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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 14, 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 |
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 March 14, 2024, American Vanguard Corporation (“Registrant”) issued a press release announcing financial results for the three- and twelve-month periods ended December 31, 2023. 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 99.1 | Press release dated March 14, 2024, of Registrant regarding financial results for the three- and twelve-month periods ended December 31, 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: March 18, 2024 | By: | /s/ Timothy J. Donnelly |
||||
| Timothy J. Donnelly | ||||||
| Chief Information Officer, General Counsel & Secretary | ||||||
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD REPORTS FOURTH QUARTER & FULL YEAR 2023 RESULTS
SETS $15MM ADJUSTED EBITDA GAIN AS TRANSFORMATION TARGET
Newport Beach, CA – March 14, 2024 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2023.
Fiscal 2023 Fourth Quarter Financial Highlights – versus Fiscal 2022 Fourth Quarter:
| • | Net sales were $172.2 million in 2023, compared to $159.5 million in 2022 |
| • | Net income was $7.0 million in 2023, compared to $3.9 million in 2022 |
| • | Earnings per diluted share of $0.25 in 2023, compared to $0.13 in 2022 |
| • | Adjusted EBITDA1 of $21 million in 2023, compared to $12 million in 2022 |
Fiscal 2023 Full Year Financial Highlights – versus Fiscal 2022 Full Year:
| • | Net sales were $579 million in 2023, compared to $610 million in 2022 |
| • | Net income was $7.5 million in 2023, compared to $27.4 million in 2022 |
| • | Earnings per diluted share of $0.26 in 2023, compared to $0.92 in 2022 |
| • | Adjusted EBITDA1 of $55 million in 2023, compared to $73 million in 2022 |
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We rebounded sharply in Q4 after having weathered the effect of global destocking within the distribution channel, the oversupply of Chinese generic products into multiple regions, and the unavailability of our most profitable products due to supply chain issues. Increased demand during Q4 provided evidence that destocking activity continues to subside and that, even while showing greater discipline, procurement within the distribution channel is following more normal patterns. During the quarter, we achieved predicted revenue growth, maintained solid manufacturing operations, sustained strong profit margins by bolstering brand value and strengthened our balance sheet.”
Mr. Wintemute concluded: “Looking forward, we believe that our company is situated well in both domestic and international markets and are targeting 8 to 12% revenue growth resulting in a full year adjusted EBITDA range of $70 to $80 million in 2024. We expect gross profit margins to remain strong, operating expenses to be tightly managed, and factory performance to be efficient. In addition, with the assistance of our consultant Kearney, through our business transformation initiative, we are targeting growth of adjusted EBITDA to 15% of net sales or an additional $15 million or more of adjusted EBITDA on a full year basis. The full benefit of the transformation will be realized by 2026 through a combination of operational, commercial, digital, and general and administrative sub-initiatives. We look forward to giving you a detailed presentation during our upcoming earnings call.”
