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 7, 2023

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))

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

Title of each class	Trading Symbol	Exchanges 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 1.01. Entry into a Material Definitive Agreement

On November 7, 2023, AMVAC Chemical Corporation (“AMVAC”), principal operating subsidiary of American Vanguard Corporation (“Registrant”), as borrower, and affiliates (including Registrant), as guarantors and/or borrowers, entered into Amendment Number Six to the Third Amended and Restated Loan and Security Agreement (the “Amendment”) with a group of commercial lenders led by BMO Bank NA (successor to the Bank of the West), as Lead Arranger and Book Runner. Under the terms of the Amendment, the two financial covenants (the Maximum Total Leverage Ratio or “MTLR” and Fixed Charge Covenant Ratio or “FCCR”) were modified. Specifically, with respect to the MTLR, the existing ratio (which had been 3.5-to-1 through September 30, 2024, and 3.25-to-1 through December 31, 2024, and thereafter), was changed to 5.5-to-1 through September 30, 2023, 4.5-to-1 for the periods ending December 31, 2023 and March 31, 2024, 4.0-to-1 for the period ending June 30, 2024, 3.5-to-1 through September 30, 2024 and returning to 3.25-to-1 from December 31, 2024, and thereafter. In addition, the FCCR (which had been 1.25) was changed to 1.0 for the periods ending September 30, 2023, December 31, 2023, and March 31, 2024, and returning to 1.25 for the period ending June 30, 2024, and thereafter. Further, after the delivery of financial statements and a covenant compliance certificate for the period ending December 31, 2023 (or thereafter), assuming MTLR is less than 2.75, then Borrowers may terminate the covenant modification period (“CMP”) and revert to the terms of the existing Credit Agreement. Further, for the duration of the CMP, the Company is restricted from making share repurchases. Finally, the Applicable Margin (SOFR and Adjusted Base Rate) and Letter of Credit fees increase by 0.50 basis points for each tier of interest during the CMP.

The Amendment is linked hereto as Exhibit 10.1 and incorporated by reference herein.

Item 2.02 Results of Operations and Financial Condition

On November 8, 2023, American Vanguard Corporation (“Registrant”) issued a press release announcing both (a) its preliminary, unaudited financial results for the three- and nine-month periods ended September 30, 2023, and (b) its transformation plans. The full text of the press release is linked hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 10.1	Amendment Number Six to the Third Amended and Restated Loan and Security Agreement dated as of November 7, 2023, by and among Registrant and its senior lending group.
Exhibit 99.1	Press release dated November 8, 2023, of Registrant regarding financial results for the three- and nine-month periods ended September 30, 2023.
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 9, 2023	By:	/s/ Timothy J. Donnelly
		Timothy J. Donnelly
		Chief Administrative Officer, General Counsel & Secretary

EX-10.1

Exhibit 10.1

Execution Version

AMENDMENT NUMBER SIX TO

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDMENT NUMBER SIX TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of November 7, 2023, and is entered into by and among AMERICAN VANGUARD CORPORATION, a Delaware corporation (“Holdco”), AMVAC CHEMICAL CORPORATION, a California corporation (the “Borrower Agent”), AMVAC NETHERLANDS B.V., a besloten vennootschap met beperkte aansprakelijkheid, organized under the law of the Netherlands (“AMVAC B.V.”, and together with the Borrower Agent, each a “Borrower” and, collectively, “Borrowers”), the financial institutions party to this Agreement from time to time as lenders (collectively, “Lenders”), BMO BANK, N.A., as successor in interest to BANK OF THE WEST (“BMO”), as administrative agent, documentation agent, syndication agent and collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”), BANK OF MONTREAL, CHICAGO BRANCH and COMPEER FINANCIAL, PCA, as co-documentation agents (collectively, and in such capacities, “Co-Documentation Agents”) and BMO, as sole lead arranger and book runner (in such capacity, together with its successors and assigns in such capacity, the “Lead Arranger and Book Runner”).

