Greetings, and welcome to the American Vanguard Third Quarter 2020 Conference Call. This conference is being recorded on Monday, November 9, 2020.

Thank you very much, Keith, and welcome everyone to our third quarter and 9-month earnings call. A few orders of business before we proceed. We are providing to the SEC our 10-Q report today. There has been some delays on the part of the SEC. But we will get that done today. Also in our press release, you took note of the fact that we are providing some slides to accompany our conversation today. They deal with the quarter and they deal with our strategic growth initiatives. So if you're all online, you will see them scrolling across your screen. If you are on audio, telephone only, you can see such slides by going to our website. There is an icon on the very front page that allows you to see those slides. Our usual cautionary reminder, which we will do before beginning. 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 include weather conditions, changes in regulatory policies, competitive pressures and other risks that are identified 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. Such information will not necessarily be updated by the Company. In today's call, we will first be starting with our Chief Financial Officer, David Johnson, who will review the quarter and the 9 months followed by Mr. Eric Wintemute, Chairman and CEO of the Company, who will talk about our strategic growth initiatives. We also have Mr. Bob Trogele present to answer any questions you may have. So with that, I will turn the call over to David Johnson.

Thank you, Bill. For a change of pace during this call, I will lead off with my remarks on our financial performance during the reporting periods and my analysis on issues of greatest interest to our investors, financially speaking. I will then turn the call over to Eric, who will give you his thoughts on our 3 to 5-year targets for growth. Going forward, we intend to keep you apprised on how we are doing against these targets, just as I do with respect to matters that are key to investors, understanding our business performance such as inventory and borrowing capacity. With regard to our public filing, as Bill mentioned, our 10-Q document for the 3 and 9 months ended September 30, 2020, is presently in queue to be filed today. I do understand that the agency that assists us with our filing has a large number of documents in the queue at this time. Everything I am covering here is included in more detail in that document. As we have noted in previous calls, the Company is fortunate to participate in industries that are considered part of critical infrastructure in all countries in which we operate. As a result, our customers and our suppliers have all operated more or less without disruption during the pandemic. This has continued through the third quarter. Having said that, the pandemic has impacted us in a few ways, including our ability to present new sales and marketing ideas such as new products face to face with customers in the field. We have also seen customer buying patterns that appear to have been moderated in the face of pandemic-related uncertainties. On the other hand, the same restrictions have caused us to spend less on operating expenses. These marketplace changes have been challenging to manage. However, we have succeeded in maintaining a profitable performance throughout this difficult period. With regard to our financial performance for the 3 months ended September 30, 2020, the Company's net sales decreased by 6% to $117 million as compared to sales of $125 million this time last year. Within that overall decline, our US sales were down about $7.5 million, and our international sales were flat. International sales accounted for 43% of net sales as compared to 41% of net sales this time last year. The main factors driving our third quarter sales performance are as follows: In our US crop market, sales were affected by reduced cotton acres, which, according to USDA statistics, are down about 11%, or 1.5 million acres in 2020. Acres were impacted by cotton commodity prices that are down, driving growers to plant alternative crops. Our market performance has also been impacted by extreme drought conditions in West Texas and frequent hurricanes in the Southeast USA, both affecting grower ability to apply our products. On a plus note, we saw a stronger-than-expected demand for our fumigant products, which are sold into the potato markets. The better-than-expected performance is attributed to cautious reopening on schools and restaurants across the United States. In our domestic non-crop market, there were small quarter-over-quarter changes with some decline on our pest strip products, which are used in bars and restaurants that were impacted by pandemic restrictions. With regard to international sales, which were overall flat, there were really 3 factors. First, we had a very strong performance in Mexico, Central America and Australia. By contrast, our Brazilian sales were down in real terms as a result of reduced insect pressure and challenges getting in front of customers because of pandemic restrictions. In addition, sales translated from local currency to US dollars were further negatively impacted by a decline in local currency exchange