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 11, 2020

 

 

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 2.02

Results of Operations and Financial Condition

On May 11, 2020, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the three months ended March 31, 2020. The full text of the press release is linked hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Current Report on Form 8-K, including the Exhibit linked hereto, is being furnished under Items 2.02 and 9.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
99.1
   Press release dated May 11, 2020 of Registrant regarding financial results for the three months ended March 31, 2020.


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 12, 2020     By:   /s/ Timothy J. Donnelly
          Timothy J. Donnelly
          Chief Administrative Officer, General Counsel & Secretary
EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS FIRST QUARTER 2020 RESULTS

Newport Beach, CA – May 11, 2020 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2020.    

Fiscal 2020 First Quarter Financial Highlights versus Fiscal 2019 First Quarter:

 

 

Net sales were $96.0 million in 2020, compared to $99.7 million in 2019

 

 

Net income was $0.52 million in 2020, compared to $3.9 million in 2019

 

 

Earnings per diluted share of $0.02 in 2020, compared to $0.13 in 2019

 

 

EBITDA1 of $7.6 million in 2020, compared to $12.6 million in 2019

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “As an essential business under both CISA guidelines and international orders, we are specially permitted to operate continuously during the pandemic. From the beginning of the year, we have maintained a healthy workforce, adapted to applicable COVID restrictions and otherwise carried on business as usual. On a consolidated basis, net sales for the period were down by 4% with flat domestic sales and lower international sales due primarily to currency exchange effects and softer market conditions. Generally speaking, sales by crop and product line were mixed across our businesses. Net income declined as compared to the first quarter in 2019; however, we exceeded breakeven, which we had forecast in our release of April 28.”

Mr. Wintemute concluded, “Our performance was not materially affected by the coronavirus during the first quarter. Looking forward, we are not yet able to determine the longer-term effects of the pandemic. Thus, with respect to the balance of 2020, we can say at this point that we will endeavor to maximize our results and are poised to perform in line with our peers. We look forward to giving you additional detail on market conditions, profitability, working capital considerations and our innovation initiatives during our upcoming earnings call.”

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, COO and David T. Johnson, CFO, will conduct a conference call focusing on operating performance and financial results at 4:30 pm ET / 1:30 pm PT on Monday, May 11, 2020. Interested parties may participate in the call by dialing (661) 378-9883 - please call in 10 minutes before the conference is scheduled to begin and mention conference ID: 7379353.

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.

 

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.


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

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,
2020
    December 31,
2019
 

Current assets:

    

Cash and cash equivalents

   $ 5,544     $ 6,581  

Receivables:

    

Trade, net of allowance for doubtful accounts of $2,606 and $2,297, respectively

     141,509       136,075  

Other

     13,134       16,949  
  

 

 

   

 

 

 

Total receivables, net

     154,643       153,024  

Inventories

     175,861       163,313  

Prepaid expenses

     11,149       10,457  

Income taxes receivable

     3,406       2,824  
  

 

 

   

 

 

 

Total current assets

     350,603       336,199  

Property, plant and equipment, net

     57,599       56,521  

Operating lease right-of-use assets

     10,731       11,258  

Intangible assets, net of applicable amortization

     193,823       198,377  

Goodwill

     41,974       46,557  

Other assets

     19,511       21,186  
  

 

 

   

 

 

 

Total assets

   $  674,241     $  670,098  
  

 

 

   

 

 

 
    
LIABILITIES AND STOCKHOLDERS’ EQUITY  

Current liabilities:

    

Current installments of other liabilities

   $ 227     $ 1,513  

Accounts payable

     64,333       64,881  

Deferred revenue

     4,448       6,826  

Accrued program costs

     53,696       47,699  

Accrued expenses and other payables

     11,720       12,815  

Operating lease liabilities, current

     4,883       4,904  
  

 

 

   

 

 

 

Total current liabilities

     139,307       138,638  

Long-term debt, net

     168,225       148,766  

Operating lease liabilities, long term

     5,996       6,503  

Other liabilities, excluding current installments

     10,963       12,890  

Deferred income tax liabilities

     15,543       19,145  
  

 

 

   

 

 

 

Total liabilities

     340,034       325,942  
  

 

 

   

 

 

 

Commitments and contingent liabilities

    

Stockholders’ equity:

    

Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued

     —         —    

Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,188,421 shares at March 31, 2020 and 33,233,614 shares at December 31, 2019

     3,319       3,324  

Additional paid-in capital

     89,757       90,572  

Accumulated other comprehensive loss

     (14,761     (5,698

Retained earnings

     274,052       274,118  

Less treasury stock at cost, 3,061,040 shares at March 31, 2020 and December 31, 2019

     (18,160     (18,160
  

 

 

   

 

 

 

Total stockholders’ equity

     334,207       344,156  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $  674,241     $  670,098  
  

