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): January 31, 2024

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 12b-2 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 7.01 Regulation FD Disclosure

On January 31, 2024, American Vanguard Corporation (“Registrant”) is conducting a investors’ call during which it will give updated information relating to its financial performance for the three- and twelve-month periods ended December 31, 2023, and its outlook for full-year 2024 (the “Earnings Call of 1/31/24”), during which company participants are to be making comments and providing slides that contain material nonpublic information. That information is contained in the speech and slide deck filed herewith as Exhibits 99.1 and 99.2 and 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 7.01 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 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1	Text of speech by Registrant for the Earnings Call of 1/31/24.
Exhibit 99.2	Powerpoint slides by Registrant for the Earnings Call of 1/31/24.

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: January 31, 2024	By:	/s/ Timothy J. Donnelly
		Timothy J. Donnelly
		Chief Administrative Officer, General Counsel & Secretary

EX-99.1

Exhibit 99.1

CEO Script

January 31, 2024 Financial Update

[Intro slide No 1]

[Click to slide No. 2, Participants]

Bill: [Make introductory remarks and Safe Harbor]

[Click to slide No. 3, Safe Harbor]

[Click to slide No. 4, Financial Information]

Eric: Hello everyone and welcome to the American Vanguard January 2024 Financial Update. Today, we want to hold a brief call to give you our impressions of Q4 and full year 2023 ahead of our formal 10-K issuance, as well as to revisit our ‘24 outlook. We presented slide No. 4 in our Q3 ‘23 Earnings call to show our financial expectations. Bottom line – while we have not completed the full audit cycle, we are broadly on track to meet our previously forecasted ‘23 numbers. Further, we remain positioned to meet our ‘24 targets – in short, our outlook is unchanged.

With respect to 2023, in our last call we outlined that we had secured a supply of two important, high value products – namely, Aztec and Dacthal – both of which experienced availability constraints in early ‘23 due to supply chain issues.

During the fourth quarter, we were able to produce volumes of these products sufficient to meet grower needs. Consequently, our quarter-over-quarter sales were up by about 8% in ‘23 as compared to ‘22. Further, we made up some of the ground that we had lost early in ‘23 such that our full year net sales declined by only 5% compared to the prior year.

1

During ‘23, gross margins held up, as we had predicted, and, while still subject to completion of the audit, also appear to be in line with our forecasted range. The same can be said for adjusted EBITDA.

[Click to slide no. 5, Working Capital]

Let ‘s turn to working capital, which we have captured on slide number 5. With improved sales, inventory management and robust pre-pay collections, we generated enough cash and EBITDA to reduce debt to about $139 million and inventory to about $220 million, while increasing our borrowing capacity to about $100 million. In other words, we deleveraged the balance sheet significantly such that, based upon initial numbers, we were able to achieve our debt-to-EBITDA target ratio of 2.75-times. As you may recall, our lenders had loosened covenants during Q4 to give us sufficient room to meet working capital needs. This relief included an uptick in interest rates. If we are able to maintain our current trajectory, we should be able to return to lower rates and reduce interest expense.

We will, of course, provide greater detail on Q4 and full-year ‘23 financial performance in our March earnings call and within our Form 10-K.

Before turning to our full-year 2024 outlook, I want to report on our transformation efforts. With me today is Don Gualdoni, our Chief Transformation Officer, who will cover our plans to improve operating profit through cost, margin and revenue initiatives. Also with me is Tim Donnelly, our Chief Administrative Officer, who is spearheading our digital transformation effort.

At this point, let me then turn the call over to Don and Tim after which I will return with my thoughts on the ’24 year.

2

[click to slide 6, Business Transformation]

Don: Thank you, Eric. It is a pleasure to be here with all of you on my two-month anniversary at AMVAC. As you will see from slide 6, a robust and sustainable transformation has three core elements.

First, it is multi-faceted – not limited to a single area of the company or a single profitability lever. Second, a sustainable transformation is about accountability which requires transparency. And lastly, transformation done right changes the DNA of the company and that pays dividends well after the formal process completes.

