8-K
AMERICAN VANGUARD CORP (AVD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): March 10, 2021
AMERICAN VANGUARD CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-13795 | 95-2588080 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | Commission<br> <br>File Number | (I.R.S. Employer<br> <br>Identification No.) |
4695 MacArthur Court
Newport Beach, California 92660
(Address of principal executive offices)
Registrant’s telephone number: (949) 260-1200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol | Exchanges<br> <br>on which registered |
|---|---|---|
| Common Stock, $.10 par value | AVD | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b02 of the Securities Exchange Act of 1934 (§240.12b02 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On March 11, 2021, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2020. The full text of the press release is linked hereto as Exhibit 99.1 and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K, including the Exhibits attached hereto, is being furnished under Items 2.02, 8.01 and 9.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01 Other Items
On March 10, 2021, the Board of Directors of Registrant declared a cash dividend of two cents ($0.02) per share of common stock of Registrant to shareholders of record as of March 25, 2021 to be distributed on April 15, 2021. On March 15, 2021, Registrant issued a press release announcing this dividend declaration. The full text of that press release is linked hereto as Exhibit 99.2 and is incorporated herein by reference.
Also on March 10, 2021, the Board of Directors of Registrant set the date of its 2021 Annual Stockholders’ Meeting (the “Annual Meeting”) to take place on June 2, 2021 with a record date of April 9, 2021. The Annual Meeting will be a web-hosted, virtual meeting (as was the case in 2020). Further details will appear in the Registrant’s 2021 proxy statement to be filed and made available in April 2021.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit 99.1 | Press release dated March 11, 2021 of American Vanguard Corporation regarding financial results for fourth quarter and fiscal year ended December 31, 2020. |
|---|---|
| Exhibit 99.2 | Press release dated March 15, 2021 of American Vanguard Corporation announcing a cash dividend. |
| Exhibit 104 | Cover Page Interacitve Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, American Vanguard Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMERICAN VANGUARD CORPORATION | ||
|---|---|---|
| Date: March 16, 2021 | ||
| By: | /s/ Timothy J. Donnelly | |
| Timothy J. Donnelly | ||
| Chief Administrative Officer, General Counsel & Secretary |
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD REPORTS FOURTH QUARTER & FULL YEAR 2020 RESULTS
Newport Beach, CA – March 11, 2021 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2020.
Fiscal 2020 Fourth Quarter Financial Highlights – **** versus Fiscal 2019 Fourth Quarter:
| • | Net sales were $141 million in 2020, compared to $131 million in 2019 |
|---|---|
| • | Net income was $7.9 million in 2020, compared to $3.4 million in 2019 |
| --- | --- |
| • | Earnings per diluted share of $0.26 in 2020, compared to $0.12 in 2019 |
| --- | --- |
| • | EBITDA^1^ of $17.1 million in 2020, compared to<br>$12.0 million in 2019 |
| --- | --- |
Fiscal 2020 Full Year Financial Highlights – versus Fiscal 2019 Full Year:
| • | Net sales were $459 million in 2020, compared to $468 million in 2019 |
|---|---|
| • | Net income was $15.2 million in 2020, compared to $13.6 million in 2019 |
| --- | --- |
| • | Earnings per diluted share of $0.51 in 2020, compared to $0.46 in 2019 |
| --- | --- |
| • | EBITDA^1^ of $47.6 million in 2020, compared to<br>$48.9 million in 2019 |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “2020 proved to be a very challenging year as the world coped with the COVID-19 pandemic. Global implementation of restrictive public health protocols resulted in conservative distribution channel procurement behavior, significant sales and marketing customer access limitations, and dramatic adaptation to remote work processes in many operational and administrative functions. Throughout the year, we maintained very strict health and safety regimens and thankfully have been able to keep AMVAC manufacturing facilities fully functioning and our workforce largely free of serious illness.”
