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): November 8, 2021
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) |
| --- | --- |
| ☐ | 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 November 8, 2021, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the three- and nine-months ended September 30, 2021. 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 99.1 | Press release dated November 8, 2021, of Registrant regarding financial results for the three- and nine-months ended September 30, 2021. |
|---|---|
| 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: November 10, 2021 | ||
| 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 IMPROVED FINANCIAL RESULTS
WITH THIRD QUARTER NET SALES UP 25% AND NET INCOME UP 88%
Newport Beach, CA – November 8, 2021 – American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine months ended September 30, 2021.
Financial Highlights Fiscal 2021 Third Quarter – versus Fiscal 2020 Third Quarter
| • | Net sales up 25% to $147 million in 2021, as compared with $117 million in 2020 |
|---|---|
| • | Net income up 88% to $5.5 million in 2021, as compared with $2.9 million in 2020 |
| --- | --- |
| • | Earnings per diluted share of $0.18 in 2021, as compared with $0.10 in 2020 |
| --- | --- |
| • | EBITDA^1^ up 47% to $15.3 million in 2021, as compared<br>with $10.4 million in 2020 |
| --- | --- |
Financial Highlights Fiscal 2021 Nine Months – versus Fiscal 2020 Nine Months
| • | Net sales up 25% to $398 million in 2021, as compared with $318 million in 2020 |
|---|---|
| • | Net income up 87% to $13.7 million in 2021, as compared with $7.3 million in 2020<br> |
| --- | --- |
| • | Earnings per diluted share of $0.45 in 2021, as compared with $0.25 in 2020 |
| --- | --- |
| • | EBITDA up 37% to $42.0 million in 2021, as compared to $30.5 million in 2020 |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard, commented: “We achieved strong third quarter results and continued performance improvement over the first three quarters of 2021. Strong crop commodity prices, favorable weather and pest pressure have fueled significant growth of our US crop sales, particularly in the Midwest and the South. Mosquito mitigation driven by tropical storm activity, commercial pest control, lawn and garden demand and our consumer pest collaboration with Proctor & Gamble’s Zevo^®^ brand have grown this year’s US Non-Crop business. Internationally, our success in Central America, Brazil, Australia and elsewhere has resulted in expanded revenues and enhanced profitability.”
Mr. Wintemute continued, “Our year-to-date performance exceeds our prior guidance with net sales increasing at a 25% rate and a more significant gain of 87% in net income and earnings per share. We have achieved these results in spite of pandemic conditions and delays in the global supply chain. Through the balance of the year, we expect strong sales, efficient manufacturing performance and earnings in excess of those posted last year. From a balance sheet perspective, we are on track with both inventory management and debt reduction as we head towards the end of the year.”
| ^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, operating income or any other financial measure so calculated and presented, nor as an alternative to<br>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.<br> |
|---|
Mr. Wintemute concluded, “We continue to pursue strategic growth initiatives in technology development, with particular emphasis on Green Solutions and Precision Application technologies. We look forward to providing details on our overall performance, industry outlook and innovation initiatives in our upcoming quarterly conference 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 at 4:30 pm ET / 1:30 pm PT on Monday, November 8, 2021. Interested parties may participate in the call by dialing (201) 493-6744 – please dial 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 (212) 836-9611 |
| williamk@amvac-chemical.com | Lcati@equityny.com |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| December 31,<br>2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 16,718 | $ | 15,923 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 4,381 and 3,297, respectively | 167,731 | 130,029 | |||
| Other | 11,384 | 8,444 | |||
| Total receivables, net | 179,115 | 138,473 | |||
| Inventories, net | 166,973 | 163,784 | |||
| Prepaid expenses | 12,491 | 10,499 | |||
| Income taxes receivable | 1,036 | 3,046 | |||
| Total current assets | 376,333 | 331,725 | |||
| Property, plant and equipment, net | 66,501 | 65,382 | |||
