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 5, 2020

 

 

AMERICAN VANGUARD CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-13795		95-2588080
(State or other jurisdiction of incorporation)		Commission File Number		(I.R.S. Employer 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 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

On March 9, 2020, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the three months and full year ended December 31, 2019. 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 linked 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 Events

Dividend Declaration. On March 9, 2020, Registrant issued a press release announcing that its Board of Directors had, on March 5, 2020, declared a cash dividend in the amount of $0.02 per share of common stock for holders of record as of March 26, 2020 for distribution on April 16, 2020. The full text of the press release is linked hereto as Exhibit 99.2 and is incorporated herein by reference.

2020 Annual Meeting Date. Further, on March 5, 2020, Registrant’s Board of Directors set the date of Registrant’s 2020 Annual Meeting of Stockholders to take place at 11:00 a.m. Pacific on June 3, 2020 with a record date of April 9, 2020. The annual meeting will be a virtual meeting, and the business of the meeting will be described in Registrant’s proxy statement which is to be distributed in the latter half of April, 2020.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit 99.1		Press release dated March 9, 2020 of Registrant regarding financial results for the three months and full year ended December 31, 2019.
Exhibit 99.2		Press release dated March 9, 2020 of Registrant regarding a cash dividend.

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.

 

 

Date: March 10, 2020				AMERICAN VANGUARD CORPORATION
				By:		/s/ Timothy J. Donnelly
						Timothy J. Donnelly
						Chief Administrative Officer, General Counsel & Secretary

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Newport Beach, CA – March 9, 2020 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2019.    

Fiscal 2019 Fourth Quarter Financial Highlights – versus Fiscal 2018 Fourth Quarter:

 

•

Net sales of $131 million in 2019, as compared to $131 million in 2018

 

•

Net income of $3.4 million in 2019, as compared to $7.4 million in 2018

 

•

Earnings per diluted share of $0.12 in 2019, as compared to $0.25 in 2018

 

•

EBITDA1 of $12.0 million in 2019, as compared to $16.6 million in 2018

Fiscal 2019 Full Year Financial Highlights – versus Fiscal 2018 Full Year:

 

•

Net sales of $468 million in 2019, as compared to $454 million in 2018

 

•

Net income of $13.6 million in 2019, as compared to $24.2 million in 2018

 

•

Earnings per diluted share of $0.46 in 2019, as compared to $0.81 in 2018

 

•

EBITDA1 of $48.9 million in 2019, as compared to $61.1 million in 2018

Eric Wintemute, Chairman and CEO of American Vanguard, stated, “Our 2019 financial performance closely corresponds to the guidance that we provided during the fourth quarter and updated in January. In the face of adverse weather, tariffs and supply disruptions that affected the entire industry, we achieved mixed results, with a modestly higher top line and declining profitability as compared to 2018. As has been the case for the past several quarters, revenue growth was driven by our international business, which now constitutes nearly 40% of our consolidated revenue. This growth was partially offset by weather-related declines in our domestic sales.”

Mr. Wintemute continued, “Our gross profit margin came in where predicted, while both operating expenses and overall corporate tax rate were more favorable than had been anticipated. However, higher volume sales of lower-margin products in our international businesses, higher interest costs from acquisition-related borrowing and reduced factory activity led to reduced net income for the year.”

Mr. Wintemute concluded, “With respect to our 2020 outlook, assuming a return to more normal weather patterns and minimal disruption in trade and supply from COVID-19 or other factors, we are targeting our global revenues to grow at a low double-digit rate, aided by larger corn acreage in the U.S., renewed availability of bromacil herbicides, ten new product introductions, and the growth of our LATAM businesses. At the same time, we will continue to exercise financial discipline in order to strengthen our balance sheet. We look forward toward giving you a more detailed presentation on 2020 during our upcoming earnings call.”

 

1

The Company believes that the use of EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors in that it is one of the primary bases upon which borrowing capacity is calculated under the Company’s senior credit facility, it gives investors a sense of the Company’s financial condition and results of operations without giving effect to the cost of increased acquisition activity and is commonly used by investors and others as a basis for supporting overall business valuations. Nevertheless, investors should not consider EBITDA in isolation or a substitute for analysis of the Company’s results as reported in accordance with GAAP.

