Q4 2023 American Vanguard Corp Earnings Call
Participants
Bill Kuser; Director of IR & Corporate Communications; American Vanguard Corp
Eric Wintemute; Chairman & CEO; American Vanguard Corp
David Johnson; VP & CFO; American Vanguard Corp
Bob Trogele; COO & EVP; American Vanguard Corp
Scott Fortune; Analyst; ROTH MKM Partners LLC
Chris Kapsch; Analyst; Loop Capital Markets LLC
Andrew Lester
Presentation
Operator
Greetings, and welcome to the American Vanguard Fourth Quarter and Full Year 2023 Conference Call and Webcast. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Director of Investor Relations.
Thank you. You may begin.
Bill Kuser
Thank you very much, Diego, and welcome, everyone, to American Vanguard's Fourth Quarter and Full Year 2023 earnings review.
Our speakers today will include Mr. Eric Wintemute, Chairman and CEO of American Vanguard, Mr. David Johnson, the Company's Chief Financial Officer, for assisting in your questions. Mr. Bob Daigle, the Company's Chief Operating Officer, Mr. Don gold, dominate the Chief Transformation Officer, and Tim Donnelly, the Chief Administrative 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 information represents the Company's best judgment as of the date of this call, and such information will not necessarily be updated by the company. Additionally, bear in mind that the financial information that we discuss today is subject to the completion of a full year 2023 audit process. With respect to the filing of our Form 10-K we are still in the midst of completing documentation, and we'll likely be filing with the SEC for an extension to the due date under Rule 12 b dash 25, thus the 10-K will be filed within 15 days after March 15, 2024.
With all that said, I turn it over now to Eric Wintemute.
Eric Wintemute
Thanks, Bill for everyone and welcome to American Vanguard's full year 2023 earnings call. I appreciate your continued support and interest.
Today, I would like to cover four topics. Excuse me, you may have muted yourself our line of sight.
Okay. First, as you'll see on slide first, our full year performance, with particular note on how we rebounded in Q4. Second, current market conditions, which are stable. Third, our sound business fundamentals, and fourth, our initiative to unlock American Vanguard's full value.
Before I get to the last point, I will have David give us an update on our financial performance. When we last spoke in January, we gave your performance targets for 2024 because as I will outline today, we are still targeting 24 net sales to increase by 8% to 12% over 2023. However, we are now raising our target for adjusted EBITDA to fall between $70 million and $80 million. With that kind of performance, we should receive a higher valuation than what we are currently seeing in the market. As you well know, our stock has historically traded at over 10 times EBITDA and now if you use net debt plus market cap and divide it by $75 million, the midpoint of our '24 EBITDA target, we are currently trading at under six times with a strong balance sheet, stable markets that after having de-risked supply issues, we are poised to enhance shareholder value this year.
Further, I'm pleased to report in summary that we are able to accomplish in Q4 at this point, I can say definitively that Q4 was in fact a rebound period for us, as you will note on slide 5, due to global destocking activity, a glut of generic products from China and supply issues of two of our leading products, Aztec, in fact, all our performance for the first nine months of 2023 was below expectations with the supply chain mended two of our high-margin products in hand and then subsidence and destocking, we were able to record 8% higher sales in Q4 as compared to the prior year.
I will also note that with respect to as type of backhaul, we have dual source the supply of raw materials and intermediates, thereby ensure ensuring continuity and availability going forward. Over the course of Q4, our working capital balance sheet improved for a more normal level and with higher sales, we reduced inventory to $220 million, generating cash from both sales and customer prepay reduced net debt to $128 million and increased borrowing capacity to $112 million in the process, we improved our debt to EBITDA ratio significantly to land comfortably below our target of 2.75 times in the short term. This will reduce our interest rate by kind of minimum 0.5%, further a stronger balance sheet and improved liquidity, both enable us to allocate cash judiciously and provide a firm foundation for operating the business '24. That brings up the second period of focus. Current market conditions covered this on Slide 6. As you know, grain particularly corn and wheat. Also, soybeans are global commodities and their prices are influenced by global factors. In 2023, Brazil passed the US alone as the largest supplier of corn and soybeans in the world with good yield and increased supply from Brazil. Prices for these crops have declined. For example, the price of corn in the US has dropped nearly one-third since early last year from six 38 a bushel to about four and a quarter. Proportional have said the farm economy has been strong for the past two years and demand for crops and crop inputs remains stable, even as commodity price levels issued. At the same time, biologicals are continuing to gain traction with growers. These inputs typically contribute to soil health and appeal to growers as us and sustainable long-term investments and their most valuable asset that is their land.