| Operating lease<br>right-of-use assets | 26,080 | 12,198 | |||
| Intangible assets, net of amortization | 201,078 | 197,514 | |||
| Goodwill | 46,616 | 52,108 | |||
| Other assets | 15,595 | 18,602 | |||
| Deferred income tax assets, net | 3,669 | 2,764 | |||
| Total assets | 735,872 | $ | 680,293 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | **** | ||||
| Current liabilities: | |||||
| Current installments of other liabilities | 1,633 | $ | 2,647 | ||
| Accounts payable | 66,082 | 59,253 | |||
| Deferred revenue | 5,510 | 43,611 | |||
| Accrued program costs | 79,355 | 45,441 | |||
| Accrued expenses and other payables | 20,726 | 16,184 | |||
| Operating lease liabilities, current | 5,015 | 4,188 | |||
| Total current liabilities | 178,321 | 171,324 | |||
| Long-term debt, net of deferred loan fees | 136,328 | 107,442 | |||
| Operating lease liabilities, long-term | 21,415 | 8,177 | |||
| Other liabilities, excluding current installments | 7,213 | 9,054 | |||
| Deferred income tax liabilities, net | 24,254 | 23,560 | |||
| Total liabilities | 367,531 | 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 34,272,665 shares at<br>September 30, 2021 and 33,922,433 shares at December 31, 2020 | 3,428 | 3,394 | |||
| Additional paid-in capital | 99,917 | 96,642 | |||
| Accumulated other comprehensive loss | (12,370 | ) | (9,322 | ) | |
| Retained earnings | 300,105 | 288,182 | |||
| 391,080 | 378,896 | ||||
| Less treasury stock at cost, 3,361,040 shares at September 30, 2021 and 3,061,040 shares at<br>December 31, 2020 | (22,739 | ) | (18,160 | ) | |
| Total stockholders’ equity | 368,341 | 360,736 | |||
| Total liabilities and stockholders’ equity | 735,872 | $ | 680,293 |
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 September 30, | For the Nine MonthsEnded September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net sales | $ | 147,298 | $ | 117,439 | $ | 398,063 | $ | 317,956 | ||||
| Cost of sales | (90,234 | ) | (74,174 | ) | (243,729 | ) | (196,004 | ) | ||||
| Gross profit | 57,064 | 43,265 | 154,334 | 121,952 | ||||||||
| Operating expenses | (48,410 | ) | (39,039 | ) | (132,934 | ) | (109,163 | ) | ||||
| Adjustment to bargain purchase gain on business acquisition | 292 | — | 171 | — | ||||||||
| Operating income | 8,946 | 4,226 | 21,571 | 12,789 | ||||||||
| Change in value of equity investments, net | (668 | ) | 257 | 103 | 281 | |||||||
| Other income | — | — | 672 | — | ||||||||
| Interest expense, net | (962 | ) | (1,022 | ) | (2,921 | ) | (3,804 | ) | ||||
| Income before provision for income taxes and loss on equity method investment | 7,316 | 3,461 | 19,425 | 9,266 | ||||||||
| Income tax expense | (1,517 | ) | (492 | ) | (5,324 | ) | (1,852 | ) | ||||
| Income before loss on equity method investment | 5,799 | 2,969 | 14,101 | 7,414 | ||||||||
| Loss from equity method investment | (301 | ) | (42 | ) | (388 | ) | (80 | ) | ||||
| Net income | $ | 5,498 | $ | 2,927 | $ | 13,713 | $ | 7,334 | ||||
| Earnings per common share—basic | $ | .18 | $ | .10 | $ | .46 | $ | .25 | ||||
| Earnings per common share—assuming dilution | $ | .18 | $ | .10 | $ | .45 | $ | .25 | ||||
| Weighted average shares outstanding—basic | 29,892 | 29,501 | 29,854 | 29,401 | ||||||||
| Weighted average shares outstanding—assuming dilution | 30,390 | 29,973 | 30,470 | 29,926 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(Inthousands)
(Unaudited)
| For the Three Months EndedSeptember 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | % Change | ||||||
| Net sales: | |||||||||
| U.S. crop | $ | 66,722 | $ | 48,361 | $ | 18,361 | 38 | % | |
| U.S. non-crop | 21,622 | 18,251 | 3,371 | 18 | % | ||||
| U.S. total | 88,344 | 66,612 | 21,732 | 33 | % | ||||
| International | 58,954 | 50,827 | 8,127 | 16 | % | ||||
| Net sales: | $ | 147,298 | $ | 117,439 | $ | 29,859 | 25 | % | |
| Gross profit: | |||||||||
| U.S. crop | $ | 30,237 | $ | 20,146 | $ | 10,091 | 50 | % | |
| U.S. non-crop | 8,882 | 8,758 | 124 | 1 | % | ||||
| U.S. total | 39,119 | 28,904 | 10,215 | 35 | % | ||||
| International | 17,945 | 14,361 | 3,584 | 25 | % | ||||
| Total gross profit: | $ | 57,064 | $ | 43,265 | $ | 13,799 | 32 | % | |
| For the Nine Months EndedSeptember 30, | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | Change | % Change | ||||||
| Net sales: | |||||||||
| U.S. crop | $ | 184,052 | $ | 148,630 | $ | 35,422 | 24 | % | |
| U.S. non-crop | 60,563 | 37,881 | 22,682 | 60 | % | ||||
| U.S. total | 244,615 | 186,511 | 58,104 | 31 | % | ||||
| International | 153,448 | 131,445 | 22,003 | 17 | % | ||||