rates quarter-over-quarter. Finally, whereas we saw Mocap and Nemacur sales lower in Europe, both products recorded significant sales increases in other parts of the world. As you can see from the table, the US crop market was where we recorded reduced sales. This is pretty much in line with other market participants that have reported Q3 results. Our international business increased as a percentage of consolidated net sales and our comparatively low exposure to foreign currency rate movements was a strength for the quarter. With regard to the 9-month performance, the various market dynamics described for the quarter are broadly the same. Our US crop business was impacted by reduced cotton acres and by growers making cautious decisions with regard to input as the pandemic gradually revealed its impacts. As an offset, we have done a bit better than expected with fumigants as schools and restaurants reopened. And in addition, we've had the benefit of sales of products acquired in the fall of 2019. Our non-crop business in mosquito control has been a little lower than we hoped given the storm intensity impacting our main markets, mainly due to vector control districts using existing inventory. Finally, our international sales have performed well, given the challenges with currency devaluation in some of our key markets. Moving now to cover our gross profit performance. For both the quarter and the year-to-date, the trends are fairly similar. In our US crop business, the drop in gross profit was driven by our lower sales of cotton products and partially offset by strong fumigant sales. In non-crop, the impact of reduced sales of Dibrom and pest strips were negative for the quarter and was somewhat offset by strong sales in our horticultural business which has slightly lower margins. During the quarter, we also recorded higher royalty income on our Envance technology business. For the international business, the decline in foreign exchange rates was offset entirely in the 3-month period and to a lesser degree in the 9-month period by strong performances in Central America, Australia and Mexico. As a result of these various dynamics, gross margin performance in the quarter reduced from 38% to 37% and for the 9-month period from 39% to 38%. For the quarter, our manufacturing performance was strong with factory operating cost well controlled and activity improved as compared to 2019. Generally speaking, over the long term, our net factory costs amount to about 2.5% of net sales, reflecting some latent capacity in our plants should the need arise. This kind of available capacity is necessary to help manage our production planning effectively. In the third quarter our factories cost approximately 2.4% of sales as compared to 2% this time last year. The third quarter is typically a strong manufacturing period for the Company. For the first 9 months, the net factory costs amounted to 1.6% as compared to 2.4% of net sales for the same period of 2019. For the 3 months ended September 30, 2020, our operating expenses decreased as compared to the same period of the prior year. The underlying performance is greater than its parent from the published statements because in 2019 we benefited from an adjustment to earn out liabilities on past acquisition. That benefit did not recur this year. On the other hand, we did record a benefit of approximately $1 million during the third quarter because we completed an update to our environmental risk assessment related to the Brazilian business we acquired at the start of 2019, which led to a decrease in our liability in this regard. As we have reported for prior periods this year, our operating expenses were reduced because travel and entertainment costs were lower as a result of pandemic restrictions in all jurisdictions in which we operate. Our costs were also reduced because of the translation effect caused by devaluation of currencies that are important for the Company, including the Mexican, Brazilian and Australian currencies. With regard to the 9-month period ended September 30, 2020, in comparison to the same period of 2019, our overall expenses have reduced. The reported reduction actually understates the real improvement because in 2019 we benefited from adjustments to earn out liabilities related to past acquisitions in the amount of $3.5 million that did not recur this year. As a result, our underlying costs are down approximately $5.5 million, or 5%, for the 9 months. The drivers of the reduced costs are similar to the quarter. We have spent less on travel and entertainment because of pandemic restrictions. Both short- and long-term incentive compensation is tied to financial performance and has reduced in 2020 compared to 2019. Finally, operating expenses incurred in currencies other than the US dollar are reduced as a result of the devaluation of those currencies I have already mentioned. I've mentioned adverse exchange rate movements in 3 key currencies for the Company's perspective. I want to put some color on that comment. If we had used the 2019 exchange rates for both the 3- and 9-month periods of 2020, our reported net sales would have increased for the 3 months by $3 million and for the 9 months by $7 million. When looking at gross margin, we would have recorded additional gross margin of $700,000 