We are also seeing continued interest in products that have a softer environmental footprint with respect to distribution channel, the de-stocking and frenzy of 2023 Synta import that self-help growers still need inputs insist that they will tend to bind them closer to season in order to minimize carrying costs. This is true over the length of the distribution channel. Also, as evidenced by our Q4 sales distribution channel will purchase crop inputs even in advance of the planting season. Further demand for our end-use products in the US was stable on '23 on a full-year basis. That said, we are seeing a higher level of sophistication and discipline in inventory control at the retail end of the distribution, some of our competitors have softened their guidance for '24, noting an inventory overhang of their products in the distribution channel. The state of oversupply largely affects South America, particularly Brazil and Europe. By contrast, we are not facing book within our major markets. We are a niche player in Brazil, and our sales into that country are minimal further. As I mentioned on our last call, AdCom sales in Brazil dropped by an average of 33% in 2023, while ours declined by only 4%. Certainly we do very little business in Europe.
Let's turn now to the third element of our discussion on slide 7. That is American Vanguard and its business fundamentals. In light of the market conditions that I just outlined with respect to last year's destocking and our industry's poor performance, it bears repeating that even with the on availability of two of our high-margin products we outperform the ad market as our net sales were down 5% year over year for the industry average was closer to 13%. In other words, we were not affected as materially by destocking or for that matter, Chinese generic pressure. And as I say, procurement has been rationalized by the channel. Also, we did not oversupply that market '23 that is resolved with the market demand and with our price reduction. In fact, we have maintained brand value and legitimacy in the eyes of our customers. This confidence is reflected in their continued commitment toward the significant prepayments that many of our U.S. customers made in Q4. Given our favorable inventory position and the channel distribution, current sales activity and our customers' outlook, we are targeting a sales increase of 8% to 12% and adjusted EBITDA of $7 million '24.
At this point, I'd like to turn the call over to David for his comments on our financial performance. I will then return and give my thoughts on unlocking value photomasks that, David?
David Johnson
Thank you, Eric. I will begin my comments with a recap of full year 2023 during the course of which I will present important metrics for Q4 as well as working capital and liquidity analysis.
As you will see from slide 8 our overall sales for the full year declined by about 5% from $610 million to $579 million for the reasons that Eric has already outlined, you can see from the graphic depiction that US crop with the unavailability of Aztec in the first half of the year and actually for most of the year declined by 7%, while both US non-crop and international declined modestly during the fourth quarter.
With respect to US non-crop, we are observing a more stable sales trend following the destocking effort. The efforts of retailers that began in the beginning of 2023.
With regard to international, the bar graph tends to bear out the fact that oversupply of generic products did not materially affect our business in the regions that we serve.
Turning to slide 9, with a sales decline of 5%, our gross gross profit declined by about 7% and gross margin percentage decreased from 32% to 31% year over year. As you may know, for our US crop business carries our highest margin product, many of which we manufacture in our factories. The drop in sales of high margin products such as our semiconductor wouldn't necessarily put pressure on gross margins, as you will see on slide 10, our operating expenses in 2023 edged up about to about $156 million from about $151 million in 2022. This was due to increased selling expenses, both in South America to support our new business in Ecuador, the largest banana growing country in the world and increased travel, coupled with additional R&D and regulatory costs, which represents the continued investment in our future with the concurrent defense of our registrations. These increases were partially offset by a decrease in G&A expense, largely due to reduced incentive compensation as a result of overall financial performance.
With respect to cash flow, as per Slide 11, despite the negative change in working capital, which occurred due to slower sales and expansion of working capital, primarily driven by the accumulation of inventory. We closed the year with net debt of $128 million. I will cover liquidity in a few moments.
Looking at our statement of operation on slide 12, you will note that our drop in sales with slightly higher OpEx translated into lower operating income, lower income before tax, lower income tax and the consequent net income of about $7.5 million or $0.26 per share. Bear in mind, as Eric has intimated for the first three quarters of 2023, we generated very little net income. That's what you're seeing on Slide 12. As far as net income and EPS search is concerned, generally it was generated in Q4 Turning now to working capital on slide 13, you will see our inventory trend on a quarterly basis since 2021. Note that as compared to 2022, we took a step up in inventory during 2023 there, again, with unavailability of certain key products and lower demand due to destocking in the distribution channel, we ended up accumulating inventory at the start of the year, we turned the corner in Q4 as more normalized market conditions returned at 38% of net sales. Our ending inventory is higher than we would like we are targeting to get inventory levels down to $195 million by the end of 2024.
