David Johnson: Yes. So three quick points, Steve we see that as a positive. It expands our distribution network. AGCO has over 2,000 distribution points. So, therefore, we see much more opportunities. We don’t have to wait until that deal goes through. We’ve already started that process. Two, we see a lot of cross-selling opportunities between precision planting and our systems. We’ve been working with AGCO for 8 years so there is already a relationship in place. We’ll just reinforce that. And then I think three, there’s an action list we’ve already agreed with management to start in 2024 for the 2025 season. So I hope that gives you color. If you have a follow-up question.
Unidentified Analyst: Yes. No, that helps a lot. I was just kind of curious, I didn’t know if AGCO had exactly something similar to the SIMPAS equipment or if you guys might fit in well with them.
Eric Wintemute: We’re symbiotic
Unidentified Analyst: Okay. Sounds good. Thanks for the info
Operator: Thank you. Our next question comes from Chris Kapsch with Loop Capital Markets. Please proceed with your question.
Chris Kapsch: Yes. I had a couple of follow-ups. Just so as you look through the fourth quarter and next year, just curious, if you achieve these levels, like how much of your inventory will you be able to sort of liquidate and therefore, working capital can be turned to or generate – sorry, become a source of cash? And what are the implications for your debt position either end of this year, if you have that strong fourth quarter or through ’24?
Eric Wintemute: That’s a very good question. I mean I think we’re looking to reduce about 39 in Q4 –already. Something like that inventory in Q4. I can tell you the part of the process that we’re doing is understanding where we’re deploying our working capital – it’s not that it’s something we should have been focused on at all times, but it’s a completely different picture when you’re paying 7% interest versus to 2.75% interest. So as such, there’s been a strong look at each of our inventory items globally and targets that are set to bring those down dramatically from where they have been particularly of concerned or products that we may be storing that are lower-margin products. And I think all along, as we’ve acquired some of these distribution businesses told them, essentially, we really are not focused on top line and how we’re driving this bottom line.
So you’ve got low-margin products, let somebody else sell them focus on building higher margin volume products when we need to – we’re going to need to improve working capital and deployment across. So we’ll give a little more granular view on the target specifically to each of the edges. And as we mentioned, we’re holding accountable to get to those numbers.
Chris Kapsch: Its okay, just as a follow-up to that. I would – and I don’t know if this – is there any part of the transformation plan that examines and looks at your product SKUs that – where there might be some that aren’t just simply aren’t profitable and therefore, might be candidates for rationalization? Or is the transformation plan really just focus more on operational measures.
Eric Wintemute: We’re focused on all aspects, including margin justification of products that we would have in inventory. Again, our customer – a number of our customers kind of gone to being stocking distributors to on the billing side. And so as such, we’ve got to kind of reevaluate what we’re going to do with our products. We’re not a bank. We’re not set up to be a bank and we need to make sure that as we deploy capital, we’ve been in the best return on our capital that we can. So yes, we’re examining all aspects
Chris Kapsch: And then one other question, sort of peruse buyer Monsanto results, I think it was this morning. And it was interesting, the season trade business is up and healthy and positive pricing and is subjected to this downbeat sort of backdrop. And then obviously, with – for them, the pretty pronounced pressures on quite in other crop chemistry. But they – so curious, is there any sort of bifurcation in your portfolio along those lines where some of your products are more subjected to those pressures than others. That’s one question. Then the second was they also mentioned that – and this is pretty well understood, I guess, by the broader market that given the corn to soy ratio that there will be a shift in acreage most likely from corn to soy, – just wondering what the net implications of that, if any, your portfolio in a normal year? Thank you.
Eric Wintemute: Sure. So as far as kind of generic, there’s not a product that has more generic pressure than glycoside believe globally. And that’s not a product that we play in. They have geoplasm historic that’s associated with that molecule. And so I think from a seed standpoint, that remains healthy, which tells you that demand is still there for planting and the crop inputs. But – we do not have a great deal of exposure to the generic. We’re not immune to it. Obviously, as I said, we’re seeing Central America, maybe is having more pressure than some of our other areas. But with regard to the second part of your question, I’m sorry, what was the second piece? I missed —
Chris Kapsch: Yes, on the acreage shift corn and soya.
Eric Wintemute: Yes. I mean we’re effectively with our corn, we’re effectively on those are high-pressure areas, which typically tend to be corn on corn, they don’t shift like they would see in some of the areas where there acres, let’s say, in the south that call more corn, soybean shift or even in the cotton. We have a growing portfolio of products on soybeans, and we have our SIMPAS-applied Solutions products on soybeans as well. So I think that was part of our strategy was to add to our portfolio for SIMPAS soybean products as well as cotton products and peanut products so that people using our SIMPAS system could produce it on multi crops. But yes, there’s – I mean, going from 90 million acres of corn to 88 million acres of corn and 2.5 acres that we’re involved in with our corn and soil insecticide really doesn’t have much of a play.
And it’s more – ours is more based upon corn rootworm pressure. And one of the things we’re happy about this year launching into – well I guess I think we’re getting off this year with our BioWake —
David Johnson: Yes.
Eric Wintemute: BioWake product that will also be for low corn rootworm pressure and again this is our first real commercial launch. We did a trial launch last year and moved a fair amount of product in a very short window. But in addition to corn and soybean specific, we have peanut and cotton BioWake products, and then our new product, which would be controlling in light rootworm pressure areas. So.
Chris Kapsch: Appreciate the color.
Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to Eric Wintemute for closing comments.
Eric Wintemute: Okay. Well, I hope this is the last quarter for some time to come where we do not meet expectations. It’s been a long time and I appreciate the pressure that is upon us and the performance of our company. But we believe we’ve taken a very nice corrective approach for as we’ve headed into the Q4 into the ’24 season and look forward to giving you an update report when we get together in January. So with that thank you very much for attending. Bye-bye.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
