嗨
美國
證券交易委員會
華盛頓特區20549
表格
截至該季度結束
過渡期從 至
委員會文件編號
(依據所在地或其他管轄區) 公司成立或组织 |
(國稅局雇主識別號碼) 識別號碼) |
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(總部辦公地址) |
(郵遞區號) |
(
(註冊人電話號碼，包括區號)
根據法案第12(b)條規定註冊的證券：
每種類別的名稱 |
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交易 標的 |
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每個註冊交易所的名稱 |
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勾選表示登記商：(1) 是否已在過去12個月內（或登記商需提交報告的較短期間內）依照1934年證券交易法第13條或第15(d)條的規定提交所有報告?，並且(2) 在過去90天內已受過此等報告要求的條款約束。
請打勾號表明註冊人是否根據《S-t條例405條規定（本章節232.405號）的規定，在過去12個月內（或註冊人需要提交此類文件的更短期限內），已提交每個交互數據文件。
勾選表示登記人是大型加速申報人、加速申報人、非加速申報人、較小型申報公司或新興成長公司。詳細定義請參閱《交易所法》第1202條中“大型加速申報人”、“加速申報人”、“較小型申報公司”和“新興成長公司”的定義。
大型加速報告人 |
☐ |
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☒ |
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非加速檔案提交者 |
☐ |
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小型報告公司 |
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新興成長型企業 |
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如果是新興成長型企業，在符合任何依據證券交易法第13(a)條所提供的任何新的或修改的財務會計準則的遵循的延伸過渡期方面，是否選擇不使用核准記號進行指示。☐
請在核取方框內表明公司是否為空殼公司（根據交易所法規120億2號所定義）。 是 ☐ 否
請指明發行人的每一類普通股的流通股數量，截止至最近可行日期。普通股，每股面值$0.10 —
Identification No.)
指数
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頁碼 |
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3 |
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5 |
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6 |
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8 |
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9 |
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18 |
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27 |
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27 |
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28 |
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28 |
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28 |
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28 |
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29 |
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30 |
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2
第一部分. 財務資訊AL資訊
項目 1。 金融財務報表
美國先鋒公司及其附屬公司
綜合損益表 運作檢討
(以千為單位，除每股數據外)
(未經審計)
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三個月的時間內 |
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截至2024年7月31日的九個月 |
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2024 |
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2023 |
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2024 |
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2023 |
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營業淨收入 |
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$ |
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$ |
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$ |
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銷售成本 |
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毛利潤 |
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營運費用 |
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銷售、總務及行政 |
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研究、產品開發及監管 |
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轉型 |
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營運（損失）收入 |
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股權投資的公允價值變動 |
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利息費用，淨額 |
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(損失) 稅前收入(收益) |
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所得稅效益（費用） |
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淨（損失）收入 |
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$ |
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$ |
( |
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$ |
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$ |
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每普通股淨（虧損）收益—基本 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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每普通股淨（虧損）收益—考慮稀釋 |
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$ |
( |
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$ |
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$ |
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$ |
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基本加權平均股本 |
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加權平均流通股數—考慮稀釋 |
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請參閱精簡綜合財務報表附註。
3
美國先鋒公司及其子公司
綜合所得綜合財務報表綜合損益表項目
（以千為單位）
(未經審計)
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三個月的時間內 |
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截至2024年7月31日的九個月 |
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2024 |
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2023 |
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2024 |
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2023 |
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淨（損失）收入 |
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$ |
( |
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$ |
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$ |
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$ |
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其他綜合（損失）收益： |
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外幣換算調整，扣除稅務影響 |
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綜合(虧損)收益 |
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$ |
( |
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$ |
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$ |
( |
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$ |
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參見簡明綜合財務報表附註。
4
美國先鋒公司及其子公司
簡明綜合簡明資產負債表
（單位：千元，股份數據除外）
(未經審計)
資產 |
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九月三十日， |
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十二月三十一日, |
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流動資產: |
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現金 |
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$ |
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$ |
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應收款項： |
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交易，扣除信貸損失準備後的金額為$ |
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其他 |
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$ |
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存貨 |
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預付款項 |
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所得稅應收 |
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全部流動資產 |
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不動產、廠房及設備淨值 |
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營運租賃權利資產，淨額 |
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無形資產，減損後淨值 |
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商譽 |
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透過權益法之投資 |
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其他資產 |
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資產總額 |
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$ |
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$ |
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負債及股東權益 |
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流動負債： |
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應付帳款 |
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$ |
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$ |
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客戶預付款 |
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應計程序成本 |
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應計費用及其他應付款 |
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營運租賃負債，流動 |
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應納所得稅款 |
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流動負債合計 |
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長期負債 |
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經營租賃負債，長期 |
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遞延所得稅負債 |
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其他負債 |
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負債總額 |
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股東權益： |
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優先股，面額$0.01，授權股數為5,000,000股，發行且流通股數為截至2024年6月30日和2023年12月31日之184,668,188股和181,364,180股。 |
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0.01 |
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資本公積額額外增資 |
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累積其他全面損失 |
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( |
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保留盈餘 |
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籌備成本減少的庫存股票， |
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( |
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( |
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股東權益總額 |
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負債和股東權益總額 |
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$ |
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$ |
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參見簡明綜合財務報表附註。
5
美國先鋒公司及其子公司
綜合所得綜合財務報表股東權益的變動
截至2024年9月30日的三個月和九個月
（單位：千元，股份數據除外）
(未經審計)
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普通股 |
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Additional |
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累積 |
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庫藏股 |
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股份 |
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金額 |
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實收 |
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綜合 |
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留存盈餘 |
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分享 |
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金額 |
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總計 |
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2024年1月1日的餘額 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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透過員工購股計劃發行的股票 |
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— |
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— |
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— |
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— |
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已宣佈的普通股現金分紅派息 |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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外幣翻譯調整，淨額 |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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基於股票的補償 |
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— |
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— |
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— |
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— |
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— |
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— |
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行使股票期權；授予， |
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( |
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— |
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— |
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— |
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— |
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( |
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淨利潤 |
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— |
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— |
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— |
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— |
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— |
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— |
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2024年3月31日結存 |
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( |
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( |
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宣告的普通股現金分紅派息 |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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外幣轉換調整，淨額 |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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基於股票的補償 |
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— |
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— |
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— |
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— |
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— |
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— |
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行使期權；授予，終止 |
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( |
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— |
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— |
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— |
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— |
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虧損 |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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2024年6月30日資產負債表 |
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( |
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( |
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根據ESPP發行的股票 |
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外幣翻譯調整，淨額 |
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— |
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— |
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— |
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( |
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— |
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— |
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基於股票的補償 |
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— |
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已行使的股票期權；授予，終止 |
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( |
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— |
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— |
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— |
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淨虧損 |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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2024年9月30日餘額 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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參見簡明綜合財務報表附註。
6
美國先鋒公司及其子公司
綜合所得綜合財務報表股東權益的變動
截至2023年9月30日的三個月和九個月
（單位：千元，股份數據除外）
（未審計）
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普通股 |
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額外的 |
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累積的 |
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庫藏股 |
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股票 |
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數量 |
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實收資本 |
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綜合 |
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留存盈餘 |
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分享 |
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金額 |
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american vanguard corp |
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2023年1月1日的結餘 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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透過員工購股計劃發行的股票 |
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— |
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已宣佈的普通股現金分紅派息 |
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— |
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— |
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( |
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— |
|
|
|
— |
|
|
|
( |
) |
外幣轉換調整，淨額 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
基於股票的薪酬 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
行使期權；授予，終止 |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
收回的股份 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
凈利潤 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
2023年3月31日結餘 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
宣佈對普通股的現金分紅派息 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
外幣翻譯調整, 淨額 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
基於股票的補償 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
期權行使; 授予, 終止 |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
||
回購的股份 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
淨虧損 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
( |
) |
|
2023年6月30日結餘 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
根據員工股票購買計劃發行的股票 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
已宣告普通股的現金分紅派息 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
外幣折算調整，淨額 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
股票基礎補償 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
行使的期權; 授予，終止 |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
回購的股份 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
凈虧損 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
2023年9月30日的餘額 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
See notes to the Condensed Consolidated Financial Statements.