in the 3-month period and $1.7 million year-to-date. Notwithstanding these impacts we have been effective at putting in place some natural hedges. That is that the majority of our operating expenses for the businesses in the territory are also in local currency. That mitigates the impact on sales and gross margin, leaving relatively immaterial differences at the bottom line resulting from translation exposure. The Company experienced some significant transactional-related exposures during the first quarter of the year. This has reduced as exchange rates have settled at new levels during the second and third quarters. During the third quarter, we recorded lower interest expense than this time last year. Our average debt was lower than the prior year, and we got a benefit from reduced borrowing rates in the US. In the 9-month period, our average debt was a little higher than the prior year, but we gained the benefit for the lower federal base rate resulting in significantly lower interest expense. Finally, our effective tax rate continues to decline in comparison to the prior year as we are having a stronger international performance in jurisdictions with lower rates this year compared to last year. In the 3-month period, we earned $0.10 per share as compared to $0.11 per share in the same period of the prior year. For the 9-month period, we earned $0.25 per diluted share as compared to $0.34 per share last year. From my perspective, the operating and financial focus of the Company remains as follows: We continue to follow a disciplined approach in planning our factory activities balancing overhead recovery with demand forecasts and inventory levels. At the end of September 2020, our inventories were at $176 million as compared to $186 million this time last year. During the intervening periods, we have made acquisitions and added inventory as a result. The underlying period-over-period improvement in our base inventory before the impact of recent acquisitions amounted to approximately $14 million, or 7.5%. We are highly focused on our balance sheet as we navigate through this pandemic period and having lower inventories at this point of the year is pleasing to report. As we look at the final quarter of the year and our target for December 31, 2020, inventory, Eric will comment in a moment about acquisitions that we closed in the first and second week of the final quarter of this year. As a consequence, our inventory forecast will now be amended to incorporate these new businesses. In previous conference calls, we expected to end in the region of $145 million. Given our latest operations planning assessment, we are expecting that our underlying inventory will increase a little from our prior forecast. In addition, the new acquisitions that Eric will mention in a moment are expected to add approximately $15 million at December 31, 2020. Accordingly, our latest forecast is to end the year at approximately $160 million to $165 million, effectively flat with 2019, but including the addition of inventory from recent acquisitions. Our business has a distinct annual cycle, and we routinely experience expansion in working capital in the first part of the year and a reversal in the second part. During 2020, we, like most businesses, have been highly focused on working capital and its impact on debt levels. During the period of the year when we typically expand working capital, we have contained the increase to only $5 million as compared to adding $49 million in the same period of 2019. This careful management of working capital is driving the improved cash generated from our operating activities. In the first 9 months of 2020, we have generated $19 million from operations as compared to using $21 million in the first 9 months of 2019. Comparatively that amounts to a positive change of $40 million period-over-period. At September 30, 2020, net indebtedness ended at $149 million as compared to $165 million this time last year. During the last year, in addition to paying down $16 million in debt, we have funded more than $27 million in investments, including fixed assets, product acquisitions, and technology investments from the cash generated from operations. These investments are focused on developing our consolidated business for the future. With regard to liquidity at the end of the third quarter, availability under our credit line was $45 million, which compares to $30 million at the same point in 2019. In summary, for the third quarter and for the 9-month period, though our sales were down, selling prices and gross margins in each territory remained good. We are seeing a stronger international performance this year, and the mix of US sales, generally higher gross margin; and international sales, generally lower gross margin, is tending to bring the average down slightly. Our factory performance improved compared to 2019, and our expenses for operating costs, interest, and tax are all lower in 2020 than in the comparable periods of the prior year. From a balance sheet and cash perspective, we are doing very well, managing working capital, and our debt is lower than this time last year, notwithstanding our investments in long-term growth of our business. Finally, availability under our credit line has improved. With that, I will hand over to Eric.