RECITALS

WHEREAS, Holdco, Borrowers, Lenders, and Agent are parties to that certain Third Amended and Restated Loan and Security Agreement, dated as of August 5, 2021 (the “Loan Agreement”).

WHEREAS, Agent and the Required Lenders have agreed to Borrower’s request pursuant to the terms of this Amendment.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties agree as follows:

1. DEFINITIONS. All terms which are defined in the Loan Agreement shall have the same definition when used herein unless a different definition is ascribed to such term under this Amendment, in which case, the definition contained herein shall govern.

2. AMENDMENT. The Loan Agreement is amended in the following respects:

2.1 Add Definitions of “Amendment No. 4 Closing Date” and “Covenant Modification Period”. Section 1.1 of the Loan Agreement is hereby amended by adding the defined terms “Amendment No. 4 Closing Date” and “Covenant Modification Period” in the appropriate alphabetical order.

Amendment No. 6 Closing Date: November 7, 2023.

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Covenant Modification Period: the fiscal quarters commencing with the fiscal quarter ended September 30, 2023, and continuing up to and including the fiscal quarter ending June 30, 2024.

Early Termination of the Covenant Modification Period: shall have the meaning set forth in Section 10.3.1.

2.2 Increase in the Applicable Margin during Covenant Modification Period. Commencing on the Amendment No. 6 Closing Date and continuing until the next determination pursuant to the procedures set forth in the definition of Applicable Margin, the margins shall be determined as if Level I were applicable. In addition, the Applicable Margins for SOFR, Adjusted Base Rate and Letter of Credit Fee shall be increased by 0.50% commencing on the Amendment No. 6 Closing Date and continuing for the remainder of the Covenant Modification Period. For the avoidance of doubt, the 0.50% increase in the Applicable Margins for SOFR, Adjusted Base Rate and Letter of Credit Fee shall terminate if Borrower Agent elects to exercise the Early Termination of the Covenant.

2.3 Restriction of Distributions to Repurchase Equity Interests during Covenant Modification Period. Notwithstanding the provisions of Section 10.2.4(d) of the Loan Agreement to the contrary, at all times during the Covenant Modification Period Holdco shall not, and shall cause each Subsidiary not to, make any Distributions in order to repurchase their Equity Interests.

2.4 Change in the Total Leverage Ratio Covenant and Fixed Charge Coverage Ratio Covenant. Sections 10.3.1 and 10.3.2 of the Loan Agreement are deleted and are replaced with the following::

1. 10.3.1 Maximum Total Leverage Ratio Commencing on September 30, 2023, maintain a Total Leverage Ratio, measured on a Fiscal Quarter-end basis, of not greater than the applicable ratio set forth in the following table for the applicable date set forth opposite thereto; provided, however, that the maximum Total Leverage Ratio may be increased by 0.50:1.00 for a period of four consecutive Fiscal Quarters (the “Adjusted Covenant Period”) in connection with any one or more Permitted Acquisitions during any period of ninety (90) consecutive days for an aggregate consideration of more than $15,000,000, if the Borrowers have provided notice in writing to the Agent requesting an Adjusted Covenant Period during the Fiscal Quarter in which such Permitted Acquisition is consummated; provided, further, that, (x) an Adjusted Covenant Period cannot commence during the Covenant Modification Period, (y) Borrowers may not request more than three (3) Adjusted Covenant Periods during the term of this Agreement, and (z) at least two (2) Fiscal Quarters have been completed following the end of the previously requested Adjusted Covenant Period:

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Fiscal Quarter Ending	Maximum Total Leverage Ratio
September 30, 2023		5.50:1.00
December 31, 2023, and March 31, 2024*		4.50:1.00
June 30, 2024*		4.00:1.00
September 30, 2024		3.50:1.00
December 31, 2024 and each Fiscal Quarter thereafter		3.25:1.00

