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): March 6, 2019

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))

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 11, 2019, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2018. 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 attached 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 Items

On March 6, 2019, the Board of Directors of Registrant declared a cash dividend of two cents ($0.02) per share of common stock of Registrant to shareholders of record as of March 27, 2019 to be distributed on April 10, 2019. On March 11, 2019, Registrant issued a press release announcing this dividend declaration. The full text of that press release is linked hereto as Exhibit 99.2 and is incorporated herein by reference.

Also on March 6, 2019, the Board of Directors of Registrant set the date of its 2019 Annual Stockholders’ Meeting (the “Annual Meeting”) to take place on June 5, 2019 with a record date of April 10, 2019. The Annual Meeting will be a web-hosted, virtual meeting (as was the case in 2018). Further details will appear in the Registrant’s 2019 proxy statement to be filed and made available in April 2019.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1	Press release dated March 11, 2019 of American Vanguard Corporation regarding financial results for fourth quarter and fiscal year ended December 31, 2018.
Exhibit 99.2	Press release dated March 11, 2019 of American Vanguard Corporation announcing 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.

	AMERICAN VANGUARD CORPORATION
Date: March 12, 2019
	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 FOURTH QUARTER & FULL YEAR 2018 RESULTS

Newport Beach, CA – March 11, 2019 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2018.

Fiscal 2018 Fourth Quarter Financial Highlights – versus Fiscal 2017 Fourth Quarter:

• Net sales were $131 million, compared to $116 million in 2017, an increase of 13%

• Operating income was $11.4 million in 2018, compared to $8.4 million in 2017, an increase of 33%

• Net income was $7.4 million in 2018, compared to $8.4 million in 2017 (which included a one-time $3.4 million tax benefit)

• Earnings per diluted share of $0.25 in 2018, compared to $0.28 in 2017 (which included a one-time tax benefit of approximately $0.11)

• EBITDA¹ of $16.6 million in 2018, compared to $14.6 million in 2017

Fiscal 2018 Financial Highlights – versus Fiscal 2017:

• Net sales were $454 million in 2018, compared to $355 million in 2017, an increase of 28%

• Operating income was $39 million in 2018, compared to $26.8 million in 2017, an increase of 46%

• Net income was $24.2 million in 2018, compared to $20.3 million in 2017 (which included a one-time $3.4 million tax benefit)

• Earnings per diluted share of $0.81 in 2018, compared to $0.68 in 2017 (which included a one-time tax benefit of approximately $0.11)

• EBITDA of $61.1 million in 2018, compared to $48.8 million in 2017

Financial Note: Fourth Quarter 2017 and Full-Year 2017 Net Income and Earnings per share includes a one-time tax benefit gained by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017. The effect on 2017 was an increase of $3.4 million in Net income for both the quarter and full year periods. This amounts to an earnings per share adjustment of $0.11 for the same periods.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our 46% improvement in operating income was driven by both our existing businesses (approximately one third) and the new products and businesses acquired during the second half of 2017 (approximately two thirds). These acquisitions broadened and diversified our product portfolio and expanded the footprint of our international business, which now constitutes one-third of our consolidated revenue. All of these assets were purchased at attractive investment values, leaving us with ample borrowing capacity to pursue additional acquisitions in 2019 and beyond.”

¹  Earnings before interest, taxes, depreciation and amortization. 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 measure 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.

Mr. Wintemute continued: “Our full-year gross profit margin remained strong at 40%, and we experienced outstanding factory utilization with under absorption costs down about $11 million year-over-year. Net income rose 19% for the full year, and, if adjusted for the $3.4 million one-time tax benefit recorded in 2017, it would have been 43%. During the same period, EBITDA² increased by 25%.”