Thank you, David. Many of our investors have expressed an interest in our strategic direction and longer-term prospects, particularly in light of our increased emphasis on technology innovation. In that spirit then, rather than getting into the weeds on market conditions over the past reporting periods, I would like to look forward to where we hope to be in the next 3 to 5 years. We have 3 primary growth platforms within our business: our core business, our green product lines, and our precision application technology led by SIMPAS. There are synergies between these platforms. For example, SIMPAS is a market access tool for both core products and green solutions such as Agrinos biologicals. Also, there is some overlap between these platforms. But for directional purposes, it is useful to take each platform in order. Our core business consists largely of our synthetic chemistries. Using 2019 numbers as a reference, let's build a model using a baseline of annual sales of $468 million. We have grown our core business in 3 ways: First, organically, that is through additional market penetration; second, through our new product pipeline, that is making new formulations or getting new users for what we already have; and third, through acquisitions. If we were to grow at a rate of only 2% per year, we should be at $507 million by year 3 and $527 million by year 5 in organic growth. Let's add to that our new product pipeline. We regularly introduce several new products per year. For example, in 2020 alone, we launched 5 new formulations. As these new products get traction and we continue adding new introductions, we expect that we will add another $37 million by year 3 and $109 million by year 5. The core business plus new pipeline products puts us at $544 million by year 3 and $636 million by year 5. But now let's add acquisitions. It's hard to predict the acquisition market, but I can say that it is extremely active today. As you may have read, we just completed 2 acquisitions: Agrinos, a biologicals company that I will talk about further in a moment; and AgNova, an Australian company that gives us greater critical mass and market access in Australia and the surrounding region. To establish our forward-looking target, we look backward over the past 5 years and determined that on average we added $40 million per year in sales of newly acquired products. If out of conservatism, we cut that number in half to $20 million per year and extrapolate it forward, we find that our incremental acquisition growth that puts us at $60 million by year 3 and $100 million by year 5. The core business plus new product pipeline acquisitions puts us at a 3-year top line target of $604 million and a 5-year target of $736 million. Now let's turn to our green solutions platform. Before we get back to the model, I would like to bring you current on a recent acquisition. In early October, we acquired the shares of Agrinos, Inc. and its sister companies at a very favorable price as they were being sold in an auction by the Norwegian parent in a liquidation process. Agrinos makes and markets unique blends of biological products into many markets and operates 3 factories. The first located in Oregon, ferments a 22-species consortium of bacteria into an end-use product that enhances soil health and plant growth by, for example, increasing nitrogen uptake. The second located in Mexico, produces a microbially enhanced chitin-based product. The chitin, a calciferous substance, comes from the shells of shrimp that are locally grown and that has similar applications. The third located in India produces biologicals for that region, including sales to the Government of India. With this investment, we have created a biologicals team to manage these green product offerings globally. That effort will also include our management of the Envance/TyraTech business. So let's get back to the model. Now adamantly, some of the green solution businesses are already included in our core business. For purposes of this discussion, we will focus on the incremental addition. Through the end of the third quarter of 2020, we had already been on track to sell approximately $22 million in green products this year, including biologicals, bio-nutritional products through both our domestic and international businesses, and essential oil products through Envance, which are the active ingredients in Procter & Gamble's Zevo line of consumer products. Let's use that number as a baseline for