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 13, 2023
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)) |
| --- | --- |
| ☐ | 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<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 Conditions |
|---|
On March 13, 2023, American Vanguard Corporation (“Registrant”) issued a press release in which it provided financial results for the full year of 2022. 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 |
|---|
On March 13, 2023, Registrant issued a press release in which it reported that its board of directors had declared a cash dividend of $0.03 per share to holders of record of its common stock as of March 24, 2023, for distribution on April 14, 2023. The full text of that press release is linked hereto as Exhibit 99.2 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit 99.1 | Press release of Registrant dated March 13, 2023, providing financial results for the full year 2022. |
|---|---|
| Exhibit 99.2 | Press release of Registrant dated March 13, 2023 reporting a cash dividend. |
| 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: March 14, 2023 | ||
| By: | /s/ Timothy J. Donnelly | |
| Timothy J. Donnelly | ||
| Chief Administrative Officer, General Counsel<br> <br>& Secretary |
EX-99.1
Exhibit 99.1
FOR IMMEDIATERELEASE
AMERICAN VANGUARD REPORTS FULL YEAR 2022 RESULTS
FY Net Income Increased 47% - Strong Outlook for 2023
Newport Beach, CA – March 13, 2023 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the full year ended December 31, 2022.
Fiscal 2022 Full Year Financial Highlights – versus Fiscal 2021 Full Year:
| • | Net sales were $610 million in 2022, compared to $558 million in 2021 (up 9%) |
|---|---|
| • | Net income was $ 27.4 million in 2022, compared to $18.6 million in 2021 (up 47%) |
| --- | --- |
| • | Earnings per diluted share of $0.92 in 2022, compared to $0.61 in 2021 (up 51%) |
| --- | --- |
| • | Adjusted EBITDA^1^ of $73.1 million in 2022, compared to<br>$63.5 million in 2021 (up 15%) |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our full-year performance in 2022 exceeded that of 2021 in virtually every financial metric with net sales up 9% and net income up 47%. With high commodity prices and a strong farm economy, our U.S. Crop business recorded increased sales of our products in corn, soybeans, cotton, potatoes, and many fruits and vegetables. Our Non-Crop business experienced flat overall sales, in spite of a 30% drop in the domestic consumer product market. Further, our international business grew by 13% year-over-year, with increased sales of soil fumigants in Mexico and Australia, a milestone $100 million net sales record in Central America and expansion of our Green Solutions business into key markets. With demand for many of the high margin products that we produce in-house, we experienced greater efficiency within our manufacturing operations. At the same time, we strengthened our balance sheet through prudent allocation of capital, generation of cash and reduction of debt.”
Mr. Wintemute continued: “Looking forward, we are well positioned in both domestic and international markets for 2023, during which we are targeting increased net sales, and consistent gross profit and operating expense performance when compared to sales. During 2023, we are forecasting higher interest rates (due to the FOMC’s regular increases in the interest rate) and consequently higher expense. At the bottom line, we expect to see a solid increase in both net income, earnings per share, and adjusted EBITDA. During 2023, we will continue to develop our key strategic growth initiatives in innovative Core products, Green Solutions and SIMPAS/Ultimus technologies.”
2023 Performance Targets
| Range | Growth v. 2022 | ||||
|---|---|---|---|---|---|
| Net Sales | $ | 655M-685M | 8-12 | % | |
| Gross Margin % | 38-41 | Similar | |||
| OPEX as % Sales | 31-33 | Similar | |||
| Adjusted EBITDA | $ | 86M-91M | 18-25 | % | |
| Net Income | $ | 34M-37M | 22-34 | % |
All values are in US Dollars.
