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): May 9, 2024
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) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<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 |
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On May 9, 2024, American Vanguard Corporation (“Registrant”) issued a press release announcing financial results for the three-month period ended March 31, 2024. The full text of the press release is linked hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits
| Exhibit 99.1 | Press release dated May 9, 2024, of Registrant regarding financial results for the three-month period ended March 31, 2024. |
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| 104 | Cover Page Interactive 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: May 10, 2024 | By: | /s/ Timothy J. Donnelly |
| Timothy J. Donnelly | ||
| Chief Information Officer, General Counsel & Secretary |
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD REPORTS Q1 2024 RESULTS
ADJUSTED EBITDA UP 35%, OPERATING INCOME UP 87%
Newport Beach, CA – May 9, 2024 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights – **** versus First Quarter 2023:
| • | Net sales of $135 million vs. $125 million |
|---|---|
| • | Adjusted EBITDA^1^ of $15.5 million vs.<br>$11.5 million |
| --- | --- |
| • | Operating Income of $6.1 million vs. $3.3 million |
| --- | --- |
| • | Net income of $1.6 million vs. $1.9 million |
| --- | --- |
| • | Earnings per diluted share of $0.06 vs. $0.07 |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We attained improved operating leverage with a significant increase in adjusted EBITDA and operating income, during the first quarter as compared to last year. This is due in part to our cost control initiatives, on account of which our operating expenses reduced as a percent of net sales, even after including our transformation costs. We expect to gain greater efficiencies through our transformation program which we have begun in earnest and which we expect will generate an additional $15 million of adjusted EBITDA on an annualized basis by 2026.”
He continued, “Further, it is pleasing to note that we experienced growth in all three businesses, US Crop, US Non-crop and International. Within US Crop, we recorded strong sales of granular soil insecticides (in light of a stable farm economy), herbicides (in part due to seasonal demand and favorable weather conditions) and cotton and peanut products (driven by increased planted acres for those crops). The destocking initiatives from last year have begun to subside to a degree; however, the distribution channel is still exercising conservatism in their procurement approach.”
Mr. Wintemute continued, “Within US Non-crop, we experienced significantly higher sales, led by our mosquito adulticides (in anticipation of tropical storm activity), pest strips (with a resurgence in consumer and technical sales) and our OHP products for nursery and ornamental uses. Our International business recorded moderately higher sales, led by Mexico and APAC, despite continued overstocking of generic products in other regions. All in, we are encouraged by the resiliency of our markets during the quarter.”
| ^1^ | Adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is not a financial<br>measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, operating income or any other financial measure so calculated and presented, nor<br>as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors)<br>may define adjusted EBITDA differently. |
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Mr. Wintemute concluded, “Market conditions remain stable with a strong farm economy and a more relaxed procurement approach within the distribution channel compared to last year. That said, in light of concerns raised by USEPA, we have voluntarily suspended sales of our herbicide Dacthal pending potential approval of a label that we believe should answer the agency’s concerns. In light of these factors, we are adjusting our annual targets to achieve an increase in net sales of between 6% and 9% year over year and are setting our adjusted EBITDA target to $60 - $70 million. 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 4:15 pm ET on Thursday, May 9, 2024. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time 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. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has over 1,000 product registrations in 56 nations worldwide. Its strategy rests on three growth initiatives – i) Core Business (through innovation of conventional products), ii) Green Solutions (with over 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products) and iii) Precision Agriculture innovation (including SIMPAS prescriptive application and Ultimus measure/record/verify technologies). American Vanguard is included on the Russell 2000^®^ and Russell 3000^®^ Indexes. 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:<br> <br>American Vanguard<br>Corporation<br> <br>Anthony Young, Director of Investor Relations<br><br><br>(949) 260-1200<br><br><br>anthonyy@amvac-chemical.com | Investor Representative:<br> <br>The Equity Group<br>Inc.<br> <br>www.theequitygroup.com<br> <br>Lena Cati<br><br><br>Lcati@equityny.com |
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| ASSETS | December 31,2023 | ||||
|---|---|---|---|---|---|
| Current assets: | |||||
| Cash | 13,709 | $ | 11,416 | ||
| Receivables: | |||||
| Trade, net of allowance for credit losses of 7,798 and 7,107, respectively | 187,197 | 182,613 | |||
| Other | 7,395 | 8,356 | |||
| Total receivables, net | 194,592 | 190,969 | |||
| Inventories | 228,309 | 219,551 | |||
| Prepaid expenses | 7,446 | 6,261 | |||
| Income taxes receivable | 2,889 | 3,824 | |||
| Total current assets | 446,945 | 432,021 | |||
| Property, plant and equipment, net | 75,909 | 74,560 | |||
| Operating lease<br>right-of-use assets, net | 23,084 | 22,417 | |||
| Intangible assets, net of amortization | 168,723 | 172,508 | |||
| Goodwill | 50,469 | 51,199 | |||
| Deferred income tax assets | 3,307 | 2,849 | |||
| Other assets | 13,188 | 11,994 | |||
| Total assets | 781,625 | $ | 767,548 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 64,642 | $ | 68,833 | ||
| Customer prepayments | 28,520 | 65,560 | |||
| Accrued program costs | 74,343 | 68,076 | |||
| Accrued expenses and other payables | 15,927 | 16,354 | |||
| Operating lease liabilities, current | 6,358 | 6,081 | |||
| Income taxes payable | 5,633 | 5,591 | |||
| Total current liabilities | 195,423 | 230,495 | |||
| Long-term debt, net | 187,017 | 138,900 | |||
| Operating lease liabilities, long term | 17,407 | 17,113 | |||
| Deferred income tax liabilities | 7,157 | 7,892 | |||
| Other liabilities | 3,038 | 3,138 | |||
| Total liabilities | 410,042 | 397,538 | |||
| Commitments and contingent liabilities | |||||
| Stockholders’ equity: | |||||
| Preferred stock, 0.10 par value per share; authorized 400,000 shares; none issued | — | — | |||
| Common stock, 0.10 par value per share; authorized 40,000,000 shares; issued 34,754,634 shares at<br>March 31, 2024 and 34,676,787 shares at December 31, 2023 | 3,475 | 3,467 | |||
| Additional paid-in capital | 113,223 | 110,810 | |||
| Accumulated other comprehensive loss | (7,527 | ) | (5,963 | ) | |
| Retained earnings | 333,613 | 332,897 | |||
| Less treasury stock at cost, 5,915,182 shares at March 31, 2024 and December 31,<br>2023 | (71,201 | ) | (71,201 | ) | |
| Total stockholders’ equity | 371,583 | 370,010 | |||
| Total liabilities and stockholders’ equity | 781,625 | $ | 767,548 |
All values are in US Dollars.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| For the three monthsended March 31 | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Net sales | $ | 135,143 | $ | 124,885 | ||
| Cost of sales | (92,725 | ) | (86,348 | ) | ||
| Gross profit | 42,418 | 38,537 | ||||
| Operating expenses | ||||||
| Selling, general and administrative | (30,621 | ) | (26,402 | ) | ||
| Research, product development and regulatory | (5,706 | ) | (8,870 | ) | ||
| Operating income | 6,091 | 3,265 | ||||
| Change in fair value of an equity investment | 638 | (22 | ) | |||
| Interest expense, net | (3,693 | ) | (1,686 | ) | ||
| Income before provision for income taxes | 3,036 | 1,557 | ||||
| Income tax (expense) benefit | (1,484 | ) | 361 | |||
| Net income | $ | 1,552 | $ | 1,918 | ||
| Earnings per common share—basic | $ | 0.06 | $ | 0.07 | ||
| Earnings per common share—assuming dilution | $ | 0.06 | $ | 0.07 | ||
| Weighted average shares outstanding—basic | 27,844 | 28,367 | ||||
