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): May 7, 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.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	AVD	New York Stock Exchange

Item 2.02 Results of Operations and Financial Condition

On May 7, 2019, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the quarter ended March 31, 2019. 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 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 May 7, 2019 of American Vanguard Corporation regarding financial results for the quarter ended March 31, 2019.

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: May 8, 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 FIRST QUARTER 2019 RESULTS

Newport Beach, CA – May 7, 2019 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the quarter ended March 31, 2019.

Financial Highlights Fiscal 2019 First Quarter – versus Fiscal 2018 First Quarter

• Net sales of $99.7 million in 2019, compared with $104.1 million in 2018

• Net income of $3.9 million in 2019, compared with $4.7 million in 2018

• Earnings per diluted share of $0.13 in 2019, compared with $0.16 in 2018

• EBITDA¹ of $12.6 million in 2019, compared with $13.3 million in 2018

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Thanks to international diversification, our overall top-line performance for this year’s first quarter was moderately below that of last year’s first quarter notwithstanding widespread unfavorable weather in the North American region. While rain and cold slowed procurement activity in many domestic regions, our international business grew by 9% year-over-year. Further, driven by strong manufacturing performance and an optimal product mix, our overall gross margin grew to 42% from 39% as compared to first quarter of 2018. Over the course of the year, we expect to recover most of the domestic sales that were lost during the quarter. In fact, we forecast overall net sales for 2019 to be between $510 million and $530 million, which is above the range that we had previously forecast.”

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. 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 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.

Mr. Wintemute continued, “Over the coming quarters, we will focus on strengthening our balance sheet by reducing inventory to a target of $145 million, generating cash from increased sales, managing operating expenses, maintaining factory efficiency and reducing debt to $100 million or less. We look forward to giving greater detail on our quarterly performance during the earnings call. Further, we will be reporting on our five-year outlook and the expected financial performance of our SIMPAS technology during the annual shareholders’ meeting this June.”

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 4:10 pm ET / 1:10 pm PT on Tuesday, May 7, 2019. 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)

ASSETS

	March 31, 2019			December 31, 2018
Current assets:
Cash and cash equivalents	$	6,657		$	6,168
Receivables:
Trade, net of allowance for doubtful accounts of $2,297 and $1,263, respectively		119,153			123,320
Other		12,493			10,709
Total receivables, net		131,646			134,029
Inventories		189,499			159,895
Prepaid expenses		12,746			10,096
Total current assets		340,548			310,188
Property, plant and equipment, net		51,379			49,252
Operating lease right-of-use assets		10,293			—
Intangible assets, net of applicable amortization		197,063			186,583
Goodwill		39,159			25,790
Other assets		23,983			21,774
Total assets	$	662,425		$	593,587
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities	$	3,076		$	1,609
Accounts payable		77,543			66,535
Deferred revenue		4,159			20,043
Accrued program costs		39,740			37,349
Accrued expenses and other payables		14,076			15,962
Operating lease liabilities, current		4,156			—
Income taxes payable		4,780			4,030
Total current liabilities		147,530			145,528
Long-term debt, net		149,321			96,671
Operating lease liabilities, long term		6,157			—
Other liabilities, excluding current installments		11,105			6,795
Deferred income tax liabilities		19,194			15,363
Total liabilities		333,307			264,357
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 33,194,563 shares at March 31, 2019 and 32,752,827 shares at December 31, 2018		3,320			3,276
Additional paid-in capital		84,068			83,177
Accumulated other comprehensive loss		(6,276	)		(4,507	)
Retained earnings		266,166			262,840
Less treasury stock at cost, 3,061,040 shares at March 31, 2019 and 2,902,992 December 31, 2018		(18,160	)		(15,556	)
Total stockholders’ equity		329,118			329,230
Total liabilities and stockholders’ equity	$	662,425		$	593,587