Now let's take a quick look at debt and liquidity as the slide 14 daily strain that was apparent in the first nine months of 2023 took a turn for the better in the fourth quarter. While we recorded a significant drop in borrowing from $218 million in Q. three to $139 million in Q4 and a concomitant increase in borrowing capacity from $29 million to $115 million end numbers are approaching historical averages. However, with our targeted performance in 2024, we would expect to have an even stronger liquidity position at the year end. That sums up my detailed comments on the whole, while 2023 started quite slowly in the face of adverse market supply conditions I'm pleased with the progress that we made in Q4 during which we significantly improved the balance sheet. This gives us a great foundation to 2024 and beyond. With that, I'll turn the call back to Eric. Erik.?
Eric Wintemute
Thank you, David. Let me now turn to the fourth part of my comments, namely unlocking American Vanguard's full potential as seen on Slide 15. You may recall in our January call, the Co-stream capital has been in effect.
Will it go after years of return to more normalized historic performance?
What's next? Similarly, one of our analysts pose the question, though, but we will unlock some value that is inherent in the company as discussed the answer on slide 16, along with our advisor clients, our team is driving and business transformation initiative to improve operating leverage and move adjusted EBITDA to 15% of net sales by 2026. We call the process of defining the target Pathfinder. As you see on the slide, this initiative should translate into $15 million or more in additional EBITDA on an annualized basis. This is not a new endeavor as you may recall, we announced a transformation initiative at the end of Q2 last year. At that time, we had also identified we could achieve a $15 million benefit through operational and commercial changes, but tires, health, we are validating the initial assessment and defining a plan by which to obtain this improvement on operating leverage.
As for Slide 17, we expect that about 60% of this benefit will come from operational changes in manufacturing planning, inventory and procurement, including freight fell 30%, will likely come from commercial areas such as pricing, sales expenses, product portfolio and R&D funding and another 10% will likely come out of G&A. We will implement these changes over the course of the next two years. And as I said, we should realize the full benefits in 2026. In short, we will be applying the sound business principles to all that we do with the intention of returning value to our shareholders as our first priority.
Turning to Slide 18.
As part of the transformation in this, we are reassessing our working capital allocation within that respect. Grocery growth platforms or in solutions and I'll pause to note that with respect to our core business, our two continues to launch new formulations. Inventions, for example, are they low and vintage herbicide, the dominant brand solutions reported a 10% increase in sales year-over-year with new products like BioWare lubricant. That has been good critically on so far.
And now we've passed our first foreign person by over 30% integration with Zendesk. We have validated this technology and proven clinical functionality issues with both solid and liquid inputs.
Is there some potential and both there was and Brazil markets and most recently as its yield enhancement tool and field trials volume prescriptive versus conventional applications. Sunpower's platform is really our prime portfolio is continuing to increase at this stage of maturity we expect that we will incur reduced development cost for some paths going forward and are now positioned to capitalize on market demand as grower and appetite for equipment and prescriptive application technology.
And Chris, in closing, we have a solid business with a strong balance sheet, broad geographical reach and three growth platforms. We are poised to return to greater profitability in the short-term and with our initiatives to unlock American Vanguard's full potential, we are investing and returning greater value to shareholders. This is an exciting time for the Company. And again, we thank you for your continued interest and support.
With that, I'll turn it back to the operator for any questions. Diego?
Question and Answer Session
Operator
Thank you, sir.
And at this time, we'll conduct our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two. If you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please while we poll for question. And our first question comes from Scott Fortune with Roth MKM. Please state your question.
Scott Fortune
Good afternoon and thanks for the questions here from one and step two, I know you're kind of focusing on looking at the growth platforms going forward here, and you've highlighted that for the near term. I just want to get a sense for now where I guess specifically focusing on 10 path and the confidence there, this really starting to get the take the adoption where you're at as far as numbers and passes in the field now and in that ramp of you mentioned new products and productions for this impact going forward here, just kind of step us through as you look out over the next couple of years, the opportunity set that is taking a while to get here. But the opportunity now for that going forward would be helpful.
Eric Wintemute
Yes.
And as far as the numbers, we're still we're still delivering equipment now, but I think we're somewhere in that 200.
What are the systems that are that are in place, frankly.