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 9, 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 Securities and Exchange Commission 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
[email protected]		[email protected]

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2019 and 2018 (Unaudited)

(In thousands, except share data)

 

		2019				2018
Assets
Current assets:
Cash and cash equivalents		$	6,581			$	6,168
Receivables:
Trade, net of allowance for doubtful accounts of $2,300 and $1,263, respectively			136,075				123,320
Other			16,949				10,709
			153,024				134,029
Inventories, net			163,313				159,895
Prepaid expenses			10,457				10,096
Income taxes receivable			2,824				—
Total current assets			336,199				310,188
Property, plant and equipment, net			56,521				49,252
Operating lease right-of-use assets			11,258				—
Intangible assets, net			198,377				186,583
Goodwill			46,557				25,790
Other assets			21,186				21,774
Total assets		$	670,098			$	593,587
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of other liabilities		$	1,513			$	1,609
Accounts payable			64,881				66,535
Deferred revenue			6,826				20,043
Accrued program costs			47,699				37,349
Accrued expenses and other payables			12,815				15,962
Operating lease liabilities, current			4,904				—
Income taxes payable			—				4,030
Total current liabilities			138,638				145,528
Long-term debt, net of deferred loan fees			148,766				96,671
Other liabilities, excluding current installments			12,890				6,795
Operating lease liabilities, long-term			6,503				—
Deferred income tax liabilities, net			19,145				15,363
Total liabilities			325,942				264,357
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 33,233,614 shares in 2019 and 32,752,827 shares in 2018			3,324				3,276
Additional paid-in capital			90,572				83,177
Accumulated other comprehensive loss			(5,698	)			(4,507	)
Retained earnings			274,118				262,840
			362,316				344,786
Less treasury stock at cost, 3,061,040 shares in 2019 and 2,902,992 shares in 2018			(18,160	)			(15,556	)
Total stockholders’ equity			344,156				329,230
Total liabilities and stockholders’ equity		$	670,098			$	593,587

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands, except per share data)

 

		2019				2018				2017
Net sales		$	468,186			$	454,272			$	355,047
Cost of sales			290,832				271,641				207,655
Gross profit			177,354				182,631				147,392
Operating expenses			151,133				143,610				120,598
Operating income			26,221				39,021				26,794
Change in fair value of derivative instrument			—				1,401				—
Interest expense, net			7,209				4,024				1,941
Income before provision for income taxes and loss on equity method investments			19,012				33,596				24,853
Provision for income taxes			5,202				9,145				4,443
Income before loss on equity method investments			13,810				24,451				20,410
Less net loss from equity method investments			209				389				49
Net income			13,601				24,062				20,361
Net loss (income) attributable to non-controlling interest			—				133				(87	)
Net income attributable to American Vanguard		$	13,601			$	24,195			$	20,274
Earnings per common share—basic		$	0.47			$	0.83			$	0.70
Earnings per common share—assuming dilution		$	0.46			$	0.81			$	0.68
Weighted average shares outstanding—basic			29,030				29,326				29,100
Weighted average shares outstanding—assuming dilution			29,656				30,048				29,703

ANALYSIS OF SALES

Years Ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

		2019				2018				2017
Net sales:
Insecticides		$	153,448			$	150,595			$	134,377
Herbicides/soil fumigants/fungicides			181,686				183,350				124,529
Other, including plant growth regulators			67,266				58,360				42,503
Total crop			402,400				392,305				301,409
Non-crop			65,786				61,967				53,638
		$	468,186			$	454,272			$	355,047
Gross profit:
Crop		$	140,806			$	150,986			$	117,892
Non-crop			36,548				31,645				29,500
		$	177,354			$	182,631			$	147,392