7
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net (loss) income to net cash used in operating |
|
|
|
|
|
|
||
Depreciation of property, plant and equipment |
|
|
|
|
|
|
||
Amortization of intangibles assets |
|
|
|
|
|
|
||
Amortization of other long-term assets |
|
|
|
|
|
|
||
Amortization of deferred loan fees |
|
|
|
|
|
|
||
Provision for bad debts |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Change in deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Changes in liabilities for uncertain tax positions or unrecognized tax benefits |
|
|
|
|
|
|
||
Change in equity investment fair value |
|
|
( |
) |
|
|
|
|
Other |
|
|
|
|
|
|
||
Foreign currency transaction losses |
|
|
|
|
|
|
||
Changes in assets and liabilities associated with operations: |
|
|
|
|
|
|
||
Decrease (increase) in net receivables |
|
|
|
|
|
( |
) |
|
Increase in inventories |
|
|
( |
) |
|
|
( |
) |
Increase in prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Change in income tax receivable/payable, net |
|
|
( |
) |
|
|
( |
) |
Increase (decrease) in net operating lease liability |
|
|
( |
) |
|
|
|
|
Increase in accounts payable |
|
|
|
|
|
|
||
Decrease in customer prepayments |
|
|
( |
) |
|
|
( |
) |
Increase in accrued program costs |
|
|
|
|
|
|
||
Increase (decrease) in other payables and accrued expenses |
|
|
|
|
|
( |
) |
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from disposal of property, plant and equipment |
|
|
|
|
|
|
||
Intangible assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Payments under line of credit agreement |
|
|
( |
) |
|
|
( |
) |
Borrowings under line of credit agreement |
|
|
|
|
|
|
||
Receipt from the issuance of common stock under ESPP |
|
|
|
|
|
|
||
Net receipt from the exercise of stock options |
|
|
|
|
|
|
||
Net payment for tax withholding on stock-based compensation awards |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
|
|
|
( |
) |
|
Payment of cash dividends |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
See notes to the Condensed Consolidated Financial Statements.
8
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(In thousands, except share data)
(Unaudited)
1. Summary of Significant Accounting Policies — The accompanying unaudited condensed consolidated financial statements of American Vanguard Corporation and Subsidiaries (“AVD” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of consolidating adjustments, eliminations and normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The condensed consolidated financial statements and related notes do not include all information and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.
All significant accounting policies used in the preparation of these condensed consolidated financial statements are consistent with those disclosed in the Company's Annual Report on Form 10-K except for the following:
Transformation
2. Leases — The Company has operating leases for warehouses, manufacturing facilities, offices, cars, railcars and certain equipment. The lease term includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not terminate) that the Company is reasonably certain to exercise. The Company has leases with a lease term ranging from
The operating lease expense for the three months ended September 30, 2024 and 2023, was $
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Cash paid for amounts included in the |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
ROU assets obtained in exchange for |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The weighted-average remaining lease term and discount rate related to the operating leases as of September 30, 2024 were as follows:
Weighted-average remaining lease term (in years) |
|
|
|
|
Weighted-average discount rate |
|
|
% |
9
Future minimum lease payments under non-cancellable operating leases as of September 30, 2024 were as follows:
2024 (excluding nine months ended September 30, 2024) |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Total |
|
$ |
|
Amounts recognized in the condensed consolidated balance sheets at September 30, 2024:
Operating lease liabilities, current |
|
$ |
|
|
Operating lease liabilities, long-term |
|
$ |
|
3. Revenue Recognition —The Company recognizes revenue from the sale of its products, which include crop and non-crop products. The Company sells its products to customers, which include distributors, retailers, and growers. In addition, the Company recognizes royalty income from licensing agreements. Substantially all revenue is recognized at a point in time. During the three and nine months ended September 30, 2024, the Company recorded a reduction to sales in the amount of $
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
- |
% |
||
U.S. non-crop |
|
|
|
|
|
|
|
|
|
|
|
% |
||||
Total U.S. |
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
% |
||
International |
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
% |
||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
- |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
- |
% |
||
U.S. non-crop |
|
|
|
|
|
|
|
|
|
|
|
% |
||||
Total U.S. |
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
% |
||
International |
|
|
|
|
|
|
|
|
( |
) |
|
|
- |
% |
||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
- |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
The Company sometimes receives payments from its customers in advance of goods and services being provided in return for early cash incentive programs. These payments are included in customer prepayments on the condensed consolidated balance sheets. Revenue recognized for the three and nine months ended September 30, 2024, that was included in customer prepayments at the beginning of 2024, was $
10
4. Property, Plant and Equipment —
|
|
September 30, |
|
|
December 31, 2023 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Office furniture, fixtures and equipment |
|
|
|
|
|
|
||
Automotive equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Total gross value |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total net value |
|
$ |
|
|
$ |
|
||
The Company recognized depreciation expense related to property and equipment of $
Substantially all of the Company’s assets are pledged as collateral to its banks.
