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 2.02	Results of Operations and Financial Condition

On November 9, 2020, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the three and nine months ended September 30, 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.

(d) Exhibits

Exhibit 99.1	Press release dated November 9, 2020 of Registrant regarding financial results for the three and nine months ended September 30, 2020.
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 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 THIRD QUARTER AND NINE-MONTH 2020 RESULTS

Conference Call and Audio & Slides Webcast Scheduled for Today at 4:30 pm ET

Newport Beach, CA – November 9, 2020 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine months ended September 30, 2020.

Financial Highlights Fiscal 2020 Third Quarter – versus Fiscal 2019 Third Quarter

•	Net sales of $117 million in 2020, compared with $125 million in 2019
•	Net income of $2.9 million in 2020, compared with $3.1 million in 2019
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•	Earnings per diluted share of $0.10 in 2020, compared with $0.11 in 2019
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•	EBITDA^1^ of $10.4 million in 2020, compared with<br>$12.4 million in 2019
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Financial Highlights Fiscal 2020 Nine Months – versus Fiscal 2019 Nine Months

•	Net sales of $318 million in 2020, compared with $338 million in 2019
•	Net income of $7.3 million in 2020, compared with $10.2 million in 2019
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•	Earnings per diluted share of $0.25 in 2020, compared with $0.34 in 2019
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•	EBITDA of $30.8 million in 2020, compared to $36.9 million in 2019
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Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our net income for the third quarter was nearly even with that of the comparable period in 2019, despite a modest decline in our top line due largely to conservative procurement in the distribution channel, lower commodity prices and a strained farm economy. During the quarter we continued to maintain tight control over operating expenses, closely manage working capital and optimize our manufacturing assets. We also benefited from lower interest and tax expenses. While the first nine months of 2020 trended below those of 2019, we have recorded sequential top-line improvement since the start of the year in spite of a global pandemic.”

Mr. Wintemute continued, “Looking forward into the fourth quarter, we are already seeing greater optimism in the Agriculture sector spurred, in part, by rising crop commodity prices for corn, soybeans, and cotton, which bodes well for improved grower profitability. In the Midwest, with less crop rotation and more continuous corn planting, we are also beginning to see a resurgence of soil insect pressure. In addition, demand for our

^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.

industry-leading soil fumigation products continues to rise. Based upon these trends and current sales activity, barring unforeseen weather or pandemic factors, we are encouraged by our prospects for the fourth quarter and into the 2021 season.”

Mr. Wintemute concluded, “While endeavoring to maximize our financial performance, we continue to pursue strategic initiatives in technology development, portfolio expansion and market access. Please listen in to our upcoming earnings call during which I will be devoting my time to our three-to-five-year outlook with a particular focus on new product development, our growing portfolio of green products and our SIMPAS prescription application technology.”

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 9, 2020. Interested parties may participate in the call by dialing (800) 381 7839 or (212) 231-2900 – 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 Company’s web site at www.american-vanguard.com. To listen to the live webcast, which thisquarter will be accompanied by slides, go to the web site at least 15 minutes early to register, download and install any necessary audio software. Additionally, presentation slides will be available for download at http://www.american-vanguard.com. If you are unable to listen live, the conference call will be archived on the Company’s web site.

AboutAmerican 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)

ASSETS

			December 31,<br>2019
Current assets:
Cash and cash equivalents	9,581		$	6,581
Receivables:
Trade, net of allowance for doubtful accounts of 3,046 and 2,300, respectively	145,374			136,075
Other	9,064			16,949
Total receivables, net	154,438			153,024
Inventories, net	176,287			163,313
Prepaid expenses	10,738			10,457
Income taxes receivable	1,972			2,824
Total current assets	353,016			336,199
Property, plant and equipment, net	59,801			56,521
Operating lease<br>right-of-use assets	12,128			11,258
Intangible assets, net of amortization	191,133			198,377
Goodwill	40,737			46,557
Other assets	18,926			21,186
Total assets	675,741		$	670,098
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities	210		$	1,513
Accounts payable	61,283			64,881
Deferred revenue	5,689			6,826
Accrued program costs	67,745			47,699
Accrued expenses and other payables	11,266			12,815
Operating lease liabilities, current	4,312			4,904
Total current liabilities	150,505			138,638
Long-term debt, net of deferred loan fees	149,362			148,766
Operating lease liabilities, long-term	7,979			6,503
Other liabilities, excluding current installments	9,087			12,890
Deferred income tax liabilities	14,014			19,145
Total liabilities	330,947			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 33,337,075 shares at<br>September 30, 2020 and 33,233,614 shares at December 31, 2019	3,335			3,324
Additional paid-in capital	93,273			90,572
Accumulated other comprehensive loss	(14,520	)		(5,698	)
Retained earnings	280,866			274,118
	362,954			362,316
Less treasury stock at cost, 3,061,040 shares at September 30, 2020 and December 31,<br>2019	(18,160	)		(18,160	)
Total stockholders’ equity	344,794			344,156
Total liabilities and stockholders’ equity	675,741		$	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 September 30,				For the Nine-Months<br>Ended September 30,
	2020		2019		2020		2019
Net sales	$	117,439	$	124,884	$	317,956	$	337,664
Cost of sales		74,174		77,421		196,004		206,846
Gross profit		43,265		47,463		121,952		130,818
Operating expenses		38,782		40,677		108,882		110,839
Operating income		4,483		6,786		13,070		19,979
Interest expense, net		1,022		2,070		3,804		5,606
Income before provision for income taxes and loss on equity method investment		3,461		4,716		9,266		14,373
Income tax expense		492		1,474		1,852		4,059
Income before loss on equity method investment		2,969		3,242		7,414		10,314
Loss from equity method investment		42		89		80		149
Net income attributable to American Vanguard	$	2,927	$	3,153	$	7,334	$	10,165
Earnings per common share—basic	$	.10	$	.11	$	.25	$	.35
Earnings per common share—assuming dilution	$	.10	$	.11	$	.25	$	.34
Weighted average shares outstanding—basic		29,501		29,057		29,401		29,013
Weighted average shares outstanding—assuming dilution		29,973		29,650		29,926		29,591