Mr. Wintemute continued: “Despite a difficult and somewhat depressed revenue global environment, our 2020 year-over-year bottom-line performance has increased significantly. This resulted from pandemic restrictions affecting travel activities, lower interest expenses primarily due to reduced federal base lending rate, the benefit of securing a biological technology acquisition at a favorable purchase price, and other non-operating income. Recent product acquisitions continue to broaden our traditional portfolio and company acquisitions have expanded the footprint of our international business. This diversification along with our financial discipline allowed us to achieve reasonable revenue, strong profitability and a de-levered balance sheet despite the difficult business circumstances of this past year.”
| ^1^ | Earnings before interest, taxes, depreciation and amortization. EBITDA is not a financial measure calculated<br>and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an<br>alternative to cash flow from operating activities as a measure of liquidity. The items excluded from EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define<br>EBITDA differently. |
|---|
Mr. Wintemute concluded: “Looking forward, we believe that our Company is situated well in both domestic and international markets and are consequently optimistic about the prospects for low double-digit revenue growth in 2021. This optimism is driven by the belief that global economies are poised to start re-opening, higher commodity prices will encourage crop protection procurement, the expectation of larger corn acreage in the U.S., continued steady supply availability of key raw and intermediate materials, greater AMVAC product participation in the soybean segment, and the continued expansion of our international business. Looking forward, we expect gross profit margins to remain strong and operating expenses will be tightly managed as we return to more normal operations during the middle to later part of 2021. Further, we will continue to develop our innovative Envance, biological and SIMPAS technologies which collectively represent an integrated Environmental, Social and Governance (ESG) platform. We look forward to giving you a more detailed presentation during our upcoming earnings call.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, EVP & COO and David T. Johnson, VP & CFO, will conduct a conference call focusing on the financial results and strategic themes…at 4:30 pm ET on March 11, 2020. Interested parties may participate in the call by dialing (201) 493-6744. Please call in 10 minutes before the call is scheduled to begin and ask for the American Vanguard call. The conference call will also be webcast live via the News and Media section of the Company’s web site at www.american-vanguard.com. To listen to the live webcast, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Company’s web site.
About American Vanguard
American Vanguard Corporation is a diversified specialty and agricultural products company that develops and markets products for crop protection and management, turf and ornamentals management and public and animal health. American Vanguard is included on the Russell 2000^®^ and Russell 3000^®^ Indexes and the Standard & Poor’s Small Cap 600 Index. To learn more about American Vanguard, please reference the Company’s web site at www.american-vanguard.com.
The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the Company’s management and are subject to various risks and uncertainties that may cause results to differ from management’s current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed from time-to-time in the Company’s SEC reports and filings. All forward-looking statements, if any, in this release represent the Company’s judgment as of the date of this release.
