8-K
AMERICAN VANGUARD CORP (AVD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENTREPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): May 11, 2020
AMERICAN VANGUARD CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-13795 | 95-2588080 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | Commission<br><br><br>File Number | (I.R.S. Employer<br><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)<br> |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act<br>(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 Symbol | Exchanges 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 11, 2020, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the three months ended March 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 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. |
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(d) Exhibits
| Exhibit<br>99.1 | Press release dated May 11, 2020 of Registrant regarding financial results for the three months ended March 31, 2020. |
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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 12, 2020 | 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 FIRST QUARTER 2020 RESULTS
Newport Beach, CA – May 11, 2020 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2020.
Fiscal 2020 First Quarter Financial Highlights – **** versus Fiscal 2019 First Quarter:
| • | Net sales were $96.0 million in 2020, compared to $99.7 million in 2019 |
|---|---|
| • | Net income was $0.52 million in 2020, compared to $3.9 million in 2019 |
| --- | --- |
| • | Earnings per diluted share of $0.02 in 2020, compared to $0.13 in 2019 |
| --- | --- |
| • | EBITDA^1^ of $7.6 million in 2020, compared to<br>$12.6 million in 2019 |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “As an essential business under both CISA guidelines and international orders, we are specially permitted to operate continuously during the pandemic. From the beginning of the year, we have maintained a healthy workforce, adapted to applicable COVID restrictions and otherwise carried on business as usual. On a consolidated basis, net sales for the period were down by 4% with flat domestic sales and lower international sales due primarily to currency exchange effects and softer market conditions. Generally speaking, sales by crop and product line were mixed across our businesses. Net income declined as compared to the first quarter in 2019; however, we exceeded breakeven, which we had forecast in our release of April 28.”
Mr. Wintemute concluded, “Our performance was not materially affected by the coronavirus during the first quarter. Looking forward, we are not yet able to determine the longer-term effects of the pandemic. Thus, with respect to the balance of 2020, we can say at this point that we will endeavor to maximize our results and are poised to perform in line with our peers. We look forward to giving you additional detail on market conditions, profitability, working capital considerations and our innovation initiatives during our upcoming earnings call.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, COO and David T. Johnson, CFO, will conduct a conference call focusing on operating performance and financial results at 4:30 pm ET / 1:30 pm PT on Monday, May 11, 2020. Interested parties may participate in the call by dialing (661) 378-9883 - please call in 10 minutes before the conference is scheduled to begin and mention conference ID: 7379353.
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.
| ^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. |
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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 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS
| December 31,<br>2019 | |||||
|---|---|---|---|---|---|
| Current assets: | |||||
| Cash and cash equivalents | 5,544 | $ | 6,581 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 2,606 and 2,297, respectively | 141,509 | 136,075 | |||
| Other | 13,134 | 16,949 | |||
| Total receivables, net | 154,643 | 153,024 | |||
| Inventories | 175,861 | 163,313 | |||
| Prepaid expenses | 11,149 | 10,457 | |||
| Income taxes receivable | 3,406 | 2,824 | |||
| Total current assets | 350,603 | 336,199 | |||
| Property, plant and equipment, net | 57,599 | 56,521 | |||
| Operating lease<br>right-of-use assets | 10,731 | 11,258 | |||
| Intangible assets, net of applicable amortization | 193,823 | 198,377 | |||
| Goodwill | 41,974 | 46,557 | |||
| Other assets | 19,511 | 21,186 | |||
| Total assets | 674,241 | $ | 670,098 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current liabilities: | |||||
| Current installments of other liabilities | 227 | $ | 1,513 | ||
| Accounts payable | 64,333 | 64,881 | |||
| Deferred revenue | 4,448 | 6,826 | |||
| Accrued program costs | 53,696 | 47,699 | |||
| Accrued expenses and other payables | 11,720 | 12,815 | |||
| Operating lease liabilities, current | 4,883 | 4,904 | |||
| Total current liabilities | 139,307 | 138,638 | |||
| Long-term debt, net | 168,225 | 148,766 | |||
| Operating lease liabilities, long term | 5,996 | 6,503 | |||
| Other liabilities, excluding current installments | 10,963 | 12,890 | |||
| Deferred income tax liabilities | 15,543 | 19,145 | |||
| Total liabilities | 340,034 | 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 33,188,421 shares at<br>March 31, 2020 and 33,233,614 shares at December 31, 2019 | 3,319 | 3,324 | |||
| Additional paid-in capital | 89,757 | 90,572 | |||
| Accumulated other comprehensive loss | (14,761 | ) | (5,698 | ) | |
| Retained earnings | 274,052 | 274,118 | |||