5. Inventories —Inventory is stated at the lower of cost or net realizable value. Cost is determined by the average cost method, and includes material, labor, factory overhead and subcontracting services.
|
|
September 30, |
|
|
December 31, 2023 |
|
||
Finished products |
|
$ |
|
|
$ |
|
||
Raw materials |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
Finished products consist of products that are sold to customers in their current form as well as intermediate products that require further formulation to be saleable to customers.
7. Cash Dividends on Common Stock —
Declaration Date |
|
Record Date |
|
Distribution Date |
|
Dividend |
|
|
Total |
|
||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
|
|
|
$ |
|
|
$ |
|
|||||
11
8. Earnings Per Share —
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Denominator: (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding-basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock options and grants |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding-diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
9. Debt — The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at September 30, 2024 and December 31, 2023. The Company has
Long-term indebtedness ($000's) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Revolving line of credit |
|
$ |
|
|
$ |
|
||
Deferred loan fees |
|
|
( |
) |
|
|
( |
) |
Total indebtedness, net of deferred loan fees |
|
$ |
|
|
$ |
|
||
The deferred loan fees as of September 30, 2024 and December 31, 2023 are included in other assets on the condensed consolidated balance sheets.
The Company and certain of its affiliates are parties to a revolving line of credit agreement entitled the “Third Amended and Restated Loan and Security Agreement” dated as of August 5, 2021 (the “Credit Agreement”), which is a senior secured lending facility among AMVAC, the Company’s principal operating subsidiary, as Borrower Agent (including the Company and AMVAC BV), as Borrowers, on the one hand, and a group of commercial lenders led by Bank of the West as administrative agent, documentation agent, syndication agent, collateral agent and sole lead arranger, on the other hand. The Credit Agreement consists of a line of credit of up to $
On August 8, 2024,
12
The Company’s borrowing capacity varies with its financial performance, measured in terms of Consolidated EBITDA as defined in the Credit Agreement, for the trailing twelve-month period.
As of September 30, 2024, the Company is deemed to be in compliance with its financial covenants. Furthermore, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $
10. Comprehensive (Loss) Income — Total comprehensive (loss) income includes, in addition to net (loss) income, changes in equity that are excluded from the condensed consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the condensed consolidated balance sheets. For the three- and nine-month periods ended September 30, 2024 and 2023, total comprehensive (loss) income consisted of net (loss) income and foreign currency translation adjustments.
11. Stock-Based Compensation — Under the Company’s Equity Incentive Plan of 1993, as amended (“the Plan”), all employees are eligible to receive non-assignable and non-transferable restricted stock (RSUs), options to purchase common stock, and other forms of equity. During the three months ended September 30, 2024 and 2023, the Company's stock-based compensation expense amounted to $
RSUs
A summary of nonvested RSUs outstanding is presented below:
|
|
Nine Months Ended |
|
|||||
|
|
Number |
|
|
Weighted |
|
||
Nonvested shares at January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Nonvested shares at September 30, 2024 |
|
|
|
|
$ |
|
||
As of September 30, 2024, the total unrecognized stock-based compensation expense related to RSUs outstanding was $
13
Stock Options
A summary of the time-based incentive stock option activity for the nine months ended September 30, 2024 is presented below:
|
|
Options outstanding |
|
|
Weighted Average Exercise Price Per Share |
|
Weighted Average Remaining Contractual Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Balance as of January 1, 2024 |
|
|
|
|
$ |
|
|
|
|
$ |
— |
|
|||
Granted |
|
|
|
|
$ |
|
|
|
|
$ |
— |
|
|||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
$ |
— |
|
||
Balance as of September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
$ |
— |
|
|||
Options vested and exercisable as of September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
$ |
— |
|
|||
As of September 30, 2024, the total unrecognized stock-based compensation expense related to stock options outstanding was $
12. Commitments and Contingencies — The Company records a liability on its consolidated financial statements for loss contingencies when a loss is known or considered probable, and the amount can be reasonably estimated. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company recognizes legal expenses in connection with loss contingencies as incurred.
Department of Justice and Environmental Protection Agency Investigation. On November 10, 2016, AMVAC was served with a grand jury subpoena from the United States Attorney’s Office for the Southern District of Alabama, seeking documents regarding the importation, transportation, and management of a specific pesticide. The Company retained defense counsel to assist in responding to the subpoena and otherwise in defending the Company’s interests. AMVAC fully cooperated during the investigation. After interviewing multiple witnesses (including three employees before a grand jury in February 2022) and making multiple document requests, the Department of Justice (“DoJ”) identified the Company and a manager-level employee as targets of the government’s investigation. DoJ’s investigation focused on potential violations of two environmental statutes, the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) and the Resource Conservation and Recovery Act (“RCRA”), as well as obstruction of an agency proceeding and false statement statutes. In March 2022, the individual target entered into a plea agreement relating to provision of false information in a government proceeding. In January 2024, the Company and DoJ reached an agreement in principle, subject to approval by the cognizant court and with respect to which the Company has recorded a loss contingency. A Company representative attended a hearing to enter a plea of guilty (to one count of transporting hazardous waste without a waste manifest) on the matter in late May 2024. Under the terms of the plea agreement, the Company would pay a fine and enter into a three-year probation during which it would be subject to an environmental compliance plan. The court provisionally accepted the plea, subject to entry of an order following a sentencing hearing on October 25, 2024, on which date the court accepted with finality the plea and entered a sentence as per the plea agreement. At that time, the Company paid a monetary fine, with respect to which a liability had been recorded during the quarter ended December 31, 2023.
Reyes v. AMVAC. On September 28, 2023, the Company received correspondence from counsel for ex-employee Jorge Reyes Jr. addressed to the California Department of Industrial Relations alleging a number of wage and hour violations under California law. This is a precursor to a civil filing under applicable state law. Subsequently, plaintiff, putatively on behalf of the class of similarly situated, non-exempt California-based employees, served a summons and complaint on the Company’s registered agent that had been electronically filed as Case No. 238TCV23665, captioned Jorge Reyes v. AMVAC etc., etal., with the Superior Court for the County of Los Angeles, Central District. As is typical of this sort of action, plaintiff alleges multiple wages and hours violations, including overtime, minimum wage, sick leave, rest periods and so on. The parties attended a settlement conference on September 4, 2024, at which time they agreed to settle the matter for an amount that was within the liability recorded during the quarter ended June 30, 2024. The settlement is subject to court approval which the Company believes will be forthcoming in the first quarter of 2025.
