the program with them and again we’re seeing increases in our demand every year and so far I don’t see that cutting back so we’re pleased with the program and I think we’re working well.

All right, thanks for taking all my questions.

Sure.

Yeah. Good afternoon.

Just wondering, if you could just provide a little bit more color on the higher that you had mentioned in terms of I guess global marketing business development just a genesis of that conversation and what the priorities you see for that roll? Are you -- is that going to be more of a focus of product acquisition or more collaboration and I assume it’s again the focus can be really more internationally so if you could just provide little bit more color in genesis and the priorities.

Thank you.

Okay, well here is an individual that we known for number of years, when we acquired from there, the low cap and that mature line, given the individually worked with on those products and we were extremely impressed with them and his knowledge on a global basis is managed I think five or six different countries in its -- three or four for there and its predecessors has good command of kind global markets and language wise I think he speaks four or five languages. So as we expand internationally we think his insights and contacts are going to be great importance to us so that certainly from licensing standpoint, he and [fellow] [ph] I think have a lot of contracts.

We’re starting to see some of those, some of the efforts that Bob has put through starting to come forward that will see any kind of a global basis. Peter again ran I think was $2.5 billion market in Europe and Middle East and Africa for there and so I think the scale of what he has done will help us as we going to move forward into the next line of growth.

As far as again you think there is going to be a good kind of wide variety of acquisition candidates which, he will providing us some roll on getting those into our camp as well as licenses and internal marketing and standpoint maybe a little bit more specification from where we have been in the past.

Just a follow up on that in terms of looking at acquisition candidates are given this is alluded to early but the consolidation that taken places is there any evidence that some products are shaking less are been offered from either have the FMC ongoing consolidations or the platforms led by a rest consolidations to that’s one. And then secondly how do you, what’s your capacity for doing acquisitions?

How do you view that going forward? Thank you.

Capacity in terms of the ability to acquire, what sort of capacity? Thanks.

So it’s too early I think for FMC and came in over the determine of various products that they need to spin off at least, what was the game play minus ten, they’ve got a couple 100 different ingredients and I think it probably going to be difficult for them into maintain all of that as combination so probably some but again these are first phase really takes a year of trying less there something that the FDC requires divestment in order for the falls into occur but that’s not a case. So we would expect, may be somewhere in the 12 month timeframe in the mean time again we’ve each of the major times has go through cycle of the three to five years of within your portfolio and you continued to see activity there as they look to turn and focus on the most important products.

I think your, what was your last point of your question?

How about the capacity?

Yes of course right, so well, we’ve through proper cash management continued to look, I mean we’ve obviously got inventory higher than where we look to have at the end of the year and if were successful as David pointed out that will generate another $25 million cash and so, there is certainly availability of money if you want to go away from our traditional, EBITDA ratio on our borrowing through the banks. And I think one of the things that we look at is our debt equity ratio continues to be very underleveraged were maintaining about 0.33 on our debt equity level, impacts probably drop down a little bit quarter from probably that last quarter David, so we’re fairly underleveraged I mean if the light deal comes line, we wouldn’t be restrained by what we’re dealing with the bank.

So is that correct answer.

Yeah, that’s just I mean appreciate you willing but to do acquisition but just wanted to get sometimes for order of magnitude what your appetite might be in terms of product line that may check loose and fit, your strategic direction going forward, how much appetite you have in terms of that capacity to stretch your capital structure in order to find, to add something that’s compelling?

Well again it’s a function of how important the deal is to us, companies in our space and size small cap companies relatively kind of feel comfortable after the 1.5 times debt-to-equity ratio and as I mentioned we’re 0.33. So we’re not -- we’ve remained fairly prudent in our acquisitions during 2010 through 2014 period, so a number of opportunities we had that we didn’t think that our criteria but it does seem like now there are more deals that are coming available that do fit the metrics that we put forward as far as return on investment and making the acquisitions.

Okay, thank you.

Sure.

Thank you. With acquisitions of Nemacur and Hyvar/Krovar for international or I know you have Nemacur for I think the United States and I think they’re able to find Nemacur on the AMVAC Chemical website and Hyvar/Krovar I’ve never heard before, so what did you actually acquire there?

Sure. Nemacur we acquired well Makhteshim Agan which is now ADAMA acquired Europe for Nemacur some years ago, we acquired Nemacur in 2010 which the product has not been sold in the United States for a number of years.

So we acquired the rest of the world other than Europe in 2010 and we had talked with ADAMA from the standpoint they continue to be selling very essentially our agents in Europe, it’s just that we were managing the molecule from both manufacturing standpoint and from a regulatory standpoint and so very strategic sense for both of -- for us to have the ownership of the molecule and have them do the marketing for us. With regard to Hyvar/Krovar those are products that were strong globally for DuPont they sold the U.S.

and I believe the Canada portion of that business to bare the rest of the business was sold to. So to answer your question of Nemacur, Hyvar/Krovar they’re 100% international business for us.

And why was that acquisition worth full, you paid for it?

Why was it worth full, we paid for it?

Yes.

To your question, well when we look at acquisitions, we have a number of metrics that we go through and hurdles from MKV to the payback period over certain time and so we run all of our acquisitions through this and both to past our criteria and that’s therefore why we do.

Okay. I was hoping that the wet weather in Texas et cetera would be a benefit for your mosquito business, it doesn’t seem like it has so far is that right?

We have a little bit of business but Texas has not been a strong market historically for Dibrom, the bigger so if you’re looking for the future and you’re praying to the Rain Gods, please focus on Florida and Louisiana those are the two biggest markets for Dibrom. And so if you see tropical storms coming into those areas into the Gulf area or across Florida that’s when you would see despite but based upon what we would see now we think that it will be a normal year but we never know this if the storms come into that area then there will be dramatic increases in volume and that’s part of the financing the Dave and mine and rest of the crew do is we want to make sure, we’ve got enough inventory to cover upside for the few products like Dibrom where we keep intermediates and kind of precursors on hand, so that if we do see something we’re able to react quickly and take advantage of the market conditions.

Okay. Thank you.

Okay. We’ll appreciate as always be insightful questions and we look forward to reporting to you for our third quarter results and thank you for joining us today.

Bye.