| Company Contact: | Investor Representative |
|---|---|
| American Vanguard Corporation | The Equity Group Inc. |
| William A. Kuser, Director of Investor Relations | www.theequitygroup.com |
| (949) 260-1200 | Lena Cati |
| williamk@amvac-chemical.com | Lcati@equityny.com |
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2020 and 2019
(In thousands, except share data)
(Unaudited)
| 2019 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 15,923 | $ | 6,581 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 3,297 and 2,300, respectively | 119,071 | 136,075 | |||
| Other | 8,444 | 16,949 | |||
| Total receivables, net | 127,515 | 153,024 | |||
| Inventories, net | 163,784 | 163,313 | |||
| Prepaid expenses | 11,112 | 10,457 | |||
| Income taxes receivable | 3,046 | 2,824 | |||
| Total current assets | 321,380 | 336,199 | |||
| Property, plant and equipment, net | 65,382 | 56,521 | |||
| Operating lease<br>right-of-use assets | 12,198 | 11,258 | |||
| Intangible assets, net of amortization | 197,514 | 198,261 | |||
| Goodwill | 52,108 | 46,673 | |||
| Other assets | 18,602 | 21,186 | |||
| Total assets | 667,184 | $ | 670,098 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Current installments of other liabilities | 2,647 | $ | 1,513 | ||
| Accounts payable | 59,254 | 64,881 | |||
| Deferred revenue | 32,652 | 6,826 | |||
| Accrued program costs | 45,441 | 47,699 | |||
| Accrued expenses and other payables | 16,797 | 12,815 | |||
| Operating lease liabilities, current | 4,188 | 4,904 | |||
| Total current liabilities | 160,979 | 138,638 | |||
| Long-term debt, net of deferred loan fees | 107,442 | 148,766 | |||
| Other liabilities, excluding current installments | 9,054 | 12,890 | |||
| Operating lease liabilities, long-term | 8,177 | 6,503 | |||
| Deferred income tax liabilities, net | 20,796 | 19,145 | |||
| Total liabilities | 306,448 | 325,942 | |||
| Commitments and contingent liabilities | |||||
| Stockholders’ equity: | |||||
| Preferred stock, .10 par value per share; authorized 400,000 shares; none issued | — | — | |||
| Common stock, .10 par value per share; authorized 40,000,000 shares; issued 33,922,433 shares in<br>2020 and 33,233,614 shares in 2019 | 3,394 | 3,324 | |||
| Additional paid-in capital | 96,642 | 90,572 | |||
| Accumulated other comprehensive loss | (9,322 | ) | (5,698 | ) | |
| Retained earnings | 288,182 | 274,118 | |||
| 378,896 | 362,316 | ||||
| Less treasury stock at cost, 3,061,040 shares in 2020 and 2019 | (18,160 | ) | (18,160 | ) | |
| Total stockholders’ equity | 360,736 | 344,156 | |||
| Total liabilities and stockholders’ equity | 667,184 | $ | 670,098 |
All values are in US Dollars.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the years and quarters ended December 31, 2020 and 2019
(In thousands, except per share data)
(Unaudited)
| For the quarters<br>ended December 31, | For the years ended<br>December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||
| Net sales | $ | 140,747 | $ | 130,521 | $ | 458,704 | $ | 468,186 | ||
| Cost of sales | 90,109 | 83,985 | 286,114 | 290,832 | ||||||
| Gross profit | 50,638 | 46,536 | 172,590 | 177,354 | ||||||
| Operating expenses | 44,740 | 40,279 | 153,622 | 151,133 | ||||||
| Bargain purchase gain on business acquisition | (4,657 | ) | — | (4,657 | ) | — | ||||
| Operating income | 10,555 | 6,257 | 23,625 | 26,221 | ||||||
| Interest expense, net | 1,374 | 1,605 | 5,178 | 7,209 | ||||||
| Income before provision for income taxes and loss on equity method investment | 9,181 | 4,652 | 18,447 | 19,012 | ||||||
| Provision for income taxes | 1,228 | 1,155 | 3,080 | 5,202 | ||||||
| Income before loss on equity method investment | 7,953 | 3,497 | 15,367 | 13,810 | ||||||
| Less net loss from equity method investment | 45 | 61 | 125 | 209 | ||||||
| Net income | $ | 7,908 | $ | 3,436 | $ | 15,242 | $ | 13,601 | ||
| Earnings per common share—basic | $ | 0.27 | $ | 0.12 | $ | 0.52 | $ | 0.47 | ||
| Earnings per common share—assuming dilution | $ | 0.26 | $ | 0.12 | $ | 0.51 | $ | 0.46 | ||