| Net sales: | $ | 398,063 | $ | 317,956 | $ | 80,107 | 25 | % | |
| Gross profit: | |||||||||
| U.S. crop | $ | 78,313 | $ | 68,119 | $ | 10,194 | 15 | % | |
| U.S. non-crop | 28,047 | 18,535 | 9,512 | 51 | % | ||||
| U.S. total | 106,360 | 86,654 | 19,706 | 23 | % | ||||
| International | 47,974 | 35,298 | 12,676 | 36 | % | ||||
| Total gross profit: | $ | 154,334 | $ | 121,952 | $ | 32,382 | 27 | % |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| For the Nine Months EndedSeptember 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 13,713 | $ | 7,334 | ||
| Adjustments to reconcile net income to net cash (used in) provided by operating<br>activities: | ||||||
| Depreciation and amortization of property, plant and equipment and intangible assets | 17,045 | 14,584 | ||||
| Amortization of other long-term assets | 2,981 | 2,966 | ||||
| Accretion of discounted liabilities | (10 | ) | 9 | |||
| Amortization of deferred loan fees | 294 | 219 | ||||
| Provision for bad debts | 1,202 | 777 | ||||
| Loan principal and interest forgiveness | (672 | ) | — | |||
| Adjustment to contingent consideration | 520 | — | ||||
| Stock-based compensation | 5,309 | 3,776 | ||||
| Decrease in deferred income taxes | (560 | ) | (1,757 | ) | ||
| Change in value of equity investments, net | (103 | ) | (281 | ) | ||
| Net foreign currency adjustments | (330 | ) | (711 | ) | ||
| Loss from equity method investment | 388 | 80 | ||||
| Adjustment to bargain purchase gain on business acquisition | (171 | ) | — | |||
| Changes in assets and liabilities associated with operations: | ||||||
| Increase in net receivables | (42,979 | ) | (5,089 | ) | ||
| Increase in inventories | (4,325 | ) | (16,941 | ) | ||
| Increase in prepaid expenses and other assets | (2,194 | ) | (532 | ) | ||
| Decrease in income tax receivable | 2,031 | 873 | ||||
| Increase in net operating lease liability | 183 | 14 | ||||
| Increase (decrease) in accounts payable | 7,769 | (1,759 | ) | |||
| Decrease in deferred revenue | (38,272 | ) | (1,079 | ) | ||
| Increase in accrued program costs | 33,982 | 20,058 | ||||
| Increase (decrease) in other payables and accrued expenses | 4,025 | (2,117 | ) | |||
| Net cash (used in) provided by operating activities | (174 | ) | 20,424 | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (7,963 | ) | (8,988 | ) | ||
| Acquisition of product line | (10,000 | ) | — | |||
| Intangible assets | (285 | ) | (3,942 | ) | ||
| Investments | (183 | ) | (1,190 | ) | ||
| Net cash used in investing activities | (18,431 | ) | (14,120 | ) | ||
| Cash flows from financing activities: | ||||||
| Net borrowings under line of credit agreement | 28,592 | 377 | ||||
| Payment of contingent consideration | (250 | ) | (1,227 | ) | ||
| Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock<br>options, and shares purchased for tax withholding) | (2,000 | ) | (1,064 | ) | ||
| Repurchase of common stock | (4,579 | ) | — | |||
| Payment of cash dividends | (1,789 | ) | (1,168 | ) | ||
| Net cash provided by (used in) financing activities | 19,974 | (3,082 | ) | |||
| Net increase in cash and cash equivalents | 1,369 | 3,222 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (574 | ) | (222 | ) | ||
| Cash and cash equivalents at beginning of period | 15,923 | 6,581 | ||||
| Cash and cash equivalents at end of period | $ | 16,718 | $ | 9,581 | ||
| Supplemental cash flow information: | ||||||
| Cash paid during the period for: | ||||||
| Interest | $ | 2,839 | $ | 3,960 | ||
| Income taxes, net | $ | 3,836 | $ | 2,868 | ||
| Non-cash transactions: | ||||||
| ROU assets exchanged for lease liabilities | $ | 17,872 | $ | 4,895 | ||
| Cash dividends declared and included in accrued expenses | $ | 594 | $ | — |
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
For the three- and nine-months September 30, 2021 and 2020
(Unaudited)
| Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Net income attributable to American Vanguard, as reported | $ | 5,498 | $ | 2,927 | $ | 13,713 | $ | 7,334 |
| Provision for income taxes | 1,517 | 492 | 5,324 | 1,852 | ||||
| Interest expense, net | 962 | 1,022 | 2,921 | 3,804 | ||||
| Depreciation and amortization | 7,285 | 5,920 | 20,026 | 17,550 | ||||
| EBITDA^2^ | $ | 15,262 | $ | 10,361 | $ | 41,984 | $ | 30,540 |
| ^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, operating income or any other financial measures so calculated and presented, nor as an alternative<br>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<br>differently. | |||||||
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