Notice of Intention to Suspend DCPA. On April 28, 2022, the USEPA published a notice of intent to suspend (“NOITS”) DCPA, the active ingredient of an herbicide marketed by the Company under the name Dacthal. The agency cited as the basis for the suspension that the Company did not take appropriate steps to provide data studies requested in support of the registration review. In fact, over the course of several years, the Company cooperated in performing the vast majority of the nearly 90 studies requested by USEPA and had been working in good faith to meet the agency’s schedule. After proceedings in law and motion, the Company entered into a settlement agreement with USEPA pursuant to which the parties set a timeline for the submission of remaining studies, which, if approved by the agency, would result in reinstatement of the registration. The Company submitted the studies in question, the agency reviewed them, and the registration was reinstated in November 2023.
14
After that reinstatement, the agency resumed registration review, during which it expressed concern over the potential health effects on farm workers in early stages of pregnancy. These concerns arose over a comparative thyroid assay (“CTA”), a relatively new and complex study, which indicated an effect on fetal rodents. In an effort to meet the agency’s concerns, over a period of several months, the Company provided significant training to USEPA on actual use patterns for Dacthal, worker re-entry practices, size of fields treated per diem and geographical focus. Nevertheless, in April 2024, USEPA concluded that, despite the mitigation measures and other information proposed by the Company and due to its safety concerns, the agency was at an impasse in advancing its registration review of the then current label. Accordingly, out of an abundance of caution, the Company submitted a significantly narrower label and voluntarily suspended sales of Dacthal pending review and potential approval of that label.
On August 6, 2024, USEPA issued an emergency order suspending all registrations of, and prohibiting all distribution, sale and use of, DCPA/Dacthal on the basis of its finding a risk of imminent harm to pregnant individuals who may be exposed to the product, based upon thyroid hormone disruption observed in prenatal rodents within a comparative thyroid assay test. While noting that the Company had attempted to address the agency’s concerns, USEPA could find no combination of practicable mitigations that would permit continued use of the product. The Company promptly implemented a program for effecting the return of product that was within the channels of trade. Further, on August 19, 2024, the Company filed notice of voluntary cancellation of DCPA products. The Company has taken charges in the amount of $
13. Recent Issued Accounting Guidance — In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to its condensed consolidated financial statements.
14. Fair Value of Financial Instruments — The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard established a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required:
The carrying amount of the Company’s financial instruments, which principally include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximates fair value because of the relatively short maturity of such instruments. The carrying amount of the Company’s borrowings, which are considered Level 2 liabilities, approximates fair value as they bear interest at a variable rate at current market rates.
15
15. Business Acquisitions — On October 5, 2023, the Company completed the acquisition of all outstanding stock of Punto Verde S.A. Punversa (Punto Verde), a well-established distributor in Guayaquil, Ecuador, to strengthen its product portfolio and market access in the Latin American region. The Company paid cash consideration of $
|
|
Preliminary Allocation at December 31, 2023 |
|
|
Adjustments recorded in 2024 |
|
|
Final Allocation |
|
|||
Trade receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Inventory and other current assets |
|
|
|
|
|
|
|
|
|
|||
Property, plant, and equipment |
|
|
|
|
|
|
|
|
|
|||
Customer relationships |
|
|
|
|
|
|
|
|
|
|||
Product registrations and product rights |
|
|
|
|
|
|
|
|
|
|||
Goodwill |
|
|
|
|
|
( |
) |
|
|
|
||
Liabilities assumed |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Liabilities assumed include liabilities of $
16. Accumulated Other Comprehensive Loss —
|
|
Total |
|
|
Balance, January 1, 2024 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
( |
) |
Balance, March 31, 2024 |
|
|
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
( |
) |
Balance, June 30, 2024 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of $ |
|
|
( |
) |
Balance, September 30, 2024 |
|
$ |
( |
) |
|
|
|
|
|
Balance, January 1, 2023 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, March 31, 2023 |
|
|
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, June 30, 2023 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of $ |
|
|
( |
) |
Balance, September 30, 2023 |
|
$ |
( |
) |
17. Equity Investments — In February 2016, AMVAC Netherlands BV made an investment in Biological Products for Agriculture (“Bi-PA”). Bi-PA develops biological plant protection products that can be used for the control of pests and disease of agricultural crops. As of September 30, 2024 and December 31, 2023, the Company’s ownership position in Bi-PA was
On April 1, 2020, AMVAC purchased
16
recorded in the three months ended September 30, 2024. The Company recorded a gain of $
18. Income Taxes —Income tax benefit was $
It is expected that $
19. Stock Re-purchase Programs — On March 8, 2022, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate number of up to
On May 25, 2023, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase up to $
The table below summarizes the number of shares of the Company’s common stock that were repurchased during the three and nine months ended September 30, 2024 and 2023.
Three months ended |
|
Total number of |
|
|
Average price paid |
|
|
Total amount paid |
|
|||
September 30, 2024 |
|
|
|
|
|
|
|
$ |
|
|||
September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Nine months ended |
|
Total number of |
|
|
Average price paid |
|
|
Total amount paid |
|
|||
September 30, 2024 |
|
|
|
|
|
|
|
$ |
|
|||
September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Pursuant to Amendments Number Six and Seven to the Third Amended Loan and Security Agreement, the Company is currently prevented from making stock repurchases, effective November 7, 2023.
20. Supplemental Cash Flow Information
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes, net of refunds |
|
$ |
|
|
$ |
|
||
Non-cash transactions: |
|
|
|
|
|
|
||
Cash dividends declared and included in accrued expenses |
|
$ |
|
|
$ |
|
||
17
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers in thousands)
FORWARD-LOOKING STATEMENTS/RISK FACTORS:
The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to a number of risks, uncertainties and other factors. In connection with the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statements identifying important factors which, among other things, could cause the actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Annual Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; transformation initiatives and related expenses; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 3, Quantitative and Qualitative Disclosures about Market Risk, and Part II, Item 1A., Risk Factors, in this Quarterly Report on Form 10-Q.