our green products platform. And as mentioned, we are already in the consumer pest control space through the P&G's Zevo product line, and we are expanding our essential oil product line into other areas, including lawn and garden, crop, and public and animal health. We expect that with the addition of Agrinos, the growth of our other biologicals, and the expansion of Envance/TyraTech, we should see incremental revenues in year 3 of $48 million and in year 5 of $118 million. Let's take our prior graph of core, including product pipeline and acquisitions, and now add green products. That would take us to about $70 million in year 3 and $140 million in year 5. Now for the third platform, namely precision application. We have been reporting regularly about our SIMPAS technology, which we believe is at the leading edge of prescriptive application systems. We know of no other system that enables a grower to take an agronomist's prescription for multiple crop inputs based upon field conditions and prior yield results and apply those products variably in multiple rows automatically in one path. Further with our Ultimus technology, we can trace product from factory to field, and as important, we can measure precisely what was used in any given application. And now we are enhancing this technology to permit seed treatment at time of plant. After seeing positive results from field trials by growers in many states, a number of our peers are performing their own tests with the goal of making their products available in smart cartridges through SIMPAS. That said, some investors are asking that we give them a better idea of where SIMPAS could be in 3 to 5 years. In order to answer the question, we will consider the following elements: first, revenues from our existing portfolio of products, and I'm talking about increased users which would be dramatically enhanced by applied prescriptively; second, revenues from the sale of active ingredients, licensed from other basic producers to be sold under RNA; third, royalties from third parties for marketing their products through our smart cartridges under their name; and fourth, a share in the growers' incremental yield benefit. Using conservative estimates of market penetration and domestic markets only, we are targeting top line contribution on the order of $35 million in year 3 and $131 million in year 5. In addition, we are confident that SIMPAS will be well received outside the US and are already planning to host SIMPAS field trials in Brazil in 2021. Also, these figures do not include the potential for additional revenues from our seed treatment innovation. In other words, these are conservative, domestic, in-furrow SIMPAS targets only. Let's put all of the platforms together. If we add CORE plus green plus SIMPAS, we are in the neighborhood of $687 million in year 3 and $985 million in year 5 at the top line, which is roughly double where we are today. There are many moving parts of the equation. We will continue to control the things that are within our control. For example, exercising strict discipline on managing working capital and operating expenses. Further, we are committed to maximizing our consolidated profit margin. While our expansion into distribution within international markets has tended to lower our gross margin percentage, we expect that the introduction of newer technologies across these markets will create an updraft on profitability. In future calls, I will be updating you on how we are progressing against those targets. Finally, let me pull our focus to the present and the near term. 2020 has been an unprecedented year for this industry. In spite of the pandemic, weather effects, and farm economy, as David mentioned, we have kept pace with Q3 of 2019 in terms of profitability, even with modestly lower sales. Looking forward into the fourth quarter, we are already seeing greater optimism in the domestic agricultural sector, hurt in part by rising crop commodity prices for corn and soybeans and cotton, which would tend to contribute to improved grower profitability. In the Midwest with less crop rotation and more continuous corn over corn planting, we are beginning to see a resurgence of soil insect pressure. In addition, demand for our soil fumigant products continues to rise. Based upon these trends and current sales activity, we are encouraged by our prospects for the balance of this year and into the 2021 season. We'll now take any questions you may have. Keith?