And as you know, we're growing our platforms. We did get some have some approvals from EPA for this season that we were looking for. We are we have some collars that we've got chewed up for '25 that we think we think we'll have them in place. One of the things we really completed in '23 and have just got to have received the results from was specifically with Keller was a prescriptive application with themselves and it was kind of average 10 to 12 bushels increase.
Most areas where nematode pressure was present. And then we also tested product to see where there wasn't nematode pressure and found what you might expect was it will benefit.
So model now mapped out the different fields.
And we've seen the results that we would expect from prescriptive application.
Somebody was saying, and I'm not just jumped over my line, but we're modeling on soil type as well as current inventory count.
As Mike mentioned, Sandy soil has the highest level of Scentre Group platform for Therma-Tru with enzyme.
We also found that there are certain soil types were for zinc deficiency is an issue.
And we've seen, again, 13 type increase in personal auto partner jet, which is relatively relatively inexpensive compared to the insecticide application. We think we've got some potential value on on-site hiring, which didn't we didn't have not figured out exactly where the benefits are, at least for the thousand acres that we have. So because it is so far this process has been Benson growers through third round of us to write prescriptively and you don't the demonstrated return on investment is kind of what was important, pardon Brazil, did that material out and cover some of the bleed this year?
Canada is a big upside for us there because it is registered, not only or but also sorry, please go to Slide 4 for some pass and adoption time moving forward, we are looking to ramp up best.
Scott Fortune
Okay.
Appreciate that color. And then one more for me. Just kind of step into the transformation plan and you've kind of unpack that a little bit. You're going to provide more color on the KTI.s and targets a focus and for that but just wanted a clarification. The additional savings, additional of $50 million on that cadence, you mentioned time line through 2026 to fully optimize all that. Is that $15 million on annualized basis or that's going to be taken over time through through '26. Just kind of clarification there. And then just kind of core, we'll give more color on the transformation plan around the KPIs that you guys are suggesting.
Eric Wintemute
So so what we did is kind of looked looked at' 24 and said, what's our gap to get into 15% and has no '24 had it improvements that we've baked into it and came up with this gap of 15, 15, 17 miss.
And so when harnesses delivering for us is creating that, that that pathway that we said to get into getting us to that level. So what we identified in the 24, there should be opportunities to expand that number in '25, '26 with the target again of moving, we'll bring us up to getting to that [50%] of net sales. So obviously, we expect '25 and '26 to grow and therefore to say a few more, but you're tying into the year that you have in front of us to 2024. And with regard to KPI.'s, Dan, if you want to just highlight kind of where we're at with our JPI.s well, converged on the team now kind of I think you are getting ready to to get them to kind of put those in place.
We are.
David Johnson
Thanks, Eric, and thank you for the questions, the dongle day. So on KPI. as we are looking at both financial and operational KPIs, the financial ones are certainly the ones that you would expect gross margin dollar performance of the business as a whole EBITDA and varying forms of operating expenses. Now we take those and then we want to push those out into the business units. Those are that's done normally and always through the budgeting process. And then we want to go one double-click further on that. And then cascade those business unit targets down into key roles so that each individual that is that has a responsibility for driving the performance of the business knows exactly what their targets are. Again, this is not new into the business and we've done that historically, but we haven't necessarily done it as thoroughly as we're going to do it in this past.
And another type of KPI is the are the operational KPIs. So some raw materials were manufacturer. So the raw material efficiency is very important for our business and is a lever of driving profitability. So we are going to do we're going to have a an approach for how we measure the raw material efficiency in the business. And it already is part of our continuous improvement process to get better in that regard, but marrying up those KPI.'s across our top, say, 10 products and a continuous improvement effort allows us to know where we need to be focusing more of our attention on. There's also improvements that we're seeking to make on forecasting both on the manufacturing side and the commercial side of the business. So making sure that we're manufacturing to the plans that we intend and that those plans are informed by the commercial forecasts of the business. And those are some examples of KPI.s that we're working on.
And then also, as I said, driving these KPI.s to the business units and from the business units into those key stakeholders, the roles that the organizations that are responsible for each one of those, not something necessarily that's new, but certainly much more exhaustive process. And we and it is something that Eric just mentioned and that I'm working on with the presidents of the business presidents.
Scott Fortune
Okay.
Appreciate.
And then one last quick one for me. Sorry about that, but just wanted to provide a little bit color. I know you said the different geographies, the U.S. is doing well here and you mentioned much in Latin America, just kind of unpack 2024 as some of the pressures still remain in South America and Latin America, which does affect you as much. But just kind of help us understand the strengths in different geographies and where there might be some pressure still.