Three Months Ended September 30, 2024 and 2023:
Overview of the Company’s Performance
Persistently low commodity prices and high input cost remain a challenge for the agricultural economy, however the supply chain has started to normalize and the recent decrease in interest rates should help to improve demand. Some pockets of strength have emerged, in areas such as biofertilizers, biostimulants and biochemicals, from which the Company has benefited. Notwithstanding these encouraging indicators, significant inventories of agricultural commodities remain in the supply chain that will need to be worked through before commodity prices can improve, thus a gradual recovery over several quarters is the most likely outcome for the agricultural economy.
Against this backdrop, overall sales for the third quarter of 2024 declined 21%, as compared to the third quarter of 2023. Domestic sales were down 33%, while international sales decreased by 4%. Our reported sales performance was negatively impacted by the voluntary product recall of our Dacthal product line, and lower sales of both granular soil insecticide and growth regulator products used on cotton accounted for the bulk of the sales decline. Other insecticide products and green solutions sales were relatively strong compared to the third quarter of 2023, but these areas of strength were not enough to overcome weakness in the previously mentioned categories.
The Company recorded a gross profit amounting to 15% of net sales, as compared to 29% in the same period of the prior year. The decline was driven primarily by the effect of the Dacthal recall (which amounted to a total value of $16,191) and generic price pressure on certain products - one key defoliant product in the U.S. crop market and a herbicide in Mexico. Further, the Company recorded additional inventory valuation reserves primarily associated with Dacthal inventories on hand.
Operating expenses, increased by 17%, as compared to the third quarter of 2023. Operating costs in the three months ended September 30, 2024 included non-recurring charges in the amount of $8,139, related to the on-going transformation activities.
Interest expense increased to $4,378 from $3,384 in the same period of the prior year, due almost entirely to higher interest rates as average debt was approximately flat with the same period last year. The increased interest rate was impacted by the terms of our credit facility agreement, by our overall financial performance and by costs associated with the recent modification.
The Company recorded an income tax benefit of $7,024, as compared to an income tax expense of $885 in the same period of last year.
These factors yielded a net loss of $25,742, or $(0.91) per share, compared to a loss of $325, or $(0.01) per share, in the prior year. Further details of our financial performance are set forth below.
18
RESULTS OF OPERATIONS
Quarter Ended September 30, 2024 and 2023:
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
35,533 |
|
|
$ |
67,749 |
|
|
$ |
(32,216 |
) |
|
|
-48 |
% |
U.S. non-crop |
|
|
22,454 |
|
|
|
19,250 |
|
|
|
3,204 |
|
|
|
17 |
% |
Total U.S. |
|
|
57,987 |
|
|
|
86,999 |
|
|
|
(29,012 |
) |
|
|
-33 |
% |
International |
|
|
60,320 |
|
|
|
62,517 |
|
|
|
(2,197 |
) |
|
|
-4 |
% |
Total net sales |
|
$ |
118,307 |
|
|
$ |
149,516 |
|
|
$ |
(31,209 |
) |
|
|
-21 |
% |
Total cost of sales |
|
|
(101,014 |
) |
|
|
(106,432 |
) |
|
|
5,418 |
|
|
|
-5 |
% |
Total gross profit |
|
$ |
17,293 |
|
|
$ |
43,084 |
|
|
$ |
(25,791 |
) |
|
|
-60 |
% |
Gross margin |
|
|
15 |
% |
|
|
29 |
% |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Impact of Dacthal Recall |
|
|
|
|
|
|
|
|||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
|
|
||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
(11,783 |
) |
|
$ |
— |
|
|
$ |
(11,783 |
) |
|
|
|
|
U.S. non-crop |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Total U.S. |
|
|
(11,783 |
) |
|
|
— |
|
|
|
(11,783 |
) |
|
|
|
|
International |
|
|
(620 |
) |
|
|
— |
|
|
|
(620 |
) |
|
|
|
|
Total net sales |
|
$ |
(12,403 |
) |
|
$ |
— |
|
|
$ |
(12,403 |
) |
|
|
|
|
Total cost of sales |
|
|
(3,788 |
) |
|
|
— |
|
|
|
(3,788 |
) |
|
|
|
|
Total gross profit |
|
$ |
(16,191 |
) |
|
$ |
— |
|
|
$ |
(16,191 |
) |
|
|
|
|
Our domestic crop business recorded net sales during the third quarter of 2024 that were 48% lower than those of the third quarter of 2023 ($35,533 as compared to $67,749). The reduction in sales compared to the same quarter of the prior year is driven primarily by the reversal of sales associated with the voluntary product recall of Dacthal, which amounted to $11,783. In addition, in comparison to the same quarter of the prior year, we recorded lower sales of our granular soil insecticide Aztec. That product had not been available in the marketplace in the periods prior to the third quarter of 2023, and industry participants used availability in the third quarter of 2023 to rebuild inventory. In 2024, buying patterns have now normalized. Furthermore, sales or our granular soil insecticide Thimet were down as compared to the year ago period, as demand for this product emerged earlier than normal this year. .
Our domestic non-crop business posted a 17% increase in net sales in the third quarter of 2024, as compared to the same period in the prior year ($22,454 as compared to $19,250). Non-crop insecticides and OHP distribution sales were particularly strong during the quarter. OHP benefited from addition of sales from a new distribution agreement, including biologicals products.
Net sales in our international business declined by 4% during the period ($60,320 in 2024, as compared to $62,517 in 2023). Our granular soil insecticide business was supply constrained in Asia, where demand exceeded our supply and Brazilian sales were negatively impacted by a weakening currency.
On a consolidated basis, gross profit for the third quarter of 2024 decreased by 60% ($17,293 in the three months ended September 30, 2024, as compared to $43,084 in 2023). During the three months ended September 30, 2024, the Company commenced a product recall arising from our voluntary cancellation of Dacthal registrations. The Company recorded charges associated with the product recall from distribution, retail and growers and has recorded a liability in the amount of $16,191. The overall gross margin percentage ended at 15%, including the impact of the product recall, as compared to 29% in the second quarter of the prior year.