Mr. Wintemute concluded: “During 2022 we have repurchased 1.7 million shares of the Company’s stock, representing approximately 5.5% of the outstanding shares. Furthermore, the board has authorized management to repurchase additional shares up to a total of $15 million dollars during 2023. Additionally, during 2022 we increased dividends per share by 31% reflecting our very strong financial performance. We look forward to giving you a more detailed presentation during our upcoming earnings call.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, COO, David T. Johnson, CFO, Scott Hendrix, U.S. Crop SVP and Jim Thompson, Leader of the Green Solutions Initiative, will conduct a conference call focusing on the financial results and strategic themes…at 4:30 pm ET on March 13, 2023. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time 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 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2022 and 2021
(Inthousands, except share data)
(Unaudited)
| 2021 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 20,328 | $ | 16,285 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 5,136 and 3,938, respectively | 156,492 | 149,326 | |||
| Other | 9,816 | 9,595 | |||
| Total receivables, net | 166,308 | 158,921 | |||
| Inventories, net | 184,190 | 154,306 | |||
| Prepaid expenses | 15,850 | 12,488 | |||
| Income taxes receivable | 1,891 | — | |||
| Total current assets | 388,567 | 342,000 | |||
| Property, plant and equipment, net | 70,912 | 66,111 | |||
| Operating lease right-of-use<br>assets | 24,250 | 25,386 | |||
| Intangible assets, net of amortization | 184,664 | 197,841 | |||
| Goodwill | 47,010 | 46,260 | |||
| Other assets | 10,769 | 16,292 | |||
| Deferred income tax assets, net | 141 | 270 | |||
| Total assets | 726,313 | $ | 694,160 | ||
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Current installments of other liabilities | — | $ | 802 | ||
| Accounts payable | 69,000 | 67,140 | |||
| Customer prepayments | 110,597 | 63,064 | |||
| Accrued program costs | 60,743 | 63,245 | |||
| Accrued expenses and other payables | 20,982 | 20,745 | |||
| Income taxes payable | — | 3,006 | |||
| Operating lease liabilities, current | 5,279 | 5,059 | |||
| Total current liabilities | 266,601 | 223,061 | |||
| Long-term debt, net of deferred loan fees | 51,477 | 52,240 | |||
| Other liabilities, excluding current installments | 4,167 | 5,335 | |||
| Operating lease liabilities, long-term | 19,492 | 20,780 | |||
| Deferred income tax liabilities, net | 14,597 | 20,006 | |||
| Total liabilities | 356,334 | 321,422 | |||
| Commitments and contingent liabilities (Notes 5 and 11) | |||||
| Stockholders’ equity: | |||||
| Preferred stock, 0.10 par value per share; authorized 400,000 shares; none issued | — | — | |||
| Common stock, 0.10 par value per share; authorized 40,000,000 shares; issued 34,446,194 shares in 2022 and<br>34,248,218 shares in 2021 | 3,444 | 3,426 | |||
| Additional paid-in capital | 105,634 | 101,450 | |||
| Accumulated other comprehensive loss | (12,182 | ) | (13,784 | ) | |
| Retained earnings | 328,745 | 304,385 | |||
| 425,641 | 395,477 | ||||
| Less treasury stock at cost, 5,029,892 shares in 2022 and 3,361,040 in 2021 | (55,662 | ) | (22,739 | ) | |
| Total stockholders’ equity | 369,979 | 372,738 | |||
| Total liabilities and stockholders’ equity | 726,313 | $ | 694,160 |
All values are in US Dollars.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Yearsended December 31, 2022, 2021 and 2020
(In thousands, except per share data)
(Unaudited)
| 2022 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 609,615 | $ | 557,676 | $ | 458,704 | |||
| Cost of sales | (368,263 | ) | (343,629 | ) | (286,114 | ) | |||
| Gross profit | 241,352 | 214,047 | 172,590 | ||||||
| Operating expenses | (200,701 | ) | (183,272 | ) | (154,339 | ) | |||
| Bargain purchase gain on business acquisition | — | 171 | 4,657 | ||||||
| Operating income | 40,651 | 30,946 | 22,908 | ||||||
| Change in fair value of equity investments, net | (732 | ) | (790 | ) | 717 | ||||
| Other income | — | 672 | — | ||||||
| Interest expense, net | (3,954 | ) | (3,687 | ) | (5,178 | ) | |||
| Income before provision for income taxes and loss on equity method investment | 35,965 | 27,141 | 18,447 | ||||||
| Provision for income taxes | (8,561 | ) | (8,166 | ) | (3,080 | ) | |||