Eric Wintemute
And so Mexico saw a very solid. Certainly there is generic pressure in all of the markets. But we do have we do have some kind of unique in it products into Mexico. And yes, there was there were inventories. I mean, particularly kind of globally.
If you look at the broad broad, the broad application of herbicide, probably a big plus, there were certain insecticides that I think were loaded up.
Another will go into the generic world on Central America, we probably had more generic pressure there where we saw products as the Chinese price of a lot of the commodity products came down. We saw some pressure certainly on the inventories that they had and not as much in Brazil because Brazil, we have a we have predominantly it was kind of a fruit and veggie business that expanded into corn and soybeans with calendar, and they're not not sitting with Virgin or generic pressure as much from a timing standpoint, the destocking that that I think was universal has been virtually everything.
And really a lot of people were government are watching inventory situation. But again, as you said, you know, and with Brazil, that's kind of new, of course, that gets to your question.
Scott Fortune
Thank you for your questions.
Operator
And our next question comes from Chris Kapsch with Loop Capital Markets. Please state your quest.
Chris Kapsch
Yes, hi. Good afternoon all. With a few questions.
One.
So one regarding the outlook for 2024. And given what you had these two key products affect Octel and that were impacted by the absence of availability I've come after this last year. I'm just curious about what the expectation is for those products baked into your overall '24 expectation. Is that would you expect just a normal demand environment? Or will you see outsized growth come because of restocking? Have those products throughout the channel in '24? Any color there?
Eric Wintemute
So well, I mean, we started selling assets in Q3 and Q4.
So part of that was building back some inventories because inventories were down 5% or somewhere in that range. So we did have good demand and we continue to have good demand. Now as the season is unfolding, we're not we're not seeing an inventory build, so we would expect to have a strong second half of the year as well.
And that goal was good.
It's pretty much completely gone. We did we do have ongoing orders to kind of fill all the orders.
Yes, but we did we have been supplying between fourth quarter and first quarter, a fair amount of we are expecting the demand does. It does look strong going forward, product was growing for us and so help us, which certainly so far. So I think we're looking at compliance points of prices for that.
As far as the pressure, I think as time is kind of a key product for pressure is heavy. And so for you where you have grown repro, I guess with the corn rootworm pressure that's in the field.
Chris Kapsch
Got it. That's helpful.
And then on the PATHFINDER and there our focus on, I guess, 15% EBITDA margin 2026. Curious if those if that bogey, if you will, is based on the portfolio as it exists today? Or is there any instances where you're looking at a product line or a suite of products that you just structurally?
I can't see it getting there and therefore might be subject to, I don't know, rationalization or is this sort of improvement expected to be kind of across the portfolio by '26?
Eric Wintemute
We're not baking and we did not bake any acquisitions per se into the model.
And we do have our kind of ongoing projects that create that we do in our core business, both through licensing and combination products that host us part of that.
And of course, as we expand the products and the portfolio for some past, those are there, those are those are targets that we've identified and going forward for the next next couple of years. But as I said, we're not we did not bake acquisitions into Apollo.
Chris Kapsch
We'll just have a follow up what about rationalizing products, meaning like just products that are lower margin dragging on the overall mix. And so I don't really see a pathway to get to that or to help the overall Company get to the 15%? And then what and then what also is embedded in sort of the growth rate of your the more novel growth platforms? And maybe just more generally, what when might you expect to kind of update the growth targets for those products, 3D sensing?
Eric Wintemute
So So with regard to product rationalization, yes, I mean, we are as part of of what we're identifying we're identifying quality of business return on working capital. And so those products that do have lower margins, our move to emphasize the way we want to focus our team on our higher margin products and those those with us that is part of that of process bill, of course, improvement into solar manufacturing outputs us far, as you usual and then combine that with with that, of course, working on purchasing power to lower our cost of goods, it was now a pretty good time as we saw prices spike pointed to the pandemic and we are seeing a softening back on auto-enrolment is for core intermediates that we use. And that is that that's part of improving our margins as well.
With regard to, yes, as far as the growth platforms where we are, we've done an initial pass with that as far as over the next couple of years. We do want to get through this process with finding kind of identify what and just as we're talking about some rationalization, if that's what it is, how we improve, as I mentioned, and the 60% covenant of that income come from the operational side and then 30% maybe from the commercial side. And once we once we bake that in and put clearer direction on that one, there the position to assess Paloma effects, digital three platform.
Chris Kapsch
Got it.