19
Operating expenses, including transformation costs, increased by 17% to $45,681, as compared to $38,893 in the same period of the prior year. Including in this increase, the Company incurred expenses in the amount of $8,139 related to on-going transformation activities. There were no comparable costs in the same period of the prior year. The changes in operating expenses by department are as follows:
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Selling |
|
$ |
12,741 |
|
|
$ |
14,718 |
|
|
$ |
(1,977 |
) |
|
|
-13 |
% |
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
10,945 |
|
|
|
11,794 |
|
|
|
(849 |
) |
|
|
-7 |
% |
Amortization |
|
|
3,459 |
|
|
|
3,301 |
|
|
|
158 |
|
|
|
5 |
% |
Legal reserves |
|
|
(780 |
) |
|
|
— |
|
|
|
(780 |
) |
|
|
100 |
% |
Transformation |
|
|
8,139 |
|
|
|
— |
|
|
|
8,139 |
|
|
|
100 |
% |
Research, product development and regulatory |
|
|
11,177 |
|
|
|
9,080 |
|
|
|
2,097 |
|
|
|
23 |
% |
Subtotal |
|
$ |
45,681 |
|
|
$ |
38,893 |
|
|
$ |
6,788 |
|
|
|
17 |
% |
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. The Company did not record a fair value adjustment for the three-month period ended September 30, 20204. During the same period of the prior year, the Company and recorded negative fair value adjustments in the amount of $247 during the three months ended September 30, 2023.
Interest costs net of capitalized interest were $4,378 and $3,384 during the three-month period ended September 30, 2024 and 2023, respectively. Interest costs are summarized in the following table:
Average Indebtedness and Interest expense
|
|
Three months ended September 30, 2024 |
|
|
Three months ended September 30, 2023 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
|
Interest |
|
||||||
Revolving line of credit (average) |
|
$ |
209,840 |
|
|
$ |
4,275 |
|
|
|
8.1 |
% |
|
$ |
200,247 |
|
|
$ |
3,578 |
|
|
|
7.1 |
% |
Amortization of deferred loan fees |
|
|
— |
|
|
|
160 |
|
|
|
— |
|
|
|
— |
|
|
|
56 |
|
|
|
— |
|
Other interest (income) expense |
|
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
(44 |
) |
|
|
— |
|
Subtotal |
|
|
209,840 |
|
|
|
4,473 |
|
|
|
8.5 |
% |
|
|
200,247 |
|
|
|
3,590 |
|
|
|
7.2 |
% |
Capitalized interest |
|
|
— |
|
|
|
(95 |
) |
|
|
— |
|
|
|
— |
|
|
|
(206 |
) |
|
|
— |
|
Total |
|
$ |
209,840 |
|
|
$ |
4,378 |
|
|
|
8.3 |
% |
|
$ |
200,247 |
|
|
$ |
3,384 |
|
|
|
6.8 |
% |
20
The Company’s average overall debt for the three-month period ended September 30, 2024 was $209,840, as compared to $200,247 for the same period of the prior year. Our borrowings increased primarily as a result of higher inventory levels. As can be seen from the table, the effective bank interest rate on our revolving line of credit was 8.1% and 7.1% for the three-month periods ended September 30, 2024 and 2023, respectively.
Income tax benefit was $7,023 for the three months ended September 30, 2024, as compared to an income tax expense of $885 for the three months ended September 30, 2023. The effective income tax rate for the three months ended September 30, 2024, was computed based on the actual effective tax rate for the year-to-date period ended September 30, 2024 which is approximately 4.3%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the third quarter was 21.4%. During the three months ended September 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure, which resulted in a decrease in the effective tax rate. Additionally, refer to the table below for details comprising the income tax benefit of $7,024 and the overall effective tax rate of 21.4% for the three months ended September 30, 2024.
|
|
For the Three Months Ended September 30, 2024 |
|
|||||||||
|
|
(Loss) income before provision for income taxes |
|
|
Tax rate |
|
|
Income tax benefit (expense) |
|
|||
Entities without valuation allowances (excluding transformation expenses and Dacthal recall adjustment) |
|
$ |
(7,619 |
) |
|
|
16.9 |
% |
|
$ |
1,288 |
|
Transformation expenses |
|
|
(8,139 |
) |
|
|
24.2 |
% |
|
|
1,969 |
|
Dacthal product recall adjustment |
|
|
(16,191 |
) |
|
|
23.3 |
% |
|
|
3,777 |
|
Entities with valuation allowances |
|
|
(817 |
) |
|
|
-1.2 |
% |
|
|
(10 |
) |
Total |
|
$ |
(32,766 |
) |
|
|
21.4 |
% |
|
$ |
7,024 |
|
We generated a loss before provision for income taxes of $32,766 and income $560 for the three months ended September 30, 2024 and 2023, respectively. Our net loss (after income taxes) for the three-month period ended September 30, 2024, was $25,742 or ($0.91) per basic and diluted share, as compared to $325 or ($.01) per basic and diluted share in the same quarter of 2023.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2024 and 2023:
Overview of the Company’s Performance
Agricultural commodity prices steadily trended lower in the first nine months of 2024. The pace of the downtrend slowed during the third quarter, leaving prices near a two-year low. Corn and soybean prices have been particularly weak, with corn prices down more than 10% and soybean prices down more than 20% year to date, wheat prices have fared somewhat better but are still down approximately 5% year to date. These factors have led to procurement practices remaining conservative, despite a recent easing in interest rates.
On a consolidated basis, sales were down 6% over the first nine months of the year, compared to the first nine months of 2023. Domestic sales were down 9%, while international sales were down 2%. Our reported sales performance was impacted by the voluntary product recall of our Dacthal product line, and by granular soil insecticides and plant growth regulators in the U.S. and by a herbicide in Mexico.
The Company generated a gross profit margin of 26% in the first nine months of the year, as compared to 31% during the same period of last year. Included in this performance, during the first nine months of 2024, the Company voluntarily recalled all Dacthal product globally, and recorded $16,191 in liabilities as a result.
Operating expenses increased by 14%, as compared to the same period of 2023. Operating costs in the three months ended September 30, 2024 included non-recurring charges in the amount of $16,636, related to the on-going transformation activities.
Interest expense increased to $11,988 as compared to $8,282 in the first nine months of 2023, due to higher interest rates.
21
The Company's income tax benefit during the nine months ended September 30, 2024 was $7,093, as compared to an expense of $2,066 during the similar period of 2023.
The Company recorded a net loss of $35,911 or ($1.28) per basic and diluted share, as compared to net income of $540 or $0.02 per basic and diluted share in the first nine months of the prior year.