| 1 | Earnings before interest, taxes, depreciation, and amortization. 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 (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 adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently. |
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 5:00 pm ET on March 14, 2024. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time 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. 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 |
CONSOLIDATED BALANCE SHEETS
December 31, 2023 and 2022
(In thousands, except share data)
(Unaudited)
| 2023 | 2022 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 11,416 | $ | 20,328 | ||||
| Receivables: |
||||||||
| Trade, net of allowance for credit losses of $7,107 and $5,136, respectively |
182,613 | 156,492 | ||||||
| Other |
8,356 | 9,816 | ||||||
|
|
|
|
|
|||||
| Total receivables, net |
190,969 | 166,308 | ||||||
|
|
|
|
|
|||||
| Inventories |
219,551 | 184,190 | ||||||
| Prepaid expenses |
6,261 | 15,850 | ||||||
| Income taxes receivable |
3,824 | 1,891 | ||||||
|
|
|
|
|
|||||
| Total current assets |
432,021 | 388,567 | ||||||
| Property, plant and equipment, net |
74,560 | 70,912 | ||||||
| Operating lease right-of-use assets, net |
22,417 | 24,250 | ||||||
| Intangible assets, net of amortization |
172,508 | 184,664 | ||||||
| Goodwill |
51,199 | 47,010 | ||||||
| Deferred income tax assets |
2,849 | 141 | ||||||
| Other assets |
11,994 | 10,769 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 767,548 | $ | 726,313 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 68,833 | $ | 69,000 | ||||
| Customer prepayments |
65,560 | 110,597 | ||||||
| Accrued program costs |
68,076 | 60,743 | ||||||
| Accrued expenses and other payables |
16,354 | 20,982 | ||||||
| Operating lease liabilities, current |
6,081 | 5,279 | ||||||
| Income taxes payable |
5,591 | — | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
230,495 | 266,601 | ||||||
| Long-term debt |
138,900 | 51,477 | ||||||
| Operating lease liabilities, long-term |
17,113 | 19,492 | ||||||
| Deferred income tax liabilities |
7,892 | 14,597 | ||||||
| Other liabilities |
3,138 | 4,167 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
397,538 | 356,334 | ||||||
|
|
|
|
|
|||||
| Commitments and contingent liabilities |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.10 par value per share; authorized 400,000 shares; none issued |
— | — | ||||||
| Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,676,787 shares in 2023 and 34,446,194 shares in 2022 |
3,467 | 3,444 | ||||||
| Additional paid-in capital |
110,810 | 105,634 | ||||||
| Accumulated other comprehensive loss |
(5,963 | ) | (12,182 | ) | ||||
| Retained earnings |
332,897 | 328,745 | ||||||
|
|
|
|
|
|||||
| 441,211 | 425,641 | |||||||
| Less treasury stock at cost, 5,915,182 shares in 2023 and 5,029,892 in 2022 |
(71,201 | ) | (55,662 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
370,010 | 369,979 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 767,548 | $ | 726,313 | ||||
|
|
|
|
|
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2023, 2022 and 2021
(In thousands, except per share data)
(Unaudited)
| 2023 | 2022 | 2021 | ||||||||||
| Net sales |
$ | 579,371 | $ | 609,615 | $ | 557,676 | ||||||
| Cost of sales |
(400,207 | ) | (417,227 | ) | (386,953 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Gross profit |
179,164 | 192,388 | 170,723 | |||||||||
| Operating expenses |
||||||||||||
| Selling, general and administrative |
(117,844 | ) | (119,921 | ) | (111,093 | ) | ||||||
| Research, product and regulatory |
(38,025 | ) | (31,816 | ) | (28,855 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
(155,869 | ) | (151,737 | ) | (139,948 | ) | ||||||
| Bargain purchase gain on business acquisition |
— | — | 171 | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income |
23,295 | 40,651 | 30,946 | |||||||||
| Change in fair value of equity investments, net |
(359 | ) | (732 | ) | (790 | ) | ||||||
| Other income |
— | — | 672 | |||||||||
| Interest expense, net |
(12,639 | ) | (3,954 | ) | (3,687 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Income before provision for income taxes and loss on equity method investment |
