8-K

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): November 9, 2020

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 7.01	Regulation FD Disclosure

On November 9, 2020, American Vanguard Corporation (“Registrant”) is conducting an earnings call with respect to its financial performance for the three- and nine-month periods ended September 30, 2020 (the “Earnings Call of 11/09/20”) during which its CEO is to be making comments and providing slides that contain material nonpublic information. That information is contained in the speech and slide deck filed herewith as Exhibits 99.1 and 99.2 and 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 7.01 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 9.01	Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1	Text of speech by Registrant’s CEO for the Earnings Call of 11/9/20.
Exhibit 99.2	Powerpoint slides by Registrant’s CEO for the Earnings Call of 11/9/20.
Exhibit 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: November 9, 2020	By:	/s/ Timothy J. Donnelly
		Timothy J. Donnelly
		Chief Administrative Officer, General Counsel & Secretary

EX-99.1

Exhibit 99.1

Script for CEO – American Vanguard Corporation

Earnings Call of November 9, 2020

[From earlier in the presentation][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.]

[Start of CEO comments]

Thank you, David.

[click to slide 14]

Many of our investors have expressed an interest in our strategic direction and longer-term prospects, particularly in light of our increased emphasis on technology innovation. In that spirit, then, rather than getting into the weeds on market conditions over the past reporting periods, I would like to look forward to where we hope to be in the next three- to five-years.

We have three primary growth platforms within in our business – our core business, our green product lines and our precision application technology, led by SIMPAS. There are synergies between these platforms. For example, SIMPAS is a market access tool for both core products and green solutions, such as Agrinos biologicals. Also, there is some overlap between these platforms. But for directional purposes, it is useful to take each platform in order. [click to slide 15]

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Our core business consists largely of our synthetic chemistries. Using 2019 numbers as a reference, let’s build a model using a baseline of annual net sales of $468 million. We have grown our core business in three ways – first, organically (that is, through additional market penetration), second, through our new product pipeline (that is, making new formulations or getting new uses for what already have) and third, through acquisitions. [click to slide 16] If we were to grow at a rate of only 2% per year, we should be at $507 million by year three and $527 million by year five in organic growth. [click on same slide] Let’s add to that our new product pipeline. We regularly introduce several new products per year; for example, in 2020 alone we launched five new formulations. As these new products get traction and we continue adding new introductions, we expect that we will add another $37 million by year three and $109 million by year five. So, core business plus new product pipeline puts us at $544 million by year three and $636 million by year five. [click on same slide]

But now, let’s add acquisitions. It is hard to predict the acquisition market, but I can say that it is extremely active today. As you may have read, we just completed two acquisitions, Agrinos (a biologicals company that I will talk about further in a moment) and AgNova (an Australian company that gives us greater critical mass and market access in Australia and the surrounding region). To establish our forward-looking target, we looked backward over the past five years and determined that, on average, we added $40 million per year in sales of newly-acquired products. If, out of conservatism, we cut that number in half – to $20 million per year – and extrapolated it forward, we find that our incremental acquisition growth could put us at $60 million by year three and $100 million by year five. So, core business plus new product pipeline plus acquisitions puts us at a three-year top-line target of $604 million and a five-year target of $736 million. [click to slide 17]

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Let’s turn next to our green solutions platform. Before we get back to the model, I would like to bring you current on a recent acquisition. In early October, we acquired the shares of Agrinos, Inc. and its sister companies at a very favorable price, as they were being sold in an auction by the Norwegian parent in a liquidation proceeding. Agrinos makes and markets unique blends of biological products into many markets and operates three factories. The first, located in Oregon, ferments a 22-specie consortium of bacteria into an end-use product that enhances soil health and plant growth by, for example, increasing nitrogen uptake. The second, located in Mexico, produces a microbially enhanced, chitin-based product – the chitin, a calciferous substance, comes from shrimp that are locally grown – that has similar applications. The third, located in India, produces biologicals for that region including sales to the government of India.