Mr. Wintemute concluded: “Late last year, during a period of overall equity market volatility, the Board of Directors authorized a share repurchase program, under which we have repurchased approximately $10 million in company common stock. We believe this has served to enhance stock price stability, while reversing dilution from past equity grants. With a full year’s experience in integrating our new businesses, our outlook for 2019 remains positive. Despite early season wet weather conditions in the US, we expect our global revenues for 2019 will exceed $500 million, our gross profit margins should remain in the 38% to 40% range, and our operating expenses are targeted at 31% of sales. We look forward toward giving you a more detailed presentation on the 2018 year during our upcoming earnings 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 and strategic themes…at 4:30 pm ET on March 11, 2019. 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 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: American Vanguard Corporation William A. Kuser, Director of Investor Relations (949) 260-1200 williamk@amvac-chemical.com Investor Representative The Equity Group Inc. www.theequitygroup.com Lena Cati Lcati@equityny.com

²  The Company believes that the use of EBITDA 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 conditions and results of operation without giving effect to the cost of increased acquisition activity in 2017 and it 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.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2018 and 2017

(In thousands, except share data)

(Unaudited)

	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	6,168		$	11,337
Receivables:
Trade, net of allowance for doubtful accounts of $1,263 and $46, respectively		123,320			102,534
Other		10,709			7,071
		134,029			109,605
Inventories, net		159,895			123,124
Prepaid expenses		10,096			10,817
Total current assets		310,188			254,883
Property, plant and equipment, net		49,252			49,321
Intangible assets, net of applicable amortization		186,583			180,950
Goodwill		25,790			22,184
Other assets		21,774			28,254
Total assets	$	593,587		$	535,592
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of other liabilities	$	1,609		$	5,395
Accounts payable		66,535			53,748
Deferred revenue		20,043			14,574
Accrued program costs		37,349			39,054
Accrued expenses and other payables		15,962			12,061
Income taxes payable		4,030			1,370
Total current liabilities		145,528			126,202
Long-term debt		96,671			77,486
Other liabilities, excluding current installments		6,795			10,306
Deferred income tax liabilities, net		15,363			16,284
Total liabilities		264,357			230,278
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 32,752,827 shares in 2018 and 32,241,866 shares in 2017		3,276			3,225
Additional paid-in capital		83,177			75,658
Accumulated other comprehensive loss		(4,507	)		(4,507	)
Retained earnings		262,840			238,953
		344,786			313,329
Less treasury stock at cost, 2,902,992 shares in 2018 and 2,450,634 shares in 2017		(15,556	)		(8,269	)
American Vanguard Corporation stockholders’ equity		329,230			305,060
Non-controlling interest		—			254
Total stockholders’ equity		329,230			305,314
Total liabilities and stockholders’ equity	$	593,587		$	535,592

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2018, 2017 and 2016

(In thousands, except per share data)

(Unaudited)

	2018		2017			2016
Net sales	$	454,272	$	355,047		$	312,113
Cost of sales		271,641		207,655			183,825
Gross profit		182,631		147,392			128,288
Operating expenses		143,610		120,598			107,748
Operating income		39,021		26,794			20,540
Change in fair value of derivative instrument		1,401		—			—
Interest expense, net		4,024		1,941			1,623
Income before provision for income taxes and loss on equity investments		33,596		24,853			18,917
Provision for income taxes		9,145		4,443			5,540
Income before loss on equity investments		24,451		20,410			13,377
Less net loss from equity method investments		389		49			353
Net income		24,062		20,361			13,024
Net loss (income) attributable to non-controlling interest		133		(87	)		(236	)
Net income attributable to American Vanguard	$	24,195	$	20,274		$	12,788
Earnings per common share—basic	$	0.83	$	0.70		$	0.44
Earnings per common share—assuming dilution	$	0.81	$	0.68		$	0.44
Weighted average shares outstanding—basic		29,326		29,100			28,859
Weighted average shares outstanding—assuming dilution		30,048		29,703			29,394

ANALYSIS OF SALES

For the Three Years Ended December 31, 2018

(In thousands)

(Unaudited)

	2018		2017		2016
Net sales:
Insecticides	$	150,595	$	134,377	$	119,226
Herbicides/soil fumigants/fungicides		183,350		124,529		123,540
Other, including plant growth regulators		58,360		42,503		29,438
Total crop:		392,305		301,409		272,204
Non-crop		61,967		53,638		39,909
Total net sales:	$	454,272	$	355,047	$	312,113
Net Sales:
U.S.	$	300,314	$	256,142	$	228,854
International		153,958		98,905		83,259
Total net sales:	$	454,272	$	355,047	$	312,113