| Income before loss on equity method investment | 27,404 | 18,975 | 15,367 | ||||||
| Loss from equity method investment | — | (388 | ) | (125 | ) | ||||
| Net income | $ | 27,404 | $ | 18,587 | $ | 15,242 | |||
| Earnings per common share—basic | $ | 0.94 | $ | 0.62 | $ | 0.52 | |||
| Earnings per common share—assuming dilution | $ | 0.92 | $ | 0.61 | $ | 0.51 | |||
| Weighted average shares outstanding—basic | 29,234 | 29,811 | 29,450 | ||||||
| Weighted average shares outstanding—assuming dilution | 29,872 | 30,410 | 29,993 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
For the years and quartersended December 31, 2022 and 2021
(Unaudited)
| For the quarters ended<br>December 31, | For the years ended<br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net sales: | ||||||||
| U.S. crop | $ | 68,121 | $ | 79,580 | $ | 288,624 | $ | 263,632 |
| U.S. non-crop | 23,061 | 18,042 | 76,709 | 78,605 | ||||
| Total U.S. | 91,182 | 97,622 | 365,333 | 342,237 | ||||
| International | 68,797 | 61,991 | 244,282 | 215,439 | ||||
| Total net sales | $ | 159,979 | $ | 159,613 | $ | 609,615 | $ | 557,676 |
| Gross profit: | ||||||||
| U.S. crop | $ | 27,910 | $ | 31,255 | $ | 132,509 | $ | 109,568 |
| U.S. non-crop | 10,431 | 9,396 | 35,257 | 37,443 | ||||
| Total U.S. | 38,341 | 40,651 | 167,766 | 147,011 | ||||
| International | 20,655 | 19,062 | 73,586 | 67,036 | ||||
| Total gross profit | $ | 58,996 | $ | 59,713 | $ | 241,352 | $ | 214,047 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Yearsended December 31, 2022, 2021 and 2020
(In thousands)
(Unaudited)
| 2022 | 2021 | 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Cash flows from operating activities: | |||||||||
| Net income | $ | 27,404 | $ | 18,587 | $ | 15,242 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization of property, plant and equipment and intangible assets | 22,138 | 22,229 | 19,902 | ||||||
| Loss on disposal of property, plant and equipment | 268 | 194 | 119 | ||||||
| Amortization of other long-term assets | 3,573 | 3,943 | 3,947 | ||||||
| Amortization and accretion of deferred loan fees and discounted liabilities | 289 | 359 | 309 | ||||||
| Provision for bad debts | 1,171 | 649 | 1,002 | ||||||
| Provision for inventory obsolescence | 340 | 1,034 | 738 | ||||||
| Loan principal and interest forgiveness | — | (672 | ) | — | |||||
| Fair value adjustment of contingent consideration | 610 | 758 | 250 | ||||||
| Decrease in environmental liability | — | (167 | ) | (1,155 | ) | ||||
| Stock-based compensation | 5,684 | 6,880 | 6,561 | ||||||
| (Decrease) increase in deferred income taxes | (5,278 | ) | (2,090 | ) | 969 | ||||
| Changes in liabilities for uncertain tax positions or unrecognized tax benefits | (1,441 | ) | (1,783 | ) | (2,092 | ) | |||
| Change in equity investment fair value | 732 | 790 | (717 | ) | |||||
| Loss from equity method investment | — | 388 | 125 | ||||||
| Bargain purchase gain | — | (171 | ) | (4,657 | ) | ||||
| Net foreign currency adjustment | (29 | ) | (225 | ) | 126 | ||||
| Changes in assets and liabilities associated with operations, net of business combinations: | |||||||||
| (Increase) decrease in net receivables | (6,447 | ) | (24,347 | ) | 15,407 | ||||
| (Increase) decrease in inventories | (29,560 | ) | 8,323 | 6,683 | |||||
| (Increase) decrease in income tax receivable, net | (4,910 | ) | 6,051 | (287 | ) | ||||
| (Increase) decrease in prepaid expenses and other assets | (3,082 | ) | (4,581 | ) | 140 | ||||
| Increase in net operating lease liability | 68 | 286 | 18 | ||||||
| Increase (decrease) in accounts payable | 1,704 | 8,783 | (8,199 | ) | |||||
| Increase in deferred revenue | 47,551 | 19,280 | 36,803 | ||||||
| (Decrease) increase in accrued program costs | (2,449 | ) | 17,877 | (2,517 | ) | ||||
| Increase in other payables and accrued expenses | 90 | 3,986 | 1,607 | ||||||
| Payment of contingent consideration | (1,321 | ) | — | — | |||||
| Net cash provided by operating activities | 57,105 | 86,361 | 90,324 | ||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (13,261 | ) | (9,518 | ) | (11,249 | ) | |||
| Proceeds from disposal of property, plant and equipment | 84 | — | — | ||||||
| Acquisitions of businesses and product lines | — | (10,000 | ) | (19,342 | ) | ||||
| Intangible assets | (1,293 | ) | (524 | ) | (4,014 | ) | |||
