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 8, 2022
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) |
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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> <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 8, 2022, American Vanguard Corporation (“Registrant”) issued a press release announcing its preliminary, unaudited financial results for the three-months and full-year ended December 31, 2021 as well as a share repurchase program for up to one million shares of the Registrant’s common stock over a twelve month period. 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 Exhibit linked hereto, is being furnished under Items 2.02 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 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit 99.1 | Press release dated March 8, 2022, of Registrant regarding financial results for the three-months and full-year ended December 31, 2021 as well as a share repurchase program. |
|---|---|
| Exhibit 104 | Cover Page Interactive Data File (embedded within in 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 11, 2022 | ||
| 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 2021 RESULTS
ANNOUNCES SHARE REPURCHASE PLAN
Newport Beach, CA – March 8, 2022 – American Vanguard Corporation (NYSE: AVD) today announced preliminary, unaudited financial results for the fourth quarter and full year ended December 31, 2021.
Fiscal 2021 Fourth Quarter Financial Highlights – **** versus Fiscal 2020 Fourth Quarter:
| • | Net sales were $159 million in 2021, compared to $141 million in 2020 |
|---|---|
| • | Operating income was $9.4 million in 2021, compared to $10.1 million in 2020 |
| --- | --- |
| • | EBITDA^1^ of $14.8 million in 2021, compared to<br>$17.1 million in 2020 |
| --- | --- |
| • | Both operating income and EBITDA from 2020 benefited from a one-time gain<br>of $4.6 million due to bargain purchase accounting |
| --- | --- |
Fiscal 2021 Full Year Financial Highlights – versus Fiscal 2020 Full Year:
| • | Net sales were $557 million in 2021, compared to $459 million in 2020 |
|---|---|
| • | Operating income was $30.9 million in 2021, compared to $22.9 million in 2020 |
| --- | --- |
| • | Net income was $18.6 million* in 2021, compared to $15.2 million in 2020 |
| --- | --- |
| • | Earnings per diluted share of $0.61* in 2021, compared to $0.51 in 2020 |
| --- | --- |
| • | EBITDA^1^ of $56.8 million in 2021, compared to<br>$47.5 million in 2020 |
| --- | --- |
| * | Net income and earnings per share for the full year period include the impact of a $3.3 million, one-time, non-cash charge relating to tax reserves (for net operating loss carryforwards) from the Company’s operations in Brazil. These NOLs may be taken as credits in<br>future reporting periods subject to sufficient profitability from those operations. |
| --- | --- |
With respect to the Company’s financial performance, CEO and Chairman, Eric G. Wintemute stated: “2021 proved to be a very successful year for AVD despite continuing challenges posed by COVID-19, supply chain disruptions and inflation. On an annual basis, our net sales increased by 21%, operating income was up about 35%, EBITDA rose 20% and, but for the one-time, non-cash charge (which could potentially be reversed over time), our net income would have risen 44% and generated EPS of $0.72.
“The Company adapted to restrictive public health protocols, varying degrees of customer access limitations, and remote work processes in many operational and administrative functions. Throughout the year, we kept AMVAC manufacturing facilities fully functioning and sustained strong profit margins with price increases to offset inflationary costs. In addition, we strengthened our balance sheet, reduced inventory, increased net cash from operations, reduced debt and improved availability under our credit facility.”
| ^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 continued: “2021 results were driven by every part of our business. Our U.S. Crop business benefited from economic reopening and high crop commodity prices which resulted in strong demand for our products in corn, soybeans, cotton, potatoes, and many fruits and vegetables. The U.S. Non-Crop business experienced significant demand in mosquito control, commercial pest applications, horticulture/ornamental products and Envance Technologies’ licensing for consumer products. In addition, our International business saw expanded presence in Australia, increased penetration of our biological offerings and solid performance from our Central and South American groups.”