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

		2019				2018				2017
Increase cash
Cash flows from operating activities:
Net income		$	13,601			$	24,062			$	20,361
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets			18,643				18,891				16,959
Amortization of other long term assets			4,207				4,884				5,221
Amortization of discounted liabilities			72				359				110
Provision for bad debts			1,035				1,216				5
Reassessment of deferred consideration			(4,120	)			(6,050	)			—
Stock-based compensation			7,160				5,805				4,714
Increase (decrease) in deferred income taxes			2,616				(561	)			398
Loss from equity method investments			209				389				49
Changes in assets and liabilities associated with operations, net of business combinations:
(Increase) decrease in net receivables			(11,383	)			(22,536	)			749
(Increase) decrease in inventories			3,817				(31,440	)			16,183
(Increase) decrease in income tax receivable, net			(6,855	)			2,655				(12,073	)
(Increase) decrease in prepaid expenses and other assets			(876	)			186				647
Increase in net operating lease liability			149				—				—
Increase (decrease) in accounts payable			(7,977	)			9,097				3,322
Increase (decrease) in deferred revenue			(13,355	)			5,468				10,726
Increase (decrease) in accrued program costs			5,797				(1,705	)			(4,529	)
Increase (decrease) in other payables and accrued expenses			(3,337	)			626				(3,841	)
Net cash provided by operating activities			9,403				11,346				59,001
Cash flows from investing activities:
Capital expenditures			(12,985	)			(8,050	)			(6,666	)
Investments			—				—				(950	)
Acquisitions of businesses and product lines, and intangible assets addition			(41,852	)			(19,647	)			(81,896	)
Net cash used in investing activities			(54,837	)			(27,697	)			(89,512	)
Cash flows from financing activities:
Net borrowings under line of credit agreement			51,900				18,975				37,025
Debt issuance cost			—				—				(751	)
Cash paid to acquire non-controlling interest			—				(73	)			—
Payment on deferred consideration			(850	)			—				(26	)
Net receipt (payment) from the issuance of common stock (sale of stock under ESPP, exercise of stock options and shares purchased for tax withholding)			283				1,717				(713	)
Repurchase of common stock			(2,604	)			(7,287	)			—
Payment of cash dividends			(2,323	)			(2,199	)			(1,600	)
Net cash provided by financing activities			46,406				11,133				33,935
Net increase (decrease) in cash and cash equivalents			972				(5,218	)			3,424
Effect of exchange rate changes on cash and cash equivalents			(559	)			49				44
Cash and cash equivalents at beginning of year			6,168				11,337				7,869
Cash and cash equivalents at end of year		$	6,581			$	6,168			$	11,337
Supplemental cash flow information:
Cash paid during the year for:
Interest		$	7,121			$	3,319			$	1,500
Income taxes, net		$	9,276			$	8,449			$	17,841
Non-cash investing activities:
Consideration paid in January 2019 in connection with an asset acquisition completed in 2018		$	—			$	3,530			$	—

RECONCILIATION OF NET INCOME TO EBITDA

Quarters ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

		2019				2018				2017
Net income attributable to American Vanguard		$	3,436			$	7,416			$	8,429
Provision for income taxes			1,143				2,179				(572	)
Interest expense, net			1,603				1,063				868
Depreciation and amortization			5,784				5,912				5,827
EBITDA2		$	11,966			$	16,570			$	14,552

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

		2019				2018				2017
Net income attributable to American Vanguard		$	13,601			$	24,195			$	20,274
Provision for income taxes			5,202				9,145				4,443
Interest expense, net			7,209				4,024				1,941
Depreciation and amortization			22,850				23,775				22,180
EBITDA2		$	48,862			$	61,139			$	48,838

 

2

EBITDA is not a financial 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 (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 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.

Exhibit 99.2

 

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD DECLARES QUARTERLY DIVIDEND

Newport Beach, CA – March 9, 2020 – American Vanguard Corp. (NYSE:AVD) announced that its Board of Directors has declared a $0.02 cash dividend payment to be distributed on April 16, 2020 to shareholders of record as of March 26, 2020.

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 also reflects the confidence that the Board of Directors has in our longer-term strategic initiatives including product portfolio extension, geographic market expansion, consumer pest control and the commercialization of SIMPAS precision application technology. We appreciate the support of our shareholders as we develop and deliver important solutions that enhance agricultural productivity and safeguard public health worldwide.”

 

Annual Cash Dividend Payments:    Based on Date of Cash Distribution

2020 — Payments Year-to-Date		$0.040 (including pending payment)
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 William A. Kuser, Director of Investor Relations (949) 260-1200 [email protected]		The Equity Group Inc. www.theequitygroup.com Lena Cati (212) 836-9611 [email protected]