| Investment | — | — | (1,190 | ) | |||||
| Net cash used in investing activities | (14,470 | ) | (20,042 | ) | (35,795 | ) | |||
| Cash flows from financing activities: | |||||||||
| Payments under line of credit agreement | (254,000 | ) | (186,569 | ) | (168,400 | ) | |||
| Borrowings under line of credit agreement | 253,000 | 131,000 | 126,776 | ||||||
| Payment of contingent consideration | (68 | ) | (1,301 | ) | (1,227 | ) | |||
| Net receipt from the issuance of common stock under ESPP | 837 | 743 | 721 | ||||||
| Net receipt from the exercise of stock options | 827 | 172 | 1,603 | ||||||
| Net payment from common stock purchased for tax withholding | (2,067 | ) | (2,955 | ) | (2,745 | ) | |||
| Repurchase of common stock | (34,002 | ) | (4,579 | ) | — | ||||
| Payment of cash dividends | (2,787 | ) | (2,382 | ) | (1,168 | ) | |||
| Net cash used in financing activities | (38,260 | ) | (65,871 | ) | (44,440 | ) | |||
| Net increase in cash and cash equivalents | 4,375 | 448 | 10,089 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (332 | ) | (86 | ) | (747 | ) | |||
| Cash and cash equivalents at beginning of year | 16,285 | 15,923 | 6,581 | ||||||
| Cash and cash equivalents at end of year | $ | 20,328 | $ | 16,285 | $ | 15,923 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
Forthe years and quarters ended December 31, 2022 and 2021
(Unaudited)
| For the years ended December 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | ||||
| Net income | $ | 27,404 | $ | 18,587 | |
| Provision for income taxes | 8,561 | 8,166 | |||
| Interest expense, net | 3,954 | 3,687 | |||
| Proxy costs | 1,785 | — | |||
| Depreciation and amortization | 25,711 | 26,172 | |||
| Stock compensation expense | 5,684 | 6,880 | |||
| Adjusted EBITDA^1^ | $ | 73,099 | $ | 63,492 | |
| For the quarters ended December 31, | |||||
| --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | ||||
| Net income | $ | 3,898 | $ | 4,874 | |
| Provision for income taxes | (1,626 | ) | 2,842 | ||
| Interest expense, net | 1,698 | 766 | |||
| Depreciation and amortization | 6,406 | 6,146 | |||
| Stock compensation expense | 1,288 | 1,571 | |||
| Adjusted EBITDA^1^ | $ | 11,664 | $ | 16,199 | |
| ^1^ | Adjusted 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 , operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of<br>liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently. | ||||
| --- | --- |
EX-99.2
Exhibit 99.2
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD DECLARES QUARTERLY DIVIDEND
Newport Beach, CA – March 13, 2023 – American Vanguard Corporation (NYSE: AVD) announced that its Board of Directors has declared a cash dividend in the amount of $0.03 per share of the company’s common stock to shareholders of record as of March 24, 2023, for distribution on April 14, 2023.
Chairman and CEO Eric W. Wintemute commented, “In light of our strong financial performance during 2022 and a promising outlook for 2023, we are pleased to provide a quarterly cash dividend of $0.03 per share. This dividend payment continues our history of providing cash returns to shareholders based on successful operational and financial performance. This dividend reflects the confidence that the Board of Directors has in our core business, our overall financial strength, and the substantial prospects of our strategic growth initiatives. We appreciate the continuing support of our shareholders, as we develop and deliver important solutions that enhance agricultural productivity, safeguard public health, and facilitate environmental sustainability.”
| Annual Cash Dividend Payments: Based on Date of Cash Distribution | ||
|---|---|---|
| 2023 — Payments (including pending) | $ | 0.060 |
| 2022 — Full Calendar Year | $ | 0.095 |
| 2021 — Full Calendar Year | $ | 0.080 |
| 2020 — Full Calendar Year - (Pandemic Impacted) | $ | 0.040 |
| 2019 — Full Calendar Year | $ | 0.080 |
| 2018 — Full Calendar Year | $ | 0.075 |
| 2017 — Full Calendar Year | $ | 0.055 |
About American Vanguard
American Vanguard Corporation is a diversified specialty and agricultural products company that develops, manufactures, and markets solutions for crop protection and nutrition, turf and ornamentals management, commercial and consumer pest control. 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.com | Lcati@equityny.com |