With this investment, we have created a biologicals team to manage these green product offerings globally. That effort will also include our management of the Envance/Tyratech business.

Let’s get back to the model. Now, admittedly, some of the green solutions business is already included in our current core business. For purposes of this discussion, we will focus on the incremental addition. [click to slide 18] Through the end of the third quarter of 2020, we had already been on track to sell approximately $22 million in green products, including biologicals,

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bionutritional solutions (through both our domestic and international businesses), and essential oil products through Envance, which are the active ingredients in Proctor & Gamble’s Zevo line of consumer products. So, let’s use that number as a baseline for our green products platform.

As many of you know, we are already in the consumer pest control space through P&G’s Zevo product line. And we are expanding our essential oil product line into other areas, including lawn & garden, crop AND public and animal health. [click again on same slide] We expect that with the addition of Agrinos, the growth of our other biologicals and the expansion of Envance/Tyratech, we should see incremental revenues in year three of $48 million and in year five of $118 million. **[click on same slide]**So, let’s take our prior graph of core (including product pipeline and acquisitions) and now add green products. That would take us to about $70 million in year three and $140 million in year five. [click to slide 19]

Now for the third platform, namely precision application. We have been reporting regularly about our SIMPAS technology, which we believe is at the leading edge of prescriptive application systems. We know of no other system that enables a grower to take an agronomist’s prescription for multiple crop inputs – based upon field conditions and prior yield results – and apply those products variably in multiple rows automatically – in one pass. Further, with our Ultimus technology, we can trace product from factory to field and, as important, we can measure precisely what was used in any given application. And now we are enhancing this technology to permit seed treatment at time of plant. After seeing positive results from field trials by growers in many states, a number of our peers are performing their own tests with the goal of making their products available in SMARTCartidges through SIMPAS.

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That said, some investors are asking that we give them a better idea of where SIMPAS could be in three- to five-years. In order to answer the question, we consider the following elements: first, revenues from our existing portfolio of products, which could be dramatically enhanced when applied prescriptively; second, license fees from other basic producers for active ingredients to be sold under our name; third, royalties from third parties for marketing their products through our SMARTCartidges under their name; and fourth, a share in the grower’s incremental yield benefit. [clickto slide 20] Using conservative estimates of market penetration in domestic markets only, we are targeting top-line contribution on the order of $35 million in year three and $131 million in year five. In addition, we are confident that SIMPAS will be well-received outside of the US and are already planning to host SIMPAS field trials in Brazil in 2021. Also, these figures do not include the potential for additional revenues from our seed treatment innovation. In other words, these are conservative, domestic, in-furrow SIMPAS targets. [click to slide 21]

So, let’s put all of the platforms together. If we add core + green products + SIMPAS, we are in the neighborhood of $687 million in year three and $985 million in year five at the top line, which is roughly double where we are today. There are many moving parts in the equation. We will continue to control the things that are within our control, for example exercising strict discipline on managing working capital and operating expenses. Further, we are committed to maximizing our consolidated profit margin. While our expansion into distribution within international

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markets has tended to put a drag on our overall profitability, we expect that the introduction of newer technologies across these markets will create an updraft on profitability. In future calls, I will be updating you on how we are progressing against these targets.

Finally, let me pull our focus to the present and the near term. 2020 has been an unprecedented year for this industry. In spite of the pandemic, weather effects and the farm economy, as David mentioned, we have kept pace with Q3 of 2019 in terms of profitability – even with modestly lower sales. Looking forward into the fourth quarter, we are already seeing greater optimism in the domestic Agriculture sector spurred, in part, by rising crop commodity prices for corn, soybeans and cotton, which would tend to contribute to improved grower profitability. In the Midwest, with less crop rotation and more continuous corn-over-corn planting, we are also beginning to see a resurgence of soil insect pressure. In addition, demand for our soil fumigant products continues to rise. Based upon these trends and current sales activity, we are encouraged by our prospects for the balance of the year and into the 2021 season. [click to slide 21]

We will now take any questions you might have. Operator?