Mr. Wintemute concluded: “Looking forward, we believe that our Company is situated well in both domestic and international markets. We are currently optimistic about the prospects for 8-11% revenue growth in 2022 and are targeting gross profit margins to remain strong (38 to 40% of net sales), net income to increase by 60-70% and operating expenses to be between 31% and 33% of net sales. On a very solid core business foundation, we will continue to develop our key strategic growth initiatives in Green Solutions and SIMPAS/Ultimus technologies. We look forward to giving you a more detailed presentation during our upcoming earnings call.”
In addition, the Company announced that its board of directors has approved a program for the repurchase of up to one million shares of common stock within the requirements of Exchange Act Rule 10b-18 over the course of the next year. With respect to the repurchase program, Mr. Wintemute stated, “This authorization reflects the strong confidence that our board places in the company’s long-term success. This program also serves, in part, to offset the expansion of outstanding shares resulting from equity awards that we make to our workforce.”
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 8, 2022. 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 |
CONSOLIDATED BALANCE SHEETS
December 31, 2021 and 2020
(In thousands, except share data)
(Unaudited)
| 2020 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 16,285 | $ | 15,923 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 3,938 and 3,297, respectively | 149,326 | 130,029 | |||
| Other | 9,595 | 6,969 | |||
| Total receivables, net | 158,921 | 136,998 | |||
| Inventories, net | 154,306 | 163,784 | |||
| Prepaid expenses | 12,488 | 10,499 | |||
| Income taxes receivable | — | 3,046 | |||
| Total current assets | 342,000 | 330,250 | |||
| Property, plant and equipment, net | 66,111 | 65,382 | |||
| Operating lease<br>right-of-use assets | 25,386 | 12,198 | |||
| Intangible assets, net of amortization | 197,841 | 197,514 | |||
| Goodwill | 46,260 | 52,108 | |||
| Other assets | 16,292 | 20,077 | |||
| Deferred income tax assets, net | 270 | 2,764 | |||
| Total assets | 694,160 | $ | 680,293 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Current installments of other liabilities | 802 | $ | 2,647 | ||
| Accounts payable | 67,140 | 59,253 | |||
| Deferred revenue | 63,064 | 43,611 | |||
| Accrued program costs | 63,245 | 45,441 | |||
| Accrued expenses and other payables | 20,745 | 16,184 | |||
| Income taxes payable | 3,006 | — | |||
| Operating lease liabilities, current | 5,059 | 4,188 | |||
| Total current liabilities | 223,061 | 171,324 | |||
| Long-term debt, net of deferred loan fees | 52,240 | 107,442 | |||
| Other liabilities, excluding current installments | 5,335 | 9,054 | |||
| Operating lease liabilities, long-term | 20,780 | 8,177 | |||
| Deferred income tax liabilities, net | 20,006 | 23,560 | |||
| Total liabilities | 321,422 | 319,557 | |||
| 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 34,248,218 shares in<br>2021 and 33,922,433 shares in 2020 | 3,426 | 3,394 | |||
| Additional paid-in capital | 101,450 | 96,642 | |||
| Accumulated other comprehensive loss | (13,784 | ) | (9,322 | ) | |
| Retained earnings | 304,385 | 288,182 | |||
| 395,477 | 378,896 | ||||
| Less treasury stock at cost, 3,361,040 shares in 2021 and 3,061,040 in 2020 | (22,739 | ) | (18,160 | ) | |
| Total stockholders’ equity | 372,738 | 360,736 | |||
| Total liabilities and stockholders’ equity | 694,160 | $ | 680,293 |