So where are we in this pursuit? We are drafting and implementing key performance indicators that will serve both as internal targets and as a set of vital signs for senior management and the board. These will include factors such as sales performance against plan and compared to prior year, raw material costs, gross margin, production-to-plan, inventory DSO, forecast accuracy and the like. By driving these key performance indicators – or KPIs – into the organization, we will be driving profitability and measuring it as we go.

Beyond KPIs, we will take a deeper dive into our cost and capital structure, measuring fully burdened margins of our product lines, return on capital for our businesses, freight costs, selling expenses, and the use of cash across multiple entities. The structural transformation should enable us to realize material improvement in our operating leverage and yield a lean platform for growth.

3

As is typical in these types of transformation, we will also define a specific target for additional profitability on a year-by-year basis. We anticipate that, during our next earnings call in early March, we will have set the target for improved operating leverage for the balance of 2024 and full-year 2025.

I am excited to be working with my AMVAC colleagues to set our course, deliver our plans, and see the results flow through into our financials. We will be reporting to you on our progress quarterly.

I will now turn it over to Tim to update you on our digital transformation progress.

[Click to Slide No. 7, Digital Transformation]

Tim: Thanks, Don. Let me start by answering the question, “Why are you doing a digital transformation?” The short answer is – so that we can grow and remain competitive. Let’s look back for a second, following the points on slide number 7. As many of you know, we have grown and diversified over the past ten years or so largely through acquisition. When I started here nearly 20 years ago, we had maybe a half dozen businesses; today we have 33 businesses throughout the world. With that growth has come increased complexity. We find ourselves at a stage in our growth cycle when it is necessary to step back, look at how we work and ensure that our processes are standardized and our information is current, complete and easily accessible.

4

That, in a nutshell, is what we have been doing with business consultant Kearney and our Enterprise Resource Planning (or “ERP”) vendor QAD. We have canvassed the owners of our major business processes – sales, forecasting, inventory, planning and finance – and defined how we work today, how we would like to work in the future and how we can work on the same ERP system globally. I just signed the services and subscription contract with QAD last Friday, and we are now poised to move into the implementation phase of this effort. Over the next 18 months or so, QAD and our internal team will do two things – first, bring our users up on QAD’s latest adaptive ERP system and second, implement standard processes for these functions – processes that our people have themselves fashioned.

Through this process, we will be able to provide senior management – in fact, all users – with a single source of truth through warehoused data that is gathered and rolled up in a fully automated manner. Management will have a top-down view of business metrics in real-time. This, in turn, will enable us to make the best decisions in the shortest response time. These days, external factors seemingly change with the wind, and we cannot control them. We can, however, give our business leaders the tools to operate effectively in the face of change and, in the process, provide a platform for growth. In order to take the next step in our evolution, digital transformation is essential. With that I will turn the call back to Eric. Eric?

5

[Click on slide no. 8, Financial Information]

Eric: Thanks, Tim. Turning now to our full-year 2024 outlook, our assessment is unchanged versus our previously issued targets. That is, we are still expecting revenue to rise by 8-12%, and adjusted EBITDA to increase by 25-35%. One of the primary reasons for the improvement is that we do not anticipate any material supply chain snags as we had experienced last year. On a related note, many of you have heard of the shipping impediments caused by military activity in the Red Sea. While it may have an economic impact beyond the Middle East, this activity does not directly affect shipping lanes that we use for either supply or delivery. We continue to monitor developments closely, but, at least for the present, have not been adversely affected.

Fundamentals look encouraging for ‘24. Commodity prices, which are globally-driven, have been relatively stable. Interestingly, while Brazil had record crops in corn and soybeans in ‘23, Agchem industry sales fell 33% within that country. By contrast, our sales in Brazil were down only 4% year over year. With adverse weather, Brazil crop numbers are forecasted by some to fall slightly in 2024. While this may continue to affect many in this industry, we do not expect a material effect on our global results.

With Brazil trending down, the US farm economy should trend up or at least remain stable. We do expect some drag on herbicide sales for 2024, as the presence of low-priced generic herbicides within the US and international markets will remain with us. We have taken that into account in our outlook. Our ex-US crop businesses should generate good results – bear in mind that we have a diverse portfolio in many regions. This breadth tends to blunt the effect of product-specific market challenges.