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EX-99.2

Quarterly Earnings Call Exhibit 99.2

Safe Harbor 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.

Speakers Mr. David JohnsonChief Financial Officer Mr. Eric WintemuteChairman & Chief Executive Officer Mr. Bob TrogeleChief Operating Officer

Three-months sales International 43% of total in 2020, 41% of total in 2019 $ 000’s

Nine-months sales International 41% of total in both 2020 and 2019 $ 000’s

Gross Profit Performance Gross Profit 2020 2019 Change 2020 2019 Change US Crop 20,146 23,710 -15% 68,119 69,059 -1% US Non-crop 8,758 9,860 -11% 18,535 21,444 -14% US 28,904 33,570 -14% 86,654 90,503 -4% International 14,361 13,893 3% 35,298 40,315 -12% Total 43,265 47,463 -9% 121,952 130,818 -7% Gross Margin % 2020 2019 2020 2019 US Crop 42% 43% 46% 44% US Non-crop 48% 52% 49% 51% US 43% 45% 47% 45% International 28% 27% 27% 29% Total 37% 38% 38% 39% 3Q 9 Months ($000’s)

Factory Recovery Performance Our Long-term target is to have net factory cost at approximately 2.5% of sales

Operating Expenses Operating expenses are 33% of sales in both 2019 and 2020 $40,677 $38,782 $ 000’s

Operating Expenses Operating expenses are 33% of sales in 2019 and 34% in 2020 $110,839 $108,882 $ 000’s

Statements of Operations 3 months Ended Sept 30, 9 months Ended Sept 30, Statements of Operations 2020 2019 Change 2020 2019 Change Net Sales $117,439 $124,884 ($7,445) $317,956 $337,664 ($19,708) Gross profit 43,265 47,463 (4,198) 121,952 130,818 (8,866) Operating costs (38,782) (40,677) 1,895 (108,882) (110,839) 1,957 Operating Income 4,483 6,786 (2,303) 13,070 19,979 (6,909) Interest Expense (1,022) (2,070) 1,048 (3,804) (5,606) 1,802 Income before Tax 3,461 4,716 (1,255) 9,266 14,373 (5,107) Tax (492) (1,474) 982 (1,852) (4,059) 2,207 Income before equity method 2,969 3,242 (273) 7,414 10,314 (2,900) Equity method investment (42) (89) 47 (80) (149) 69 Net income for AVD $2,927 $3,153 ($226) $7,334 $10,165 ($2,831) Diluted shares 29,973 29,650 29,926 29,591 EPS $0.10 $0.11 $0.25 $0.34 $ 000’s

Inventory *Estimated * $ Millions $186 $163 $176 $162

Debt $ Millions

Overall Financial Performance of Operations Overall, during a period of significant disruption and economic uncertainty, we have continued to run a profitable business, generated cash and, during the last quarter, came close to achieving the same level of profitability on lower sales.

Strategic Growth Initiatives Core Business Current Business New Product Pipeline Additional Product Acquisitions, Licenses, & Geographic Expansion Green Solutions: Protectants & Nutritionals Biorational Offerings AgriCenter & OHP Agrinos BioStimulants (Soil Health/Nutritional Facilitators) Envance Essential Oil Solutions (Insecticides, Herbicides) Precision AG Technologies Prescription Application System(s) SIMPAS™; SmartBox Plus Targeted deposition for maximum yield, minimum cost, environmental benefits Ultimus™ Data Retention / Treatment Documentation Records for food treatment compliance & carbon sequestration tabulation

Core Business Fumigants Growth Regulators Insecticides Granular Insecticides Herbicides Fungicides

$ Millions Core Business Targets $736

Green Solutions Target $ Millions $140 4

SIMPAS: Value Capture Target $ Millions 4

Strategic Growth Targets $ Millions $985

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