^*  In the event Borrower Agent (x) delivers to Agent the consolidated financial statements for Holdco and its Subsidiaries for the Fiscal Quarter ended December 31, 2023 or the Fiscal Quarter ended March 31, 2024, which are required pursuant to Section 10.1.2(b), (y) delivers to Agent the Compliance Certificate for the Fiscal Quarter ended December 31, 2023, or for the Fiscal Quarter ended March 31, 2024, which is required pursuant to Section 10.1.2(c), and (z) the Total Leverage Ratio as of December 31, 2023, or as of March 31, 2024, is less than 2.75:1.00 and the Fixed Charge Coverage Ratio is more than 1.25:1.00, Borrower Agent shall have the right to terminate the Covenant Modification Period (an “Early Termination of the Covenant Modification Period”). If Borrower Agent elects to exercise the Early Termination of the Covenant, the maximum Total Leverage Ratio for the Fiscal Quarters commencing on March 31, 2024, and June 30, 2024, shall not exceed 3.50:1.00.

2. 10.3.2 Minimum Fixed Charge Coverage Ratio. Commencing on September 30, 2023, maintain a Fixed Charge Coverage Ratio of not greater than the applicable ratio set forth in the following table for the applicable date set forth opposite thereto:

Fiscal Quarter Ending	Minimum Fixed Charge Coverage Ratio
September 30, 2023, and December 31, 2023		1.00:1.00
March 31, 2024*		1.00:1.00
June 30, 2024 and each Fiscal Quarter thereafter		1.25:1.00

^*  If Borrower Agent elects to exercise the Early Termination of the Covenant, the Fixed Charge Coverage Ratio for the Fiscal Quarter ending on March 31, 2024, shall not be less than 1.25:1.00.

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3. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT.

3.1 This Amendment shall become effective only upon satisfaction in full of the following conditions precedent:

A. Agent shall have received counterparts to this Amendment, duly executed by the Agent, the Borrowers, and the Lenders, as applicable.

B. Agent shall have received reimbursement, in immediately available funds, of all costs and expenses incurred by Agent in connection with this Amendment, including legal fees and expenses of Agent’s counsel.

4. REPRESENTATIONS AND WARRANTIES. Holdco and each of the Borrowers hereby affirm to Agent and the Lenders:

4.1 All of Holdco and Borrowers’ representations and warranties set forth in the Loan Agreement are true and correct in all material respects (or all respects if already qualified by materiality) as of the date hereof (except for any representations and warranties that expressly relate to an earlier date).

4.2 No event has occurred and is continuing or would result from the consummation of the transactions contemplated hereby that would constitute a Default or an Event of Default.

5. LIMITED EFFECT. Except for the specific amendments contained in this Amendment, the Loan Agreement shall remain unchanged and in full force and effect.

6. RELEASE BY BORROWERS AND GUARANTOR. Borrowers and Guarantors (collectively, the “Obligors”), for themselves, and for their respective agents, servants, officers, directors, shareholders, members, employees, heirs, executors, administrators, agents, successors and assigns forever release and discharge Agent and Lenders and their agents, servants, employees, accountants, attorneys, shareholders, subsidiaries, officers, directors, heirs, executors, administrators, successors and assigns from any and all claims, demands, liabilities, accounts, obligations, costs, expenses, liens, actions, causes of action, rights to indemnity (legal or equitable), rights to subrogation, rights to contribution and remedies of any nature whatsoever, known or unknown, which Obligors have, now have, or have acquired, individually or jointly, at any time prior to the date of the execution of this Amendment, including specifically, but not exclusively, and without limiting the generality of the foregoing, any and all of the claims, damages, demands and causes of action, known or unknown, suspected or unsuspected by Obligors which:

6.1 Arise out of the Loan Documents;

6.2 Arise by reason of any matter or thing alleged or referred to in, directly or indirectly, or in any way connected with, the Loan Documents; or

6.3 Arise out of or in any way are connected with any loss, damage, or injury, whatsoever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of Agent or any Lender or any party acting on behalf of Agent or any Lender committed or omitted prior to the date of this Amendment.