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For the three months ended March 31
	2019		2018
Net sales	$	99,676	$	104,108
Cost of sales		57,974		63,057
Gross profit		41,702		41,051
Operating expenses		34,800		33,700
Operating income		6,902		7,351
Interest expense, net		1,612		837
Income before provision for income taxes and loss on equity method investments		5,290		6,514
Income tax expense		1,360		1,692
Income before loss on equity method investments		3,930		4,822
Loss from equity method investments		24		217
Net income		3,906		4,605
Loss attributable to non-controlling interest		—		50
Net income attributable to American Vanguard	$	3,906	$	4,655
Earnings per common share – basic	$	0.13	$	0.16
Earnings per common share – assuming dilution	$	0.13	$	0.16
Weighted average shares outstanding – basic		28,977		29,282
Weighted average shares outstanding – assuming dilution		29,579		29,972

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three months ended March 31, 2019 and 2018

(In thousands)

(Unaudited)

	For the three months ended March 31,
	2019		2018		Change			% Change
Net sales:
US crop	$	50,270	$	57,344	$	(7,074	)		-12	%
US non-crop		11,267		11,892		(625	)		-5	%
US total		61,537		69,236		(7,699	)		-11	%
International		38,139		34,872		3,267			9	%
Net sales:	$	99,676	$	104,108	$	(4,432	)
Gross profit:
US crop	$	23,822	$	25,060	$	(1,238	)		-4	%
US non-crop		5,846		5,812		34			-16	%
US total		29,668		30,872		(1,204	)		-6	%
International		12,034		10,179		1,855			17	%
Total gross profit:	$	41,702	$	41,051	$	651			-1	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the three months ended March 31
	2019			2018
Cash flows from operating activities:
Net income	$	3,906		$	4,605
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of fixed and intangible assets		4,609			4,983
Amortization of other long term assets and debt issuance costs		1,082			1,163
Amortization of discounted liabilities		—			102
Provision for bad debts		1,034			251
Revision of deferred compensation		(1,543	)		—
Stock-based compensation		1,485			1,309
Decrease in deferred income taxes		(742	)		—
Operating loss from equity method investments		24			217
Changes in assets and liabilities associated with operations:
Decrease (increase) in net receivables		6,812			(9,554	)
Increase in inventories		(23,763	)		(19,558	)
Increase in prepaid expenses and other assets		(2,724	)		(562	)
Decrease (increase) in income tax receivable/payable, net		750			(497	)
Increase in accounts payable		4,960			9,613
Decrease in deferred revenue		(16,036	)		(2,740	)
Increase in accrued program costs		2,391			4,634
Decrease in other payables and accrued expenses		(2,508	)		(3,201	)
Net cash used in by operating activities		(20,263	)		(9,235	)
Cash flows from investing activities:
Capital expenditures		(3,369	)		(1,553	)
Acquisitions of businesses, product lines and intangible assets		(24,246	)		(815	)
Net cash used in investing activities		(27,615	)		(2,368	)
Cash flows from financing activities:
Payments under line of credit agreement		(23,400	)		(23,000	)
Borrowings under line of credit agreement		76,000			35,800
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings)		(550	)		810
Repurchase of common stock		(2,604	)		—
Payment of cash dividends		(581	)		(438	)
Net cash provided by financing activities		48,865			13,172
Net increase in cash and cash equivalents		987			1,569
Effect of exchange rate changes on cash and cash equivalents		(498	)		112
Cash and cash equivalents at beginning of period		6,168			11,337
Cash and cash equivalents at end of period	$	6,657		$	13,018
Non-cash investing activities:
Deferred consideration in connection with the business acquisitions completed in January 2019:	$	2,645		$	—

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three months March 31, 2019 and 2018

(Unaudited)

	March 31, 2019		March 31, 2018
Net income	$	3,906	$	4,655
Provision for income taxes		1,360		1,692
Interest expense, net		1,612		837
Depreciation and amortization		5,691		6,146
EBITDA2	$	12,569	$	13,330

²  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.