10,297 | 35,965 | 27,141 | |||||||||
| Provision for income taxes |
(2,778 | ) | (8,561 | ) | (8,166 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Income before loss on equity method investment |
7,519 | 27,404 | 18,975 | |||||||||
| Loss from equity method investment |
— | — | (388 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net income |
$ | 7,519 | $ | 27,404 | $ | 18,587 | ||||||
|
|
|
|
|
|
|
|||||||
| Earnings per common share—basic |
$ | 0.27 | $ | 0.94 | $ | 0.62 | ||||||
|
|
|
|
|
|
|
|||||||
| Earnings per common share—assuming dilution |
$ | 0.26 | $ | 0.92 | $ | 0.61 | ||||||
|
|
|
|
|
|
|
|||||||
| Weighted average shares outstanding—basic |
28,128 | 29,234 | 29,811 | |||||||||
|
|
|
|
|
|
|
|||||||
| Weighted average shares outstanding—assuming dilution |
28,533 | 29,872 | 30,410 | |||||||||
|
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|
|
|||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
For the years and quarters ended December 31, 2023 and 2022
(Unaudited)
| For the quarters ended December 31, |
For the years ended December 31, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net sales: |
||||||||||||||||
| U.S. crop |
$ | 83,406 | $ | 68,231 | $ | 269,229 | $ | 288,624 | ||||||||
| U.S. non-crop |
25,246 | 22,865 | 75,287 | 76,709 | ||||||||||||
|
|
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|
|
|
|
|
|
|||||||||
| Total U.S. |
108,652 | 91,096 | 344,516 | 365,333 | ||||||||||||
| International |
63,528 | 68,366 | 234,855 | 244,282 | ||||||||||||
|
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|
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|
|||||||||
| Total net sales |
$ | 172,180 | $ | 159,462 | $ | 579,371 | $ | 609,615 | ||||||||
| Total cost of sales |
$ | (117,545 | ) | $ | (117,529 | ) | $ | (400,207 | ) | $ | (417,227 | ) | ||||
|
|
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|
|
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|
|||||||||
| Total gross profit |
54,635 | 41,933 | 179,164 | 192,388 | ||||||||||||
|
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|
|
|
|||||||||
| Total gross margin |
32 | % | 26 | % | 31 | % | 32 | % | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2023, 2022 and 2021
(In thousands)
(Unaudited)
| 2023 | 2022 | 2021 | ||||||||||
| Cash flows from operating activities: |
||||||||||||
| Net income |
$ | 7,519 | $ | 27,404 | $ | 18,587 | ||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||||||
| Depreciation and amortization of property, plant and equipment and intangible assets |
21,780 | 22,138 | 22,229 | |||||||||
| Amortization of other long-term assets |
1,754 | 3,573 | 3,943 | |||||||||
| Amortization and accretion of deferred loan fees and discounted liabilities |
254 | 289 | 359 | |||||||||
| Loss on disposal of property, plant and equipment |
— | 268 | 194 | |||||||||
| Provision for bad debts |
1,935 | 1,171 | 649 | |||||||||
| Provision for inventory obsolescence |
517 | 340 | 1,034 | |||||||||
| Loan principal and interest forgiveness |
— | — | (672 | ) | ||||||||
| Fair value adjustment of contingent consideration |
— | 610 | 758 | |||||||||
| Decrease in environmental liability |
— | — | (167 | ) | ||||||||
| Stock-based compensation |
6,138 | 5,684 | 6,880 | |||||||||
| Deferred income taxes |
(9,710 | ) | (5,278 | ) | (2,090 | ) | ||||||
| Changes in liabilities for uncertain tax positions or unrecognized tax benefits |
(508 | ) | (1,441 | ) | (1,783 | ) | ||||||
| Change in equity investment fair value |
359 | 732 | 790 | |||||||||
| Loss from equity method investment |
— | — | 388 | |||||||||
| Bargain purchase gain |
— | — | (171 | ) | ||||||||
| Non-cash lease expense |
256 | 68 | 286 | |||||||||
| Foreign currency transaction gains |
(581 | ) | (29 | ) | (225 | ) | ||||||
| Changes in assets and liabilities associated with operations, net of business combinations: |
||||||||||||
| Increase in net receivables |
(20,278 | ) | (6,447 | ) | (24,347 | ) | ||||||
| (Increase) decrease in inventories |
(27,832 | ) | (29,560 | ) | 8,323 | |||||||
| (Increase) decrease in income tax receivable, net |
3,568 | (4,910 | ) | 6,051 | ||||||||