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7. GOVERNING LAW. This Amendment shall be governed by the laws of the State of New York.

8. COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute but one and the same Amendment.

[Signatures are on the following pages]

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IN WITNESS WHEREOF, this Amendment has been executed and delivered as of the date set forth above.

HOLDCO:
AMERICAN VANGUARD CORPORATION, a Delaware corporation
By:	/s/ David T. Johnson
Name:	David T. Johnson
Title:	V.P., Chief Financial Officer and Treasurer
BORROWERS:
AMVAC CHEMICAL CORPORATION,
a California corporation
By:	/s/ Timothy J. Donnelly
Name:	Timothy J. Donnelly
Title:	V.P., Chief Administrative Officer, General Counsel and Secretary
AMVAC NETHERLANDS B.V.
a besloten vennootschap met beperkte aansprakelijkheid, organized under the laws of the Netherlands
By:	/s/ Peter Eilers
Name:	Peter Eilers
Title:	Managing Director

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

AGENT:
BMO BANK, N.A., as successor in interest to
BANK OF THE WEST,
as Agent (with the consent of the Required Lenders)
By:	/s/ Darren Jung
Name:	Darren Jung
Title:	Vice President

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

LENDERS:
BMO BANK, N.A., as successor in interest to
BANK OF THE WEST,
as a Revolver Loan Lender and Issuing Bank
By:	/s/ Shikha Rehman
Name:	Shikha Rehman
Title:	Director

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

AGCOUNTY FARM CREDIT SERVICES, FLCA,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

COMPEER FINANCIAL, PCA,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

BANK OF MONTREAL, CHICAGO BRANCH,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

COBANK, ACB,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

UMQUA BANK,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

GREENSTONE FARM CREDIT SERVICES, FLCA,

as a Lender

By:

Name:

Title:

Amendment Number Six to Third Amended and Restated Loan and Security Agreement

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS THIRD QUARTER AND YTD 2023 RESULTS

Q3 Sales in line with prior year, Rebound Expected in Q4, Transformation Plan Underway

Newport Beach, CA – November 8, 2023 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the third quarter and nine months ended September 30, 2023, and a transformation plan for future growth, operational efficiency and profitability.

Flat Quarterly Sales in Spite of Global Destocking

Chairman and CEO, Eric Wintemute stated: “With respect to our financial performance, in spite of global destocking by customers to limit inventory carrying costs, we recorded sales that were about even with those of the prior year quarter. With channel inventory at historic lows, sales of our premier corn soil insecticide Aztec were strong, as were those of soil fumigants used on high-value crops in the Pacific Northwest. Within our US non-crop business, we are seeing more normalized trends in nursery, ornamental and professional products. Our International businesses are still feeling the effects of low-priced generic products in certain regions (especially Central America), while Mexico and Australia remain strong.”

3 Months Ended	September 30, 2023			September 30, 2022
Net sales	$	149,516		$	152,267
Net income (loss)	$	(325	)	$	6,741
EPS	$	(0.01	)	$	0.23
Adjusted EBITDA	$	11,364		$	18,912
9 Months Ended	September 30, 2023			September 30, 2022
Net sales	$	407,191		$	450,063
Net income	$	540		$	23,506
EPS	$	0.02		$	0.78
Adjusted EBITDA	$	33,536		$	61,435

Fourth Quarter Expected to Rebound

Mr. Wintemute added, “As we reported in our last earnings call, we anticipate improved sales and profitability in the fourth quarter as compared to the first nine months of this fiscal year. Even now, early in the quarter, we are experiencing strong sales, particularly within our US Crop business. This is the quarter in which many of our customers make commitments in order to qualify for program discounts, including early pay. In light of stronger US crop demand, more normalized US non-crop demand and continued international pressure, we are targeting full year financial performance as per the table below.”