Nine months ended September 30, 2024, and 2023
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
155,075 |
|
|
$ |
185,823 |
|
|
$ |
(30,748 |
) |
|
|
-17 |
% |
U.S. non-crop |
|
|
59,241 |
|
|
|
50,041 |
|
|
|
9,200 |
|
|
|
18 |
% |
Total U.S. |
|
|
214,316 |
|
|
|
235,864 |
|
|
|
(21,548 |
) |
|
|
-9 |
% |
International |
|
|
167,343 |
|
|
|
171,327 |
|
|
|
(3,984 |
) |
|
|
-2 |
% |
Total net sales |
|
$ |
381,659 |
|
|
$ |
407,191 |
|
|
$ |
(25,532 |
) |
|
|
-6 |
% |
Total cost of sales |
|
|
(284,185 |
) |
|
|
(282,662 |
) |
|
|
(1,523 |
) |
|
|
1 |
% |
Total gross profit |
|
$ |
97,474 |
|
|
$ |
124,529 |
|
|
$ |
(27,055 |
) |
|
|
-22 |
% |
Gross margin |
|
|
26 |
% |
|
|
31 |
% |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Impact of Dacthal Recall |
|
|
|
|
|
|
|
|||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
Change |
|
|
|
|
||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
(11,783 |
) |
|
$ |
— |
|
|
$ |
(11,783 |
) |
|
|
|
|
U.S. non-crop |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Total U.S. |
|
|
(11,783 |
) |
|
|
— |
|
|
|
(11,783 |
) |
|
|
|
|
International |
|
|
(620 |
) |
|
|
— |
|
|
|
(620 |
) |
|
|
|
|
Total net sales |
|
$ |
(12,403 |
) |
|
$ |
— |
|
|
$ |
(12,403 |
) |
|
|
|
|
Total cost of sales |
|
|
(3,788 |
) |
|
|
— |
|
|
|
(3,788 |
) |
|
|
|
|
Total gross profit |
|
$ |
(16,191 |
) |
|
$ |
— |
|
|
$ |
(16,191 |
) |
|
|
|
|
Our domestic crop business experienced a 17% decrease in net sales for the first nine months of the year (to $155,075 versus $185,823). This included the impact of the voluntary recall of our Dacthal product, and lower granular soil insecticides including our Aztec product which experienced higher sales in the first nine months of 2023, as the market restocked after a period of supply difficulties.
Our domestic non-crop business recorded a 18% increase in net sales for the first nine months of the year (to $59,241 from $50,041). OHP recorded sales up 30% as a result of newly implemented distribution agreement, and a surge in demand for biological products. In addition, our non-crop segment performed well as a result of weather and pest pressure in the south-east following storm activity in the south-eastern U.S.
Net sales of our international businesses were slightly weaker than the first nine months of 2023 down 2% ($167,343 versus $171,327 in 2023). Two products, Mocap, a granular soil insecticide, and Assure II, a herbicide, account for virtually all of the weakness in international business. Weakness in Mocap can be attributed to a lack of inventory to service customer demand, while Assure II sales were pressured by generic competition.
On a consolidated basis, gross profit for the nine months of 2024 ended at $97,474, as compared to $124,529 for the same period of 2023. During the period, the Company assessed the liability associated with the global voluntary cancellation of the Dacthal registrations and has recorded a liability in the amount of $16,191. In addition, as noted above, the Company recorded lower sales in both the domestic and international crop businesses.
Gross margin performance in 2024 decreased to 26%, as compared to 31% during the same period of the prior year.
22
Operating expenses increased by $15,686 to $129,003 for the nine-month period ended September 30, 2024, as compared to the same period in 2023. The changes in operating expenses by department are as follows:
|
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% Change |
|
||||
Selling |
|
$ |
39,022 |
|
|
$ |
41,288 |
|
|
$ |
(2,266 |
) |
|
|
-5 |
% |
General and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
36,660 |
|
|
|
34,115 |
|
|
|
2,545 |
|
|
|
7 |
% |
Proxy activities |
|
|
— |
|
|
|
541 |
|
|
|
(541 |
) |
|
|
-100 |
% |
Amortization |
|
|
10,018 |
|
|
|
10,010 |
|
|
|
8 |
|
|
|
0 |
% |
Legal reserves |
|
|
1,185 |
|
|
|
— |
|
|
|
1,185 |
|
|
|
100 |
% |
Transformation |
|
|
16,636 |
|
|
|
— |
|
|
|
16,636 |
|
|
|
100 |
% |
Research, product development and regulatory |
|
|
25,482 |
|
|
|
27,363 |
|
|
|
(1,881 |
) |
|
|
-7 |
% |
|
|
$ |
129,003 |
|
|
$ |
113,317 |
|
|
$ |
15,686 |
|
|
|
14 |
% |
During the nine-month period ended September 30, 2024, the Company recorded an increase in the fair value of our equity investment in Clean Seed in the amount of $513, as compared to a decrease of $324 during the nine months ended September 30, 2023. These changes in fair value of our investment directly reflect changes in the stock’s quoted market price.
23
Interest costs net of capitalized interest were $11,988 in the first nine-month period of 2024, as compared to $8,282 in the same period of 2023. Interest costs are summarized in the following table:
Average Indebtedness and Interest expense
|
|
Nine months ended September 30, 2024 |
|
|
Nine months ended September 30, 2023 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
|
Interest |
|
||||||
Revolving line of credit (average) |
|
$ |
200,187 |
|
|
$ |
11,954 |
|
|
|
8.0 |
% |
|
$ |
149,009 |
|
|
$ |
7,819 |
|
|
|
7.0 |
% |
Amortization of deferred loan fees |
|
|
— |
|
|
|
342 |
|
|
|
— |
|
|
|
— |
|
|
|
174 |
|
|
|
— |
|
Other interest expense |
|
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
— |
|
|
|
657 |
|
|
|
— |
|
Subtotal |
|
|
200,187 |
|
|
|
12,339 |
|
|
|
8.2 |
% |
|
|
149,009 |
|
|
|
8,650 |
|
|
|
7.7 |
% |
Capitalized interest |
|
|
— |
|
|
|
(351 |
) |
|
|
— |
|
|
|
— |
|
|
|
(368 |
) |
|
|
— |
|
Total |
|
$ |
200,187 |
|
|
$ |
11,988 |
|
|
|
8.0 |
% |
|
$ |
149,009 |
|
|
$ |
8,282 |
|
|
|
7.4 |
% |
The Company’s average overall debt for the nine-month period ended September 30, 2024, was $200,187, as compared to $149,009 for the same period of the prior year. Our borrowings increased as a result of higher inventory levels. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 8.0% for the nine months ended September 30, 2024, as compared to 7.0% in 2023.