That's helpful. And then the last one for me just is related to sort of the industry issue that that's been seems like it's becoming pretty acute for us or leaves some uncertainty. And that is around the herbicide dicamba. And the fact that EPA is registration is could be, you know, I guess up in the air or uncertain given the lawsuit. And I guess there's the ability for various uses this year, but next year is in jeopardy, I suppose so. So I don't know if you have a view about how that may play out, Eric, and what the implications might be, if I'm yes, that's fair further. And if there's further restrictions on dicamba, does that represent any opportunity straight?
You did?
Thank you.
Eric Wintemute
Yes, from a from a dicamba side in the marketplace, I think it's up to the sort of basics that have platforms on dicamba to decide whether they want to challenge that ruling. So that would be a decision for the quarter should be a fair amount of support for the for that challenge, but nothing that we wouldn't really be involved in.
And from an opportunity standpoint, we mentioned I mentioned the low end, our other kind of herbicides that we put together our Sinead, which is kind of two grams on bus velocity. And we're ramping up our portfolio of cover herbicides. We have such a benchmark there.
But Bob, maybe from your side?
Bob Trogele
Yes, I think that the opportunities being discussed with customers now to news is pretty recent. We're in the middle of the season. So there will be really just a 2025 discussion and as crop season ends. One of our key initiatives as far as innovation has been our press release, formulation technology, which is in silo and allows a good solid solution into windows of herbicide resistance, but also if technologies like dicamba do not survive the regulatory process. So we'll open up a window for index technology.
Chris Kapsch
Got it.
And so just the one quick follow-up on that, Bob, appreciate the Prolieve that formulation, I mean, is that the one that's associated with that or different chemistry?
Bob Trogele
and so that's the one that comes out of our formulations team here in California. It's a technology where we can put multiple chemistries together with the basic chemistry of two phosphate ammonia and stabilize it and deliver it to the to the end user. It broadens the <unk> the acre opportunity for us as far as value extraction and it targets any resistant weed issues that the grower may have as far as timing, it enhances his ability to be more flexible as far as application. So it's something that we're very, very excited about going forward. And we have a family of products that are coming with that basic formulation technology, it was
Eric Wintemute
(multiple speakers) Okay.
We can take the different chemistries that don't don't mix well together of like oil and water having. And yes, having a grid supplier, the suspense for a long duration period of time. So that's been that's been a drawback of a number of them.
Chris Kapsch
Products is just compatibility with other with other products guy, and this one is sort of tenor and goes back to maybe a time by. Thank you.
Bob Trogele
Correct, the fascinating, but we see potential other uses also.
Chris Kapsch
Thank you.
Operator
Thank you.
Just a reminder to the audience to ask a question at this time, press star one on your touchtone phone to remove yourself from the queue, please.
Our two, our next question comes from Andrew Lester with Hartley capital.
Please state your question.
Andrew Lester
Hi. Thanks for taking the question. Bob, it last quarter was light of different market conditions. The Company had to borrow a bank debt. That is what would be and sort of short-lived in light of better results. Could you state how much of that debt has presently been repaid and how quickly you expect to be able to pay down the balance?
Thank you.
Eric Wintemute
So yes, you could say that, okay, you know, so there's an extension to that, that multiple functions defense did have four just three of them. With other words, there's 2.75 targeted this amendment covenants were for the year and has kind of graduated of that point the fruit, but we got 2.7% which we did and feel that we have to change that system.
David Johnson
Okay.
And just a suggestion for the future. I know you released the news that the earnings call would come out via Bloomberg. I will just make a recommendation that it sort of more broadly be disseminated because it's very easy to miss for somebody who didn't have Bloomberg, whether it be Reuters, Dow Jones or Yahoo. Finance, something like that, I just think would be helpful for shareholders.
Thank you.
Eric Wintemute
(multiple speakers) For Brazil, Brazil and I don't know, David, if you wanted to add to that if I look at it.
Operator
Thank you. And final reminder to ask a question, press star one on your cellphone will pause for a couple more to see there.
Any question, as there appears to be no additional requests for questions.
I'll hand the floor back to Eric Wintemute for closing comments.
Thank you.
Eric Wintemute
Okay.
We'll again appreciate everybody taking the time to to listen presentation again. As I said, it's an exciting time for us where we're making a lot of improvements in our organization and go forward. We feel very bullish about it about the outcome for '24 and beyond and look forward to giving you additional additional updates.
Page 4, which is a part of it as we get through Q1. And I appreciate the question and then your participation. Thank you very much.
Operator
Thank you.
That concludes today's call. All parties may disconnect.
Have a good.