| Weighted average shares outstanding—basic | 29,598 | 29,081 | 29,450 | 29,030 | ||||||
| Weighted average shares outstanding—assuming dilution | 30,194 | 29,853 | 29,993 | 29,656 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
Forthe years and quarters ended December 31, 2020 and 2019
(Unaudited)
| For the quarters ended<br>December 31, | For the years ended<br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Net sales: | ||||||||
| U.S. crop | $ | 74,537 | $ | 62,567 | $ | 223,167 | $ | 220,635 |
| U.S. non-crop | 10,675 | 19,521 | 48,557 | 61,590 | ||||
| Total U.S. | 85,212 | 82,088 | 271,724 | 282,225 | ||||
| International | 55,535 | 48,433 | 186,980 | 185,961 | ||||
| Total net sales | $ | 140,747 | $ | 130,521 | $ | 458,704 | $ | 468,186 |
| Gross profit: | ||||||||
| U.S. crop | $ | 30,221 | $ | 26,370 | $ | 98,340 | $ | 95,429 |
| U.S. non-crop | 3,690 | 8,269 | 22,225 | 29,713 | ||||
| Total U.S. | 33,911 | 34,639 | 120,565 | 125,142 | ||||
| International | 16,727 | 11,897 | 52,025 | 52,212 | ||||
| Total gross profit | $ | 50,638 | $ | 46,536 | $ | 172,590 | $ | 177,354 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2020 and 2019
(In thousands)
(Unaudited)
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Increase cash | ||||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 15,242 | $ | 13,601 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization of property, plant and equipment and intangible assets | 19,902 | 18,643 | ||||
| Loss on disposal of property, plant and equipment | 119 | — | ||||
| Amortization of other long-term assets | 4,246 | 4,207 | ||||
| Amortization of discounted liabilities | 9 | 72 | ||||
| Provision for bad debts | 1,002 | 1,035 | ||||
| Revision of contingent consideration | — | (4,120 | ) | |||
| Stock-based compensation | 6,561 | 7,160 | ||||
| Increase (decrease) in deferred income taxes | 969 | 2,616 | ||||
| Changes in liabilities for uncertain tax positions | (2,092 | ) | 263 | |||
| Change in investment fair value | (717 | ) | — | |||
| Loss from equity method investment | 125 | 209 | ||||
| Bargain purchase gain | (4,657 | ) | — | |||
| Changes in assets and liabilities associated with operations, net of business<br>combinations: | ||||||
| (Increase) decrease in net receivables | 26,517 | (11,383 | ) | |||
| (Increase) decrease in inventories | 7,421 | 3,817 | ||||
| (Increase) decrease in income tax receivable, net | (287 | ) | (6,855 | ) | ||
| (Increase) decrease in prepaid expenses and other assets | (474 | ) | (876 | ) | ||
| Increase in net operating lease liability | 18 | 149 | ||||
| Increase (decrease) in accounts payable | (8,124 | ) | (7,977 | ) | ||
| Increase (decrease) in deferred revenue | 25,845 | (13,355 | ) | |||
| Increase (decrease) in accrued program costs | (2,517 | ) | 5,797 | |||
| Increase (decrease) in other payables and accrued expenses | 89 | (3,434 | ) | |||
| Net cash provided by operating activities | 89,197 | 9,569 | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (11,249 | ) | (12,985 | ) | ||
| Investments | (1,190 | ) | — | |||
| Acquisitions of businesses and product lines, and intangible assets additions | (23,356 | ) | (41,852 | ) | ||
| Net cash used in investing activities | (35,795 | ) | (54,837 | ) | ||
| Cash flows from financing activities: | ||||||
| Net (payments) borrowings under line of credit agreement | (41,623 | ) | 51,900 | |||
| Cash paid to acquire non-controlling interest | — | — | ||||
| Payment on deferred consideration | — | (850 | ) | |||
| Net receipt (payment) from the issuance of common stock (sale of stock under ESPP, exercise of<br>stock options and shares purchased for tax withholding) | (421 | ) | 283 | |||
| Repurchase of common stock | — | (2,604 | ) | |||
| Payment of cash dividends | (1,168 | ) | (2,323 | ) | ||
| Net cash provided by (used in) financing activities | (43,212 | ) | 46,406 | |||
| Net increase (decrease) in cash and cash equivalents | 10,190 | 1,138 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (848 | ) | (725 | ) | ||