The first question is from Joseph Reagor from ROTH Capital Partners.

I guess first thing, thanks for providing this longer-term outlook. I know a lot of us have been asking a lot of these questions anyway. But kind of like just a base question on it. When the world returns to normal, what would be your expectation for annualized number, like ex-COVID impacts without all the growth?

So you're talking about our core business?

Yes. Like currently the core business if it wasn't for COVID impacts around the world, what do you think the annualized 2021 revenue might be?

Yes, I believe that approximately $5 million to $10 million is related to COVID. The growth aspect, which is part of our core business, has been affected as we were unable to meet face to face this year, limiting our product development and customer engagement to remote interactions. We've been in a down cycle since prices dropped in 2014, and while they have stabilized, we are now seeing the first signs of recovery. With the potential effectiveness of the vaccine, I anticipate increased demand for crops, especially from the restaurant sector and overall food consumption. Therefore, I see us entering an upswing as we move into 2021.

Okay. Fair enough. And then kind of looking backward a little bit, you guys then gave a ton of what I would call market commentary on the quarter. It seems like there was a lot of impact in Q3 related to weather and then related to crop pricing. Is there any way you or David could quantify that? On a sales number, what do you think that was as an impact?

I think if we focus on cotton, the revenue for the quarter was about $6 million.

$5 million to $6 million, yes.

About $6 million is the impact we identified, primarily from three products contributing the most. Last year, we had a stronger cushion in Dibrom as many companies were placing orders for perishables in the fourth quarter. This year, those pre-orders are being processed through our main distributor, leading to a reduction in inventory. We anticipate having lower inventories of Dibrom by the end of this year.

I also mentioned pest strips were down a little bit, and that was pandemic-related because of these in bars and restaurants.

Okay. And then one final thing. Any concept of how much revenue you might pick up in Q4 that was lost in Q3 for timing reasons or whatever? And then kind of like a brief outlook of how Q4 is going so far? It seems like prices are up and maybe demand is up, too.

Yes, we are optimistic about Q4 for several reasons. One reason is the carryover effect from Q3 due to timing. Our soil fumigant business has performed strongly. Fortunately, we haven't had significant snowfall, which has allowed us to treat a lot of ground; although we do have some snow-capped mountains here in Southern California today. Looking ahead to the 2021 season, we've heard that corn rootworm pressure has increased, and there seems to be a more positive outlook regarding treatments for corn rootworm. Therefore, we anticipate an uptick in our corn-related activities.

The next question is from the line of Chris Kapsch from Loop Capital Markets.

I have a follow-up regarding the effect of cotton this season. I'm wondering if this will create a challenge for 2021 similar to what we see in the Corn Belt during weak seasons, leading to an excess of inventories in the channel. Given that this means they couldn't apply products in the Southeast and instead need to focus on West Texas, should we expect to face challenges related to channel inventories in that important product line next year?

Yes, I don't think so. As we mentioned earlier, we have seen orders being placed since the pandemic began, where we might receive half a truckload or a truckload order at a time. We received a lot of orders, but they were generally smaller as everyone was focused on preserving cash and managing their inventory levels. Therefore, the sales that we didn’t achieve did not lead to an increase in channel inventory. We have more inventory than we would prefer, but we do not anticipate facing a headwind moving forward.

Okay. You mentioned some optimism about the fourth quarter and into 2021, primarily due to firmer agricultural commodity prices, despite several challenges. Regarding the demand you're anticipating in the fourth quarter, could you elaborate on which product lines are experiencing this trend? Is it mainly products related to corn, or is it evident across various categories? Additional insights on this would be appreciated.

Yes, I think it's a general issue. We had been facing supply challenges with Bromacil, but that has been resolved. There have been some constraints in a few product lines. However, I believe that if the agriculture industry can return to a more stable state, and if today's response is any indication, I expect to see efforts from people around the world to meet the demand that should increase in the coming year.

I appreciate your comments about the possibility of increasing corn rootworm pressure and the mention of possibly reduced crop rotation recently. That seemed to contribute back when corn prices spiked in 2012 during that significant drought. Are you suggesting that farmers have generally maintained good crop rotation practices from then until now, which has resulted in diminished crop protection? Is there anything else that has led to reduced pest protection apart from crop rotation?

Yes. I mean obviously there is the trade as they advance or don't advance or the weather conditions certainly being conducive. I think all estimates are that corn will be up probably 2 million acres this year, this season versus last season and it was pretty strong last season. So I think those are the factors. Bob, I don't know if you've got any more color you'd like to add on that.

I believe the soybean market is influencing the corn market somewhat, especially since stock and use ratios are at a 23-year low, indicating a tight supply of soybeans. This may lead to a slight increase in corn prices, depending on demand from China. The significant news is that farm income this year is considerably more profitable than in 2019 and 2020. As we approach spring, we might see farmers becoming a bit more optimistic, which is a positive sign for the season ahead. Additionally, drought conditions in Southern Brazil may impact their production capacity. Meanwhile, China seems to be resuming their purchases. Unless we encounter another situation like COVID-19, which we hope to avoid, the outlook for next year appears favorable.