Metric	2023 Range		2022 Actual
Net sales	$	580MM - $590MM	$	610MM
Gross margin %		30% - 32%		32%
Adjusted EBITDA	$	55MM - $59MM	$	73.0MM

Company Announces Three-Part Transformation Plan for Growth and Profitability

Mr. Wintemute continued, “We are committed to returning greater value to investors despite current market conditions. To that end, members of the board and senior management have developed a three-pronged plan to improve operating leverage and align people and processes with enhanced profit. First, we have taken time one-on-one with each functional group to scrutinize operating expenses and identified approximately $15 million in operating profit and interest savings to which we will be holding our managers accountable. These measures include enhanced working capital management, greater factory efficiency, reduced operating expenses, decreases in freight and raw materials expense and lower debt and interest expense.”

“Second, working with our ERP sponsor, QAD, and global business consultant, Kearney, we are implementing a complete digital transformation across all business centers and processes. Through this initiative, we will improve data integrity, enhance accounting efficiency and improve management reporting so that we can make faster, better-informed decisions in the face of volatile markets, supply chains, climate and geopolitical shifts.”

“Third, we are launching an organizational transformation in which we evaluate how we are structured, how we are incentivized to operate and how we can best gain the greatest efficiencies and operating leverage. To that end, the Company has initiated a search (led by our newly-appointed Senior Vice President of Human Resources, Shirin Khosravi) for a Chief Transformation Officer who, working with both our internal team and external consultants, will lead the transformation project, recommend and implement appropriate changes and define key performance indicators to achieve better business results.”

2024 Targets Significant Improvement

Mr. Wintemute continued, “There is a general sense of optimism for 2024 within the Agriculture industry. Commodity prices remain relatively stable, the farm economy is sound, interest rates appear to have peaked, and we have observed strong demand for proprietary products, of which we have many in our portfolio. For that reason, we are targeting 8% - 12% growth in sales and 25% - 35% growth in adjusted EBITDA for full year 2024. We will provide greater clarity on our outlook for 2024 and beyond this January.”

Concluding Thoughts

Mr. Wintemute stated further, “In light of higher interest expense and in order to ensure that we have ample borrowing capacity from our senior credit facility, we reached out to our senior lenders, led by BMO, to negotiate an expansion of our financial covenants. I am pleased to report that our senior lenders were, as usual, very supportive and have agreed to an amendment that gives us a secure runway through September 2024. We thank BMO and our other lenders for their support.”

Mr. Wintemute concluded, “Times like this call for more effort, more innovation and more openness to change. We will continue to draw from our experience to provide high value products to our customers, to exercise strict financial discipline and to invest in our digital platform while transforming our global business into an optimized, agile and efficient enterprise. Please join us for our upcoming earnings call, during which we will give you more detail on our plans, our performance and our outlook.”

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Conference Call

Eric Wintemute, Chairman & CEO and David T. Johnson, VP & CFO, will conduct a conference call focusing on the financial results and strategic themes at 5 pm ET on November 8, 2023. 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, manufactures, and markets solutions for crop protection and nutrition, turf and ornamentals management, commercial and consumer pest control. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has over 1,000 product registrations in 56 nations worldwide. Its strategy rests on three growth initiatives – i) Core Business (through innovation of conventional products), ii) Green Solutions (with over 130 biorational products – including fertilizers, microbials, nutritionals and non-conventional products) and iii) Precision Agriculture innovation (including SIMPAS prescriptive application and Ultimus measure/record/verify technologies). American Vanguard is included in the Russell 2000^® and Russell 3000^® Indexes. 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.com	lcati@equityny.com

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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