| Cash and cash equivalents at beginning of year | 6,581 | 6,168 | ||||
| Cash and cash equivalents at end of year | $ | 15,923 | $ | 6,581 | ||
| Supplemental cash flow information: | ||||||
| Cash paid during the year for: | ||||||
| Interest | $ | 5,313 | $ | 7,121 | ||
| Income taxes, net | $ | 3,881 | $ | 9,276 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
Quarters ended December 31, 2020 and 2019
| 2020 | 2019 | |||
|---|---|---|---|---|
| Net income attributable to American Vanguard | $ | 7,908 | $ | 3,436 |
| Provision for income taxes | 1,396 | 1,143 | ||
| Interest expense, net | 1,374 | 1,603 | ||
| Depreciation and amortization | 6,418 | 5,726 | ||
| EBITDA^2^ | $ | 17,096 | $ | 11,908 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
Years ended December 31, 2020 and 2019
| 2020 | 2019 | |||
|---|---|---|---|---|
| Net income attributable to American Vanguard | $ | 15,242 | $ | 13,601 |
| Provision for income taxes | 3,080 | 5,202 | ||
| Interest expense, net | 5,178 | 7,209 | ||
| Depreciation and amortization | 23,968 | 22,626 | ||
| EBITDA^2^ | $ | 47,468 | $ | 48,638 |
| ^2^ | EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted<br>accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a<br>measure of liquidity. The items excluded from EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define EBITDA differently. | |||
| --- | --- |
EX-99.2
Exhibit 99.2
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD DECLARES QUARTERLY DIVIDEND
Newport Beach, CA – March 15, 2021 – American Vanguard Corp. (NYSE:AVD) announced that its Board of Directors has declared a $0.02 cash dividend payment to be distributed on April 15, 2021 to shareholders of record as of March 25, 2021.
Eric Wintemute, Chairman and CEO of American Vanguard, stated, “This dividend payment continues our history of providing cash returns to shareholders based on successful operational and financial performance. It reflects the confidence that the Board of Directors has in the strength of our business model and our longer-term strategic growth initiatives in biological product development, geographic market expansion, consumer pest control and SIMPAS precision application technology. We appreciate the support of our shareholders as we develop and deliver important solutions that enhance agricultural productivity, safeguard public health and facilitate environmental sustainability.”
Annual Cash Dividend Payments: Based on Date of Cash Distribution ****
| 2021 — Payments in 2021 (including pending payment) | $ | 0.040 |
|---|---|---|
| 2020 — Full Calendar Year | $ | 0.040 |
| 2019 — Full Calendar Year | $ | 0.080 |
| 2018 — Full Calendar Year | $ | 0.075 |
| 2017 — Full Calendar Year | $ | 0.055 |
| 2016 — Full Calendar Year | $ | 0.020 |
About American Vanguard
American Vanguard Corporation is a diversified specialty and agricultural products company that develops and markets products for crop protection and management, turf and ornamentals management and public and animal health. American Vanguard is included on the Russell 2000^®^ & Russell 3000^®^ Indexes and the Standard & Poors Small Cap 600 Index. To learn more about American Vanguard, please reference the Company’s web site at www.american-vanguard.com.
In its public commentary, the Company may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the Company’s management subject to various risks and uncertainties that may cause results to differ from management’s current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed in the Company’s SEC reports and filings. All forward-looking statements, if any, in this release represent the Company’s judgment as of the date of this release.
| Contact Information: | |
|---|---|
| American Vanguard Corporation | The Equity Group Inc. |
| William A. Kuser, Director of Investor Relations | www.theequitygroup.com |
| (949) 260-1200 | Lena Cati (212) 836-9611 |
| williamk@amvac.com | Lcati@equityny.com |