All values are in US Dollars.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2021, 2020 and 2019
(In thousands, except per share data)
(Unaudited)
| 2021 | 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 556,872 | $ | 458,704 | $ | 468,186 | |||
| Cost of sales | (343,629 | ) | (286,114 | ) | (290,832 | ) | |||
| Gross profit | 213,243 | 172,590 | 177,354 | ||||||
| Operating expenses | (182,468 | ) | (154,339 | ) | (151,133 | ) | |||
| Bargain purchase gain on business acquisition | 171 | 4,657 | — | ||||||
| Operating income | 30,946 | 22,908 | 26,221 | ||||||
| Change in fair value of equity investments, net | (790 | ) | 717 | — | |||||
| Other income | 672 | — | — | ||||||
| Interest expense, net | (3,687 | ) | (5,178 | ) | (7,209 | ) | |||
| Income before provision for income taxes and loss on equity method investment | 27,141 | 18,447 | 19,012 | ||||||
| Provision for income taxes | (8,166 | ) | (3,080 | ) | (5,202 | ) | |||
| Income before loss on equity method investment | 18,975 | 15,367 | 13,810 | ||||||
| Less loss from equity method investment | (388 | ) | (125 | ) | (209 | ) | |||
| Net income | $ | 18,587 | $ | 15,242 | $ | 13,601 | |||
| Earnings per common share—basic | $ | 0.62 | $ | 0.52 | $ | 0.47 | |||
| Earnings per common share—assuming dilution | $ | 0.61 | $ | 0.51 | $ | 0.46 | |||
| Weighted average shares outstanding—basic | 29,811 | 29,450 | 29,030 | ||||||
| Weighted average shares outstanding—assuming dilution | 30,410 | 29,993 | 29,656 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
Forthe years and quarters ended December 31, 2021 and 2020
(Unaudited)
| For the quarters ended<br>December 31, | For the years ended<br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Net sales: | ||||||||
| U.S. crop | $ | 78,034 | $ | 68,402 | $ | 263,632 | $ | 211,357 |
| U.S. non-crop | 19,588 | 16,811 | 78,605 | 60,367 | ||||
| Total U.S. | 97,622 | 85,213 | 342,237 | 271,724 | ||||
| International | 61,187 | 55,535 | 214,635 | 186,980 | ||||
| Total net sales | $ | 158,809 | $ | 140,748 | $ | 556,872 | $ | 458,704 |
| Gross profit: | ||||||||
| U.S. crop | $ | 31,828 | $ | 27,175 | $ | 109,568 | $ | 92,723 |
| U.S. non-crop | 8,823 | 6,736 | 37,443 | 27,842 | ||||
| Total U.S. | 40,651 | 33,911 | 147,011 | 120,565 | ||||
| International | 18,258 | 16,727 | 66,232 | 52,025 | ||||
| Total gross profit | $ | 58,909 | $ | 50,638 | $ | 213,243 | $ | 172,590 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2021, 2020 and 2019
(In thousands)
(Unaudited)
| 2021 | 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Increase cash | |||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 18,587 | $ | 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 | 22,229 | 19,902 | 18,643 | ||||||
| Loss on disposal of property, plant and equipment | 194 | 119 | — | ||||||
| Amortization of other long-term assets | 3,943 | 3,947 | 3,983 | ||||||
| Accretion of discounted liabilities | (8 | ) | 9 | 72 | |||||
| Amortization of deferred loan fees | 367 | 300 | 224 | ||||||
| Provision for bad debts | 649 | 1,002 | 1,035 | ||||||
| Loan principal and interest forgiveness | (672 | ) | — | — | |||||
| Fair value adjustment of contingent consideration | 758 | 250 | (4,120 | ) | |||||
| Decrease in environmental liability | (167 | ) | (1,155 | ) | — | ||||
| Stock-based compensation | 6,880 | 6,561 | 7,160 | ||||||
| Increase (decrease) in deferred income taxes | (1,133 | ) | 969 | 2,616 | |||||
| Changes in liabilities for uncertain tax positions or unrecognized tax benefits | (1,783 | ) | (2,092 | ) | 263 | ||||