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

Forthe three and nine months ended September 30, 2020 and 2019

(In thousands)

(Unaudited)

	For the three-months<br>ended September 30,
	2020		2019		Change			% Change
Net sales:
US crop	$	48,361	$	55,072	$	(6,711	)		-12	%
US non-crop		18,251		18,995		(744	)		-4	%
US total		66,612		74,067		(7,455	)		-10	%
International		50,827		50,817		10			0	%
Net sales	$	117,439	$	124,884	$	(7,445	)		-6	%
Gross profit:
US crop	$	20,146	$	23,710	$	(3,564	)		-15	%
US non-crop		8,758		9,860		(1,102	)		-11	%
US total		28,904		33,570		(4,666	)		-14	%
International		14,361		13,893		468			3	%
Total gross profit	$	43,265	$	47,463	$	(4,198	)		-9	%
	For the nine-months<br>ended September 30,
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	2020		2019		Change			% Change
Net sales:
US crop	$	148,630	$	158,068	$	(9,438	)		-6	%
US non-crop		37,881		42,068		(4,187	)		-10	%
US total		186,511		200,136		(13,625	)		-7	%
International		131,445		137,528		(6,083	)		-4	%
Net sales	$	317,956	$	337,664	$	(19,708	)		-6	%
Gross profit:
US crop	$	68,119	$	69,059	$	(940	)		-1	%
US non-crop		18,535		21,444		(2,909	)		-14	%
US total		86,654		90,503		(3,849	)		-4	%
International		35,298		40,315		(5,017	)		-12	%
Total gross profit	$	121,952	$	130,818	$	(8,866	)		-7	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine-MonthsEnded September 30,
	2020			2019
Cash flows from operating activities:
Net income	$	7,334		$	10,165
Adjustments to reconcile net income to net cash provided by (used in) operating<br><br><br>activities:
Depreciation and amortization of property, plant and equipment and intangible assets		14,584			13,892
Amortization of other long-term assets and deferred loan fees		3,185			3,174
Amortization of discounted liabilities		9			41
Provision for bad debts		777			728
Revision of deferred consideration		—			(3,539	)
Stock-based compensation		3,776			5,159
Change in deferred income taxes		(1,757	)		(459	)
Change in investment fair value		(281	)		—
Loss from equity method investment		80			149
Net foreign currency adjustment		(711	)		550
Changes in assets and liabilities associated with operations:
Increase in net receivables		(5,089	)		(15,839	)
Increase in inventories		(16,941	)		(19,713	)
Increase in prepaid expenses and other assets		(532	)		(849	)
Decrease (increase) in income tax receivable		873			(4,477	)
Increase in net operating lease liability		14			117
Decrease in accounts payable		(1,759	)		(5,548	)
Decrease in deferred revenue		(1,079	)		(19,800	)
Increase in accrued program costs		20,058			20,163
Decrease in other payables and accrued expenses		(3,344	)		(4,967	)
Net cash provided by (used in) operating activities		19,197			(21,053	)
Cash flows from investing activities:
Capital expenditures		(8,988	)		(10,546	)
Acquisition of business, product lines, and intangible assets		(3,942	)		(31,836	)
Investment		(1,190	)		—
Net cash used in investing activities		(14,120	)		(42,382	)
Cash flows from financing activities:
Net borrowings under line of credit agreement		377			68,200
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock<br>options, and shares purchased for tax withholding)		(1,064	)		(30	)
Repurchase of common stock		—			(2,604	)
Payment of cash dividends		(1,168	)		(1,741	)
Net cash (used in) provided by financing activities		(1,855	)		63,825
Net increase (decrease) in cash and cash equivalents		3,222			390
Effect of exchange rate changes on cash and cash equivalents		(222	)		(671	)
Cash and cash equivalents at beginning of period		6,581			6,168
Cash and cash equivalents at end of period	$	9,581		$	5,887
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	3,960		$	5,524
Income taxes, net	$	2,868		$	8,066

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three and nine months September 30, 2020 and 2019

(Unaudited)

	Three-Months EndedSeptember 30,				Nine-Months EndedSeptember 30,
	2020		2019		2020		2019
Net income attributable to American Vanguard, as reported	$	2,927	$	3,153	$	7,334	$	10,165
Provision for income taxes		492		1,474		1,852		4,059
Interest expense, net		1,022		2,070		3,804		5,606
Depreciation and amortization		6,000		5,688		17,769		17,066
EBITDA^2^	$	10,441	$	12,385	$	30,759	$	36,896
^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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