	September 30, 2023			December 31, 2022
Current assets:
Cash and cash equivalents	$	11,529		$	20,328
Receivables:
Trade, net of allowance for doubtful accounts of $6,274 and $5,136, respectively		185,619			156,492
Other		11,919			9,816
Total receivables, net		197,538			166,308
Inventories		247,932			184,190
Prepaid expenses		8,517			15,850
Income taxes receivable		6,071			1,891
Total current assets		471,587			388,567
Property, plant and equipment, net		73,205			70,912
Operating lease right-of-use assets, net		22,907			24,250
Intangible assets, net		174,918			184,664
Goodwill		47,426			47,010
Other assets		12,435			10,769
Deferred income tax assets, net		366			141
Total assets	$	802,844		$	726,313
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	71,054		$	69,000
Customer prepayments		5,998			110,597
Accrued program costs		90,367			60,743
Accrued expenses and other payables		16,555			20,982
Current operating lease liabilities		5,553			5,279
Total current liabilities		189,527			266,601
Long-term debt, net		218,000			51,477
Long-term operating lease liabilities		18,102			19,492
Other liabilities, net of current installments		4,805			4,167
Deferred income tax liabilities, net		13,709			14,597
Total liabilities		444,143			356,334
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 34,666,431 shares at September 30, 2023 and 34,446,194 shares at December 31, 2022		3,467			3,444
Additional paid-in capital		108,937			105,634
Accumulated other comprehensive loss		(9,254	)		(12,182	)
Retained earnings		326,752			328,745
Less treasury stock at cost, 5,915,182 shares at September 30, 2023 and 5,029,892 shares at December 31, 2022		(71,201	)		(55,662	)
Total stockholders’ equity		358,701			369,979
Total liabilities and stockholders’ equity	$	802,844		$	726,313

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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net sales	$	149,516		$	152,267		$	407,191		$	450,063
Cost of sales		(106,432	)		(102,629	)		(282,662	)		(299,698	)
Gross profit		43,084			49,638			124,529			150,365
Operating expenses		(38,893	)		(38,394	)		(113,317	)		(113,559	)
Operating income		4,191			11,244			11,212			36,806
Change in fair value of equity investments		(247	)		(454	)		(324	)		(857	)
Interest expense, net		(3,384	)		(1,086	)		(8,282	)		(2,256	)
Income before provision for income taxes		560			9,704			2,606			33,693
Income tax expense		(885	)		(2,963	)		(2,066	)		(10,187	)
Net income (loss)	$	(325	)	$	6,741		$	540		$	23,506
Net income (loss) per common share—basic	$	(.01	)	$	.23		$	.02		$	.80
Net income (loss) per common share—assuming dilution	$	(.01	)	$	.23		$	.02		$	.78
Weighted average shares outstanding—basic		27,919			29,214			28,236			29,496
Weighted average shares outstanding—assuming dilution		27,919			29,805			28,656			30,128

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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands)

(Unaudited)

Quarter Ended September 30, 2023 and 2022:

	2023			2022			Change			% Change
Net sales:
U.S. crop	$	67,749		$	69,101		$	(1,352	)		-2	%
U.S. non-crop		19,250			18,946			304			2	%
Total U.S.		86,999			88,047			(1,048	)		-1	%
International		62,517			64,220			(1,703	)		-3	%
Total net sales		149,516			152,267			(2,751	)		-2	%
Total cost of sales		(106,432	)		(102,629	)		(3,803	)		4	%
Total gross profit	$	43,084		$	49,638		$	(6,554	)		-13	%
Total gross margin		29	%		33	%

Nine months ended September 30, 2023, and 2022

	2023			2022			Change			% Change
Net sales:
U.S. crop	$	185,823		$	220,303		$	(34,480	)		-16	%
U.S. non-crop		50,041			53,844			(3,803	)		-7	%
Total U.S.		235,864			274,147			(38,283	)		-14	%
International		171,327			175,916			(4,589	)		-3	%
Total net sales		407,191			450,063			(42,872	)		-10	%
Total cost of sales		(282,662	)		(299,698	)		17,036			-6	%
Total gross profit	$	124,529		$	150,365		$	(25,836	)		-17	%
Total gross margin		31	%		33	%