| Change in equity investment fair value | 790 | (717 | ) | — | |||||
| Loss from equity method investment | 388 | 125 | 209 | ||||||
| Bargain purchase gain | (171 | ) | (4,657 | ) | — | ||||
| Net foreign currency adjustment | (225 | ) | 126 | 275 | |||||
| Changes in assets and liabilities associated with operations, net of business<br>combinations: | |||||||||
| (Increase) decrease in net receivables | (24,347 | ) | 15,407 | (11,513 | ) | ||||
| Decrease in inventories | 8,130 | 7,421 | 3,817 | ||||||
| (Increase) decrease in income tax receivable, net | 6,051 | (287 | ) | (6,855 | ) | ||||
| (Increase) decrease in prepaid expenses and other assets | (3,354 | ) | 140 | (876 | ) | ||||
| Increase in net operating lease liability | 286 | 18 | 149 | ||||||
| Increase (decrease) in accounts payable | 8,783 | (8,199 | ) | (7,912 | ) | ||||
| Increase (decrease) in deferred revenue | 19,280 | 36,803 | (13,355 | ) | |||||
| Increase (decrease) in accrued program costs | 17,877 | (2,517 | ) | 5,797 | |||||
| Increase (decrease) in other payables and accrued expenses | 3,986 | 1,607 | (3,600 | ) | |||||
| Net cash provided by operating activities | 87,318 | 90,324 | 9,613 | ||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (9,518 | ) | (11,249 | ) | (12,985 | ) | |||
| Acquisitions of businesses and product lines | (10,000 | ) | (19,342 | ) | (37,972 | ) | |||
| Intangible assets | (524 | ) | (4,014 | ) | (3,880 | ) | |||
| Investment | — | (1,190 | ) | — | |||||
| Net cash used in investing activities | (20,042 | ) | (35,795 | ) | (54,837 | ) | |||
| Cash flows from financing activities: | |||||||||
| Net (payments) borrowings under line of credit agreement | (55,569 | ) | (41,624 | ) | 51,900 | ||||
| Payment of contingent consideration | (1,301 | ) | (1,227 | ) | (850 | ) | |||
| Net receipt from the issuance of common stock under ESPP | 743 | 721 | 716 | ||||||
| Net receipt from the exercise of stock options | 172 | 1,603 | 680 | ||||||
| Net payment from common stock purchased for tax withholding | (2,955 | ) | (2,745 | ) | (1,113 | ) | |||
| Repurchase of common stock | (4,579 | ) | — | (2,604 | ) | ||||
| Payment of cash dividends | (2,382 | ) | (1,168 | ) | (2,323 | ) | |||
| Net cash (used in) provided by financing activities | (65,871 | ) | (44,440 | ) | 46,406 | ||||
| Net increase in cash and cash equivalents | 1,405 | 10,089 | 1,182 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (1,043 | ) | (747 | ) | (769 | ) | |||
| Cash and cash equivalents at beginning of year | 15,923 | 6,581 | 6,168 | ||||||
| Cash and cash equivalents at end of year | $ | 16,285 | $ | 15,923 | $ | 6,581 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
Quarters ended December 31, 2021 and 2020
(Unaudited)
| 2021 | 2020 | |||
|---|---|---|---|---|
| Net income attributable to American Vanguard | $ | 4,874 | $ | 7,908 |
| Provision for income taxes | 2,842 | 1,396 | ||
| Interest expense, net | 766 | 1,374 | ||
| Depreciation and amortization | 6,340 | 6,418 | ||
| EBITDA^2^ | $ | 14,822 | $ | 17,096 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
Years ended December 31, 2021 and 2020
(Unaudited)
| 2021 | 2020 | |||
|---|---|---|---|---|
| Net income attributable to American Vanguard | $ | 18,587 | $ | 15,242 |
| Provision for income taxes | 8,166 | 3,080 | ||
| Interest expense, net | 3,687 | 5,178 | ||
| Depreciation and amortization | 26,366 | 23,968 | ||
| EBITDA ^2^ | $ | 56,806 | $ | 47,468 |
| ^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. | |||
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