| Weighted average shares outstanding—assuming dilution | 28,128 | 29,073 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(Unaudited)
| For the three months ended<br>March 31, | Change | %Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||||||||
| Net sales: | ||||||||||||
| U.S. crop | $ | 67,257 | $ | 61,876 | $ | 5,381 | 9 | % | ||||
| U.S. non-crop | 17,768 | 13,899 | 3,869 | 28 | % | |||||||
| Total U.S. | 85,025 | 75,775 | 9,250 | 12 | % | |||||||
| International | 50,118 | 49,110 | 1,008 | 2 | % | |||||||
| Total net sales | $ | 135,143 | $ | 124,885 | $ | 10,258 | 8 | % | ||||
| Total cost of sales | $ | (92,725 | ) | $ | (86,348 | ) | $ | (6,377 | ) | 7 | % | |
| Total gross profit | $ | 42,418 | $ | 38,537 | $ | 3,881 | 10 | % | ||||
| Total gross margin | 31 | % | 31 | % |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the three months<br>ended March 31 | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 1,552 | $ | 1,918 | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||
| Depreciation and amortization of property, plant and equipment and intangible assets | 5,441 | 5,539 | ||||
| Amortization of other long-term assets | 189 | 714 | ||||
| Provision for bad debts | 700 | 581 | ||||
| Stock-based compensation | 2,005 | 1,474 | ||||
| Change in deferred income taxes | (1,025 | ) | 122 | |||
| Change in liabilities for uncertain tax positions or unrecognized tax benefits | 35 | 371 | ||||
| Change in equity investment fair value | (638 | ) | 22 | |||
| Other | (5 | ) | 72 | |||
| Foreign currency transaction gains | (373 | ) | (446 | ) | ||
| Changes in assets and liabilities associated with operations: | ||||||
| Increase in net receivables | (5,579 | ) | (8,779 | ) | ||
| Increase in inventories | (9,353 | ) | (33,731 | ) | ||
| Increase (decrease) in prepaid expenses and other assets | (1,466 | ) | 600 | |||
| Change in income tax receivable/payable, net | 1,014 | (2,965 | ) | |||
| (Decrease) increase in accounts payable | (3,951 | ) | 5,655 | |||
| Decrease in customer prepayments | (37,037 | ) | (22,759 | ) | ||
| Increase in accrued program costs | 6,399 | 10,660 | ||||
| Decrease in other payables and accrued expenses | (332 | ) | (500 | ) | ||
| Net cash used in operating activities | (42,424 | ) | (41,452 | ) | ||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (3,565 | ) | (2,590 | ) | ||
| Proceeds from disposal of property, plant and equipment | 23 | — | ||||
| Acquisition of a product line | — | (703 | ) | |||
| Intangible assets | (25 | ) | (15 | ) | ||
| Net cash used in investing activities | (3,567 | ) | (3,308 | ) | ||
| Cash flows from financing activities: | ||||||
| Payments under line of credit agreement | (35,346 | ) | (27,300 | ) | ||
| Borrowings under line of credit agreement | 83,463 | 72,000 | ||||
| Net receipt from the issuance of common stock under ESPP | 430 | 480 | ||||
| Net (payment) receipt from the exercise of stock options | — | 18 | ||||
| Net payment from common stock purchased for tax withholding | (14 | ) | (13 | ) | ||
| Repurchase of common stock | — | (557 | ) | |||
| Payment of cash dividends | (834 | ) | (851 | ) | ||
| Net cash provided by financing activities | 47,699 | 43,777 | ||||
| Net increase (decrease) in cash | 1,708 | (983 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 585 | 223 | ||||
| Cash at beginning of period | 11,416 | 20,328 | ||||
| Cash at end of period | $ | 13,709 | $ | 19,568 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(In thousands)
(Unaudited)
| Reconciliation of Net Income to EBITDA | March 31, 2024 | March 31, 2023 | |||
|---|---|---|---|---|---|
| Net income, as reported | $ | 1,552 | $ | 1,918 | |
| Provision for income taxes | 1,484 | (361 | ) | ||
| Interest expense, net | 3,693 | 1,686 | |||
| Proxy costs | — | 541 | |||
| Depreciation and amortization | 5,630 | 6,253 | |||
| Stock compensation | 2,005 | 1,474 | |||
| Transformation costs | 1,152 | — | |||
| Adjusted EBITDA^2^ | $ | 15,516 | $ | 11,511 | |
| ^2^ | Adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is not a financial<br>measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, operating income or any other financial measure so calculated and presented, nor<br>as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors)<br>may define adjusted EBITDA differently. | ||||
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