6

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net income	$	540		$	23,506
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment		6,396			6,207
Amortization of intangibles assets		10,009			10,442
Amortization of other long-term assets		1,445			2,656
Loss on disposal of property, plant and equipment		7			265
Accretion of discounted liabilities		—			28
Amortization of deferred loan fees		174			174
Provision for bad debts		952			597
Fair value adjustment to contingent consideration		—			621
Stock-based compensation		4,257			4,396
Change in deferred income taxes		(977	)		(64	)
Changes in liabilities for uncertain tax positions or unrecognized tax benefits		467			—
Change in fair value of equity investments		324			857
Net foreign currency adjustments		199			218
Changes in assets and liabilities associated with operations:
Increase in net receivables		(29,055	)		(46,289	)
Increase in inventories		(58,163	)		(38,987	)
Increase in prepaid expenses and other assets		(633	)		(4,272	)
Increase in income tax receivable/payable, net		(4,046	)		(5,201	)
Increase in net operating lease liability		227			10
Increase in accounts payable		1,240			14,418
Decrease in customer prepayments		(104,590	)		(62,831	)
Increase in accrued program costs		29,779			45,016
(Decrease) increase in other payables and accrued expenses		(4,406	)		2,555
Net cash used in operating activities		(145,854	)		(45,678	)
Cash flows from investing activities:
Capital expenditures		(8,589	)		(8,946	)
Proceeds from disposal of property, plant and equipment		200			46
Intangible assets		(759	)		(1,078	)
Net cash used in investing activities		(9,148	)		(9,978	)
Cash flows from financing activities:
Payments under line of credit agreement		(62,800	)		(64,000	)
Borrowings under line of credit agreement		228,500			160,000
Net receipt from the issuance of common stock under ESPP		980			837
Net receipt from the exercise of stock options		46			783
Payment for tax withholding on stock-based compensation awards		(1,957	)		(2,020	)
Repurchase of common stock		(15,539	)		(33,731	)
Payment of cash dividends		(2,550	)		(2,072	)
Net cash provided by financing activities		146,680			59,797
Net (decrease) increase in cash and cash equivalents		(8,322	)		4,141
Effect of exchange rate changes on cash and cash equivalents		(477	)		382
Cash and cash equivalents at beginning of period		20,328			16,285
Cash and cash equivalents at end of period	$	11,529		$	20,808

7

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023		2022
Net income (loss)	$	(325	)	$	6,741	$	540	$	23,506
Provision for income taxes		885			2,963		2,066		10,187
Interest expense, net		3,384			1,086		8,282		2,256
Depreciation and amortization		5,704			6,562		17,850		19,305
Stock compensation		1,716			1,560		4,257		4,396
Proxy contest activities		—			—		541		1,785
Adjusted EBITDA1	$	11,364		$	18,912	$	33,536	$	61,435

¹  Adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock compensation, and proxy contest activities. Adjusted 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 or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We provide these measures because we believe that they provide helpful comparisons to other companies in our industry and peer group. 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.

8

XML

Document and Entity Information	Nov. 07, 2023
Cover [Abstract]
Entity Registrant Name	AMERICAN VANGUARD CORP
Amendment Flag	false
Entity Central Index Key	0000005981
Document Type	8-K
Document Period End Date	Nov. 07, 2023
Entity Incorporation State Country Code	DE
Entity File Number	001-13795
Entity Tax Identification Number	95-2588080
Entity Address, Address Line One	4695 MacArthur Court
Entity Address, City or Town	Newport Beach
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92660
City Area Code	(949)
Local Phone Number	260-1200
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $.10 par value
Trading Symbol	AVD
Security Exchange Name	NYSE
Entity Emerging Growth Company	false