| Less treasury stock at cost, 3,061,040 shares at March 31, 2020 and December 31,<br>2019 | (18,160 | ) | (18,160 | ) | |
| Total stockholders’ equity | 334,207 | 344,156 | |||
| Total liabilities and stockholders’ equity | 674,241 | $ | 670,098 |
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 months<br>ended March 31 | |||||
|---|---|---|---|---|---|
| 2020 | 2019 | ||||
| Net sales | $ | 95,962 | $ | 99,676 | |
| Cost of sales | 57,581 | 57,974 | |||
| Gross profit | 38,381 | 41,702 | |||
| Operating expenses | 36,545 | 34,800 | |||
| Operating income | 1,836 | 6,902 | |||
| Interest expense, net | 1,508 | 1,612 | |||
| Income before provision for income taxes (benefit) and loss on equity method investment | 328 | 5,290 | |||
| Income tax (benefit) expense | (205 | ) | 1,360 | ||
| Income before loss on equity method investment | 533 | 3,930 | |||
| Loss from equity method investment | 13 | 24 | |||
| Net income | $ | 520 | $ | 3,906 | |
| Earnings per common share—basic | $ | 0.02 | $ | 0.13 | |
| Earnings per common share—assuming dilution | $ | 0.02 | $ | 0.13 | |
| Weighted average shares outstanding—basic | 29,288 | 28,977 | |||
| Weighted average shares outstanding—assuming dilution | 29,948 | 29,579 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
Forthe three months ended March 31, 2020 and 2019
(In thousands)
(Unaudited)
| For the three Months Ended<br>March 31 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | Change | %Change | |||||||||
| Net sales: | ||||||||||||
| US crop | $ | 50,362 | $ | 50,270 | $ | 92 | 0 | % | ||||
| US non-crop | 10,993 | 11,267 | (274 | ) | -2 | % | ||||||
| Total US | 61,355 | 61,537 | (182 | ) | 0 | % | ||||||
| International | 34,607 | 38,139 | (3,532 | ) | -9 | % | ||||||
| Total net sales: | $ | 95,962 | $ | 99,676 | $ | (3,714 | ) | -4 | % | |||
| Gross profit: | ||||||||||||
| US crop | $ | 24,245 | $ | 23,822 | $ | 423 | 2 | % | ||||
| US non-crop | 4,719 | 5,846 | (1,127 | ) | -19 | % | ||||||
| Total US | 28,964 | 29,668 | (704 | ) | -2 | % | ||||||
| International | 9,417 | 12,034 | (2,617 | ) | -22 | % | ||||||
| Total gross profit: | $ | 38,381 | $ | 41,702 | $ | (3,321 | ) | -8 | % | |||
| Gross margin: | ||||||||||||
| US crop | 48 | % | 47 | % | ||||||||
| US non-crop | 43 | % | 52 | % | ||||||||
| Total US | 47 | % | 48 | % | ||||||||
| International | 27 | % | 32 | % | ||||||||
| Gross margin: | 40 | % | 42 | % |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the three months<br>ended March 31 | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 520 | $ | 3,906 | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||
| Depreciation and amortization of fixed and intangible assets | 4,762 | 4,609 | ||||
| Amortization of other long-term assets and debt issuance costs | 1,026 | 1,082 | ||||
| Amortization of discounted liabilities | 4 | — | ||||
| Provision for bad debts | 359 | 1,034 | ||||
| Revision of deferred compensation | — | (1,543 | ) | |||
| Stock-based compensation | 1,357 | 1,485 | ||||
| Decrease in deferred income taxes | (910 | ) | (742 | ) | ||
| Loss from equity method investment | 13 | 24 | ||||
| Net foreign currency adjustment | 823 | 172 | ||||
| Changes in assets and liabilities associated with operations: | ||||||
| Decrease (increase) in net receivables | (5,472 | ) | 6,812 | |||
| Increase in inventories | (16,446 | ) | (23,763 | ) | ||
| Increase in prepaid expenses and other assets | (776 | ) | (2,724 | ) | ||
| Decrease (increase) in income tax receivable/payable, net | (597 | ) | 750 | |||
| (Decrease) increase in accounts payable | (189 | ) | 4,788 | |||
| Decrease in deferred revenue | (2,342 | ) | (16,036 | ) | ||
| Increase in accrued program costs | 6,016 | 2,391 | ||||
| Decrease in other payables and accrued expenses | (2,094 | ) | (2,508 | ) | ||
| Net cash used in by operating activities | (13,946 | ) | (20,263 | ) | ||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (2,980 | ) | (3,369 | ) | ||
| Acquisitions of businesses, product lines and intangible assets | — | (24,246 | ) | |||
| Net cash used in investing activities | (2,980 | ) | (27,615 | ) | ||
| Cash flows from financing activities: | ||||||
| Net borrowings under line of credit agreement | 19,400 | 52,600 | ||||
| Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock<br>options, and shares purchased for tax withholdings) | (2,177 | ) | (550 | ) | ||
| Repurchase of common stock | — | (2,604 | ) | |||
| Payment of cash dividends | (582 | ) | (581 | ) | ||
| Net cash provided by financing activities | 16,641 | 48,865 | ||||
| Net (decrease) increase in cash and cash equivalents | (285 | ) | 987 | |||
| Effect of exchange rate changes on cash and cash equivalents | (752 | ) | (498 | ) | ||
| Cash and cash equivalents at beginning of period | 6,581 | 6,168 | ||||
| Cash and cash equivalents at end of period | $ | 5,544 | $ | 6,657 | ||
| Non-cash investing activities: | ||||||
| Deferred consideration in connection with business acquisitions: | $ | — | $ | 2,645 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
For the three months March 31, 2020 and 2019
(Unaudited)
| March 31,2020 | March 31,2019 | ||||
|---|---|---|---|---|---|
| Net income, as reported | $ | 520 | $ | 3,906 | |
| Provision for income taxes (benefit) | (205 | ) | 1,360 | ||
| Interest expense, net | 1,508 | 1,612 | |||
| Depreciation and amortization | 5,788 | 5,691 | |||
| EBITDA^2^ | $ | 7,611 | $ | 12,569 | |
| ^2^ | 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 measures 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. | ||||
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