 

 

   

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

     For the three months
ended March 31
 
     2020     2019  

Net sales

   $ 95,962     $ 99,676  

Cost of sales

     57,581       57,974  
  

 

 

   

 

 

 

Gross profit

     38,381       41,702  

Operating expenses

     36,545       34,800  
  

 

 

   

 

 

 

Operating income

     1,836       6,902  

Interest expense, net

     1,508       1,612  
  

 

 

   

 

 

 

Income before provision for income taxes (benefit) and loss on equity method investment

     328       5,290  

Income tax (benefit) expense

     (205     1,360  
  

 

 

   

 

 

 

Income before loss on equity method investment

     533       3,930  

Loss from equity method investment

     13       24  
  

 

 

   

 

 

 

Net income

   $ 520     $ 3,906  
  

 

 

   

 

 

 

Earnings per common share—basic

   $ 0.02     $ 0.13  
  

 

 

   

 

 

 

Earnings per common share—assuming dilution

   $ 0.02     $ 0.13  
  

 

 

   

 

 

 

Weighted average shares outstanding—basic

     29,288       28,977  
  

 

 

   

 

 

 

Weighted average shares outstanding—assuming dilution

     29,948       29,579  
  

 

 

   

 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three months ended March 31, 2020 and 2019

(In thousands)

(Unaudited)

 

     For the three Months Ended
March 31
 
     2020     2019     Change     %
Change
 

Net sales:

        

US crop

   $ 50,362     $ 50,270     $ 92       0

US non-crop

     10,993       11,267       (274     -2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total US

     61,355       61,537       (182     0

International

     34,607       38,139       (3,532     -9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales:

   $ 95,962     $ 99,676     $ (3,714     -4
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit:

        

US crop

   $ 24,245     $ 23,822     $ 423       2

US non-crop

     4,719       5,846       (1,127     -19
  

 

 

   

 

 

   

 

 

   

 

 

 

Total US

     28,964       29,668       (704     -2

International

     9,417       12,034       (2,617     -22
  

 

 

   

 

 

   

 

 

   

 

 

 

Total gross profit:

   $ 38,381     $ 41,702     $ (3,321     -8
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin:

        

US crop

     48     47    

US non-crop

     43     52    

Total US

     47     48    

International

     27     32    

Gross margin:

     40     42    


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the three months
ended March 31
 
     2020     2019  

Cash flows from operating activities:

    

Net income

   $ 520     $ 3,906  

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation and amortization of fixed and intangible assets

     4,762       4,609  

Amortization of other long-term assets and debt issuance costs

     1,026       1,082  

Amortization of discounted liabilities

     4       —    

Provision for bad debts

     359       1,034  

Revision of deferred compensation

     —         (1,543

Stock-based compensation

     1,357       1,485  

Decrease in deferred income taxes

     (910     (742

Loss from equity method investment

     13       24  

Net foreign currency adjustment

     823       172  

Changes in assets and liabilities associated with operations:

    

Decrease (increase) in net receivables

     (5,472     6,812  

Increase in inventories

     (16,446     (23,763

Increase in prepaid expenses and other assets

     (776     (2,724

Decrease (increase) in income tax receivable/payable, net

     (597     750  

(Decrease) increase in accounts payable

     (189     4,788  

Decrease in deferred revenue

     (2,342     (16,036

Increase in accrued program costs

     6,016       2,391  

Decrease in other payables and accrued expenses

     (2,094     (2,508
  

 

 

   

 

 

 

Net cash used in by operating activities

     (13,946     (20,263
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (2,980     (3,369

Acquisitions of businesses, product lines and intangible assets

     —         (24,246
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,980     (27,615
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net borrowings under line of credit agreement

     19,400       52,600  

Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings)

     (2,177     (550

Repurchase of common stock

     —         (2,604

Payment of cash dividends

     (582     (581
  

 

 

   

 

 

 

Net cash provided by financing activities

     16,641       48,865  
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (285     987  

Effect of exchange rate changes on cash and cash equivalents

     (752     (498

Cash and cash equivalents at beginning of period

     6,581       6,168  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 5,544     $ 6,657  
  

 

 

   

 

 

 

Non-cash investing activities:

    

Deferred consideration in connection with business acquisitions:

   $ —       $ 2,645  
  

 

 

   

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three months March 31, 2020 and 2019

(Unaudited)

 

     March 31,
2020
    March 31,
2019
 

Net income, as reported

   $ 520     $ 3,906  

Provision for income taxes (benefit)

     (205     1,360  

Interest expense, net

     1,508       1,612  

Depreciation and amortization

     5,788       5,691  
  

 

 

   

 

 

 

EBITDA2

   $ 7,611     $ 12,569  
  

 

 

   

 

 

 

 

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.