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2018, 2017 and 2016

(In thousands)

(Unaudited)

	2018			2017			2016
Increase cash
Cash flows from operating activities:
Net income	$	24,062		$	20,361		$	13,024
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of fixed and intangible assets		18,891			16,959			16,327
Amortization of other long term assets and debt issuance costs		4,884			5,221			5,203
Amortization of discounted liabilities		359			110			16
Stock-based compensation		5,805			4,714			3,167
Excess tax benefit from share based compensation		—			—			(96	)
(Decrease) increase in deferred income taxes		(561	)		398			(151	)
Operating loss from equity method investments		389			49			353
Changes in assets and liabilities associated with operations, net of business combinations:
(Increase) decrease in net receivables		(21,320	)		754			(11,817	)
(Increase) decrease in inventories		(31,440	)		16,183			15,901
Decrease (increase) decrease in income tax receivable/payable, net		2,655			(12,073	)		1,186
Decrease (increase) in prepaid expenses and other assets		186			647			(3,872	)
Increase in accounts payable		9,097			3,322			9,015
Increase (decrease) in deferred revenue		5,468			10,726			(5,040	)
Decrease in accrued program costs		(1,705	)		(4,529	)		(1,441	)
(Decrease) increase in other payables		(5,424	)		(3,841	)		4,631
Net cash provided by operating activities		11,346			59,001			46,406
Cash flows from investing activities:
Capital expenditures		(8,050	)		(6,666	)		(10,630	)
Investments		—			(950	)		(3,283	)
Acquisitions of businesses and intangible assets		(19,647	)		(81,896	)		(224	)
Net cash used in investing activities		(27,697	)		(89,512	)		(14,137	)
Cash flows from financing activities:
Payments under line of credit agreement		(117,325	)		(103,975	)		(107,600	)
Borrowings under line of credit agreement		136,300			141,000			80,000
Debt issuance cost		—			(751	)		—
Cash paid to acquire non-controlling interest		(73	)		—			—
Payment on other long-term liabilities		—			(26	)		(704	)
Excess tax benefit from share based compensation		—			—			96
Net payment from the issuance of common stock (sale of stock under ESPP, exercise of stock options and shares purchased for tax withholding)		1,717			(713	)		241
Treasury shares		(7,287	)		—			—
Payment of cash dividends		(2,199	)		(1,600	)		(578	)
Net cash provided by (used in) financing activities		11,133			33,935			(28,545	)
Net (decrease) increase in cash and cash equivalents		(5,218	)		3,424			3,724
Effect of exchange rate changes on cash and cash equivalents		49			44			(1,379	)
Cash and cash equivalents at beginning of year		11,337			7,869			5,524
Cash and cash equivalents at end of year	$	6,168		$	11,337		$	7,869
Supplemental cash flow information:
Cash paid during the year for:
Interest	$	3,319		$	1,500		$	1,748
Income taxes, net	$	8,449		$	17,841		$	4,947
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

For the three years ended December 31, 2018, 2017 and 2016

(Unaudited)

	2018		2017		2016
Net income attributable to American Vanguard	$	24,195	$	20,274	$	12,788
Provision for income taxes		9,145		4,443		5,540
Interest expense, net		4,024		1,941		1,623
Depreciation and amortization		23,775		22,180		21,530
EBITDA3	$	61,139	$	48,838	$	41,481

³  Earnings before interest, taxes, depreciation and amortization. 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.

EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD DECLARES QUARTERLY DIVIDEND

Newport Beach, CA – March 11, 2019 – American Vanguard Corp. (NYSE:AVD) announced that its Board of Directors has declared a $0.02 cash dividend payment to be distributed on April 10, 2019 to shareholders of record as of March 27, 2019.

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. The Company’s steadily improving annual performance and strong balance sheet support our continuing ability to grow through product/business acquisitions, international market expansion and development of the innovative SIMPAS precision application technology. This payment reflects the confidence that the Board of Directors has in our near-term performance and longer-term strategic initiatives. 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

2019 — Payments Year-to-Date	$0.040 (including pending payment)
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 williamk@amvac-chemical.com	The Equity Group Inc. www.theequitygroup.com Lena Cati (212) 836-9611 Lcati@equityny.com