Yes, I would just add to that. I was in Brazil a couple of weeks ago, and one of the things they mentioned was that the Brazilian government is opening up import lines for corn from the US this year because they are running low. The Chinese have taken a lot as they moved away from US sources. As a result, they lack enough corn to meet their demand this year due to the drought and expected yields.

Interesting. Can you provide an update on the corn rootworm situation? You likely have some of the most effective soil-applied insecticides available. However, there are also liquid variants that may not be as strong. Additionally, I believe Monsanto's RNAi technology has been approved and could be relevant in this market. Could you discuss the current competitive landscape for your products in relation to your competitors, especially if we see increasing corn rootworm pressure?

Yes. Before I pass it over to Bob, I want to mention that we expect to reach the prescriptive level this year. While we conducted beta testing last year, we will have significantly more systems available this year. Additionally, we will introduce what we call SmartBox Plus, which is a SIMPAS system equipped with a 50-pound SmartBox capable of applying a corn soil insecticide in a prescriptive manner. I believe this will attract more attention in the prescriptive market. Bob, do you want to continue?

Yes. So I'd like to just confirm what you said that AMVAC has the best technical solution for high corn rootworm pressure. It's also the most expensive solution in the market. So we're the market leader in that. The market is really broken down into 2 sectors, granular and liquid. I would say that the granular market is holding both on price and volume. We've increased, I would say, in the last 2 years, our share marginally in that market. The liquid market seems to be more competitive and is looking to be a little bit more price sensitive. So hope that answers your question.

Do you have any visibility on the RNAi technology?

If I look back to 2015, it was expected to be launched in 2020, but we haven't seen any progress. It appears that they are still quite a distance from bringing it to the market, if it even comes to market at all.

There is a follow-up from the line of Chris Kapsch.

I appreciate your effort to provide a broader perspective on what your growth factors might look like in the long term. I'm interested in the organic aspect; what do you expect the mix and margin profile to be? Additionally, if I understood you correctly and I need to review the numbers you provided, you mentioned that the new formulations you’ve launched are expected to contribute $37 million in revenue by year 3 and $109 million by year 5 from just 5 new products. That suggests a significant increase in adoption for those products. I’m curious about the basis for that expectation and whether the calculations you've shared regarding the three buckets account for the possibility that some of these new formulations could cannibalize sales from your core products, which are figured into the 2% growth for your core sales.

Yes, the five new products we launched in 2020 are part of a bigger trend. The previous year, we introduced around 10 or 12 products. We have several planned for 2021 and 2022, so it's really the cumulative impact of all the new products we launch every year. Therefore, it's not just about the five new products; it's more than 20 at this point. That's one aspect. Can you remind me what your other question was?

Does your growth expectation there reflect some cannibalization from those new introductions of your existing legacy products? And then, in this sort of bucket of the 3 different vectors that you discussed, what is sort of the gross margin or mixed profile expected from the aggregate of that tranche of sales?

Yes. When we did this, we aimed to separate the growth of core products from the growth associated with new products. We do not expect any cannibalization; rather, we are focusing on improved market penetration. I'm sorry, could you please repeat your last question?

Any expectation on the gross margin profile of the mix of the products in that first bucket of sales that you described there as core with new products?

Our margins in the US remain consistently in the mid to upper 40 percent range. However, as our international sales have increased, our overall margins have declined. We have previously mentioned our strategy to expand market penetration through acquisitions and distribution. Notably, the new biological products we are introducing come with very high margins, and as we establish these globally, we expect to see an increase in our margins worldwide, particularly in that specific area.

There are no other questions in queue.

I appreciate your input and the request to create a model. Each quarter, we will provide updates and share different insights as we continue to work towards our growth expectations. Thank you for joining us, and we will have the next call in early March. Thank you very much.

That will conclude the conference call for today. We thank you for your participation, and you can now disconnect your lines.