| (Increase) decrease in prepaid expenses and other assets |
1,269 | (3,082 | ) | (4,581 | ) | |||||||
| Increase (decrease) in accounts payable |
(2,287 | ) | 1,704 | 8,783 | ||||||||
| (Decrease) Increase in deferred revenue |
(45,079 | ) | 47,551 | 19,280 | ||||||||
| Increase (decrease) in accrued program costs |
7,244 | (2,449 | ) | 17,877 | ||||||||
| Increase (decrease) in other payables and accrued expenses |
(5,066 | ) | 90 | 3,986 | ||||||||
| Decrease in contingent consideration |
— | (1,321 | ) | — | ||||||||
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|
|||||||
| Net cash (used in) provided by operating activities |
(58,748 | ) | 57,105 | 86,361 | ||||||||
|
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|
|
|
|||||||
| Cash flows from investing activities: |
||||||||||||
| Capital expenditures |
(11,878 | ) | (13,261 | ) | (9,518 | ) | ||||||
| Proceeds from disposal of property, plant and equipment |
242 | 84 | — | |||||||||
| Acquisitions of business and product line |
(5,195 | ) | — | (10,000 | ) | |||||||
| Intangible assets |
(186 | ) | (1,293 | ) | (524 | ) | ||||||
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|||||||
| Net cash used in investing activities |
(17,017 | ) | (14,470 | ) | (20,042 | ) | ||||||
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|
|||||||
| Cash flows from financing activities: |
||||||||||||
| Payments under line of credit agreement |
(172,500 | ) | (254,000 | ) | (186,569 | ) | ||||||
| Borrowings under line of credit agreement |
259,100 | 253,000 | 131,000 | |||||||||
| Payment of contingent consideration |
— | (68 | ) | (1,301 | ) | |||||||
| Net receipt from the issuance of common stock under ESPP |
981 | 837 | 743 | |||||||||
| Net receipt from the exercise of stock options |
46 | 827 | 172 | |||||||||
| Net payment from common stock purchased for tax withholding |
(1,967 | ) | (2,067 | ) | (2,955 | ) | ||||||
| Repurchase of common stock |
(15,539 | ) | (34,002 | ) | (4,579 | ) | ||||||
| Payment of cash dividends |
(3,384 | ) | (2,787 | ) | (2,382 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net cash provided by (used in) financing activities |
66,737 | (38,260 | ) | (65,871 | ) | |||||||
|
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|
|
|
|
|
|||||||
| Net (decrease) increase in cash and cash equivalents |
(9,028 | ) | 4,375 | 448 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents |
116 | (332 | ) | (86 | ) | |||||||
| Cash and cash equivalents at beginning of year |
20,328 | 16,285 | 15,923 | |||||||||
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|
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|
|||||||
| Cash and cash equivalents at end of year |
$ | 11,416 | $ | 20,328 | $ | 16,285 | ||||||
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
For the years and quarters ended December 31, 2023 and 2022
(Unaudited)
| For the years ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income |
$ | 7,519 | $ | 27,404 | ||||
| Provision for income taxes |
2,778 | 8,561 | ||||||
| Interest expense, net |
12,639 | 3,954 | ||||||
| Proxy costs |
541 | 1,785 | ||||||
| Depreciation and amortization |
23,534 | 25,711 | ||||||
| Stock compensation expense |
6,138 | 5,684 | ||||||
| Transformation costs |
957 | — | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA2 |
$ | 54,106 | $ | 73,099 | ||||
|
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|
|||||
| For the quarters ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income |
$ | 6,979 | $ | 3,898 | ||||
| Provision (benefit) for income taxes |
712 | (1,626 | ) | |||||
| Interest expense, net |
4,357 | 1,698 | ||||||
| Depreciation and amortization |
5,684 | 6,406 | ||||||
| Stock compensation expense |
1,881 | 1,288 | ||||||
| Transformation costs |
957 | — | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA2 |
$ | 20,570 | $ | 11,664 | ||||
|
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| 2 | Earnings before interest, taxes, depreciation, and amortization. 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 (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 adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently. |