Income tax benefit was $7,093 for the nine months ended September 30, 2024, as compared to an income tax expense of $2,066 for the nine-months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024, was computed based on the actual; effective tax rate for the year-to-date period ended September 30, 2024 which is approximately 4.3%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the nine months ended September 30, 2024 was 16.5%. During the nine months ended September 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure and beginning to develop options for alternative, more efficient, operating structures and the result was a decrease in the effective tax rate. Additionally, refer to the table below for details comprising the income tax benefit of $7,093 and the overall effective tax rate of 16.5% for the nine months ended September 30, 2024.
|
|
For the Nine Months Ended September 30, 2024 |
|
|||||||||
|
|
(Loss) income before provision for income taxes |
|
|
Tax rate |
|
|
Income tax benefit (expense) |
|
|||
Entities without valuation allowances (excluding transformation expenses and Dacthal recall adjustment) |
|
$ |
(5,257 |
) |
|
|
-6.3 |
% |
|
$ |
(332 |
) |
Transformation expenses |
|
|
(16,636 |
) |
|
|
22.1 |
% |
|
|
3,679 |
|
Dacthal product recall adjustment |
|
|
(16,191 |
) |
|
|
23.3 |
% |
|
|
3,777 |
|
Entities with valuation allowances |
|
|
(4,920 |
) |
|
|
-0.6 |
% |
|
|
(31 |
) |
Total |
|
$ |
(43,004 |
) |
|
|
16.5 |
% |
|
$ |
7,093 |
|
We incurred a loss before income taxes of $43,004 for the nine months ended September 30, 2024, as compared to income before taxes of $2,606 for the nine months ended September 30, 2023. Our net loss (after income taxes) for the nine-month period ended September 30, 2024 was $35,912 or ($1.28) per basic and diluted share, as compared to income of $540 or $0.02 per basic and per diluted share in the same period of 2023.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s operating activities utilized net cash of $29,402 during the nine-month period ended September 30, 2024, as compared to $145,854 during the nine months ended September 30, 2023. Included in the $29,402 are a net loss of $35,911, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of $17,143, and provision for bad debts in the amount of $1,278, change in deferred income taxes of $9,110 and changes in liabilities for uncertain tax positions or unrecognized tax benefits of $106. Also included are stock-based compensation of $3,887, change in fair value of an
24
equity investment of $513, and net foreign currency adjustments of $121. These together provided net cash outflows of $22,889, as compared to a net cash inflows $23,793 for the same period of 2023.
During the nine-month period of 2024, the Company decreased working capital by $1,725, as compared to an increase of $160,094 during the same period of the prior year. Included in this change: inventories increased by $29,429, as compared to $58,163 for the same period of 2023. While increases in inventories are normal for the Company’s annual cycle, this year the Company has been successful at adjusting manufacturing output to better reflect customer changing buying patterns and have seen inventories rise at a slower rate as a result. We are now positioned to see inventories decline towards our year-end target.
Customer prepayments decreased by $38,375, as compared to a decrease of $104,590 in the same period of 2023. This included customer decisions to make prepayments amounting to $57,000 during the three months ended September 30, 2024, and by purchase orders received from those customers during the first nine months of 2024 and the product mix and payment terms on those purchase orders. Our accounts payable balances increased by $6,141, as compared to $1,240 in the same period of 2023, reflecting both the timing and terms of the related purchase orders. Accounts receivables decreased by $33,475, as compared to an increase of $29,055 in the same period of 2023. This is primarily driven by the amount of customers prepayments (which reduced), and the timing of customer demand and the geographic location for the sales. Prepaid expenses increased by $4,107, as compared to $633 in the same period of 2023. Income tax receivable increased by $6,216 as compared to an increase of $4,046 in the prior year. Accrued programs increased by $17,721, as compared to $29,779 in the prior year, driven by changes in mix of sales (products attract different program arrangements) and lower sales in our US Crop business (which is the main driver from programs). Finally, other payables and accrued expenses increased by $13,878, as compared to a decreased of $4,406 in the prior year.
Accrued program costs are recorded in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30th of each year. During the first nine months of 2024, the Company made accruals for programs in the amount of $55,455 and payments in the amount of $37,866, resulting in a net increase in accrued program costs of $17,721. During the first nine months of the prior year, the Company made accruals in the amount of $62,248 and made payments in the amount of $32,469, resulting in a net increase of accrued program costs of $29,779.
Cash used for investing activities for the nine-month period ended September 30, 2024, and 2023 was $6,828 and $9,148, respectively. In 2024, the Company spent $6,106 on purchases of fixed assets primarily focused on continuing to invest in manufacturing infrastructure, as compared to $8,589 for the same period of prior year. The Company made a payment of $788 for a product acquisition for the nine-month period ended September 30, 2024, as compared to $759 for the same period in prior year. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of $66, as compared to $200 in the prior year.
During the nine months ended September 30, 2024, financing activities provided $36,824, as compared to $146,680 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $39,849 during the nine-month period ended September 30, 2023, as compared to $165,700 in the same period of the prior year. The Company paid dividends to stockholders amounting to $2,510 during the nine months ended September 30, 2024, as compared to $2,550 in the same period of 2023. During the nine-month period ended September 30, 2023, the Company paid $15,539 for the repurchase of 885,290 shares of its common stock. The Company did not repurchase shares during the nine-month period ending September 30, 2024. The Company received $901 for the issuance of ESPP shares and exercise of stock options for the nine months ended September 30, 2024, as compared to $980 for the same period in prior year. Lastly, in exchange for shares of common stock returned by employees, the Company paid $1,416 and $1,957 for tax withholding on stock-based compensation awards during the nine months ended September 30, 2024 and 2023, respectively.
The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at September 30, 2024 and December 31, 2023. These are summarized in the following table:
Long-term indebtedness ($000's) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Revolving line of credit |
|
$ |
178,749 |
|
|
$ |
138,900 |
|
Deferred loan fees |
|
|
(1,726 |
) |
|
|
(1,218 |
) |
Net long-term debt |
|
$ |
177,023 |
|
|
$ |
137,682 |
|
As of September 30, 2024, by virtue of Amendment Number Seven to the Third Amended Loan and Security Agreement, the Company is deemed to be in compliance with its financial covenants.
At September 30, 2024, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $44,716, compared to
25
$115,002 as of December 31, 2023. The Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent.
We believe that anticipated cash flow from operations, existing cash balances and available borrowings under our amended senior credit facility will be sufficient to provide us with liquidity necessary to fund our working capital and cash requirements for the next twelve months.
RECENTLY ISSUED ACCOUNTING GUIDANCE
Please refer to Note 13 in the accompanying notes to the condensed consolidated financial statements for recently issued accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company’s Form 10-K filed with the SEC for the year ended December 31, 2023, the Company