6

On the non-crop side, we expect that the shift in procurement that occurred in ‘23 – that is, our customers shifting from building 4-6 months’ worth of inventory to maintaining 40 to 60 days’ worth of inventory – will stabilize in ‘24. Even though retailers may buy smaller lots with greater frequency, assuming unchanged demand, the retailers will eventually buy a similar volume of goods on an annual basis. In other words, we took a hit in 2023 due to a shift in timing on orders, but that timing should even out in the coming year.

That said, let me now connect up our outlook with the transformation discussion that Don and Tim had covered earlier. First, our targets for ‘24 assume that we will make a host of changes that should generate $15 million in operating profit on an annualized basis. These include manufacturing optimization, reduced raw material costs, lower selling expenses, and reduced freight and interest expense. We have assigned these initiatives to our business leaders and are measuring them regularly. In the short term, however, we have to cover additional costs – for example, relating to the transformation and implementation – that will reduce the full-year impact of these efforts in the ’24 year. The idea here, however, is to improve operating efficiency, so that we have stronger operating leverage in 2025 and beyond.

7

At the same time, working with our head of Human Resources, Shirin Khosravi, Don is leading the charge on defining and implementing key performance indicators that will serve to keep our team focused on the things that matter most to maintaining profit, while giving me and the board a monthly health check. In addition, Don will establish targets for transformative benefit – this is called “sizing the prize.” We should have that in hand this March.

While not intended as a solution for improving operating leverage, our digital transformation is an accelerant to growth and increased speed of decision-making. As Tim had pointed out, we are a complex, mid-sized company operating in many regions on many platforms. As markets and conditions shift, we need the most comprehensive, accurate and current data to make the best decisions.

It is important to note that our entire team is committed to these transformation efforts. They can see the benefit from having more efficient systems and better real-time data. Further, these changes will make us a leaner, faster supplier in the eyes of our customers. Finally, we are confident that we can conduct our business profitably and efficiently even while improving our cost and digital structures.

In summary, we are on track to achieve target performance for Q4 and full-year ‘23 (subject to completion of the audit), are keeping our 2024 outlook unchanged and are positioning ourselves to maximize growth and profitability through transformation. With that, I ask our operator to poll listeners for any questions. Operator?

[Click to slide No. 9, Q&A]

8

EX-99.2

Financial Update NYSE: AVD January 31, 2024 Exhibit 99.2

Eric Wintemute …………………………………………………..…………… Chairman & Chief Executive Officer Don Gualdoni ……………………………….………………………………….……… Chief Transformation Officer Tim Donnelly …………………………….………………………………………..……. Chief Administrative Officer William Kuser ……………………………………………………………..…… Director, Investor Communications David Johnson ……………………………………………………………..………………… Chief Financial Officer Call Participants

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. Safe Harbor Statement

Operational Improvement Initiatives 2023 Expectations Cost/Margin Improvement Digital Transformation Structural Design Revenue $580-$590M Gross Margin 30-31% OPEX $152-$154M EBITDA $55-$59M Revenue Up 8-12% EBITDA Up 25-35% 2024 Outlook Financial Update Topics (January 31, 2024)

Debt$139M Inventory~ $220M Borrowing Capacity~ $100M Leverage~ 2.75X (Debt to adjusted EBITDA*) 12/31/23 Working Capital *Adjusted EBITDA includes earnings before interest, taxes, depreciation, amortization, non-cash stock compensation and proxy contest activities

Elements Multifaceted Accountability Enduring Effect KPI’s Sizing the Benefit Business Transformation

History Multi-Functional Workshop Implementation – QAD under contract Result End-to-End Fully Integrated Standardized Digital Transformation

Operational Improvement Initiatives 2023 Expectations Cost/Margin Improvement Digital Transformation Structural Design Revenue $580-$590M Gross Margin 30-31% OPEX $152-$154M EBITDA $55-$59M Revenue Up 8-12% EBITDA Up 25-35% 2024 Outlook Financial Update Topics (January 31, 2024)

Q & A NYSE: AVD

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Document and Entity Information	Jan. 31, 2024
Cover [Abstract]
Entity Registrant Name	AMERICAN VANGUARD CORP
Amendment Flag	false
Entity Central Index Key	0000005981
Document Type	8-K
Document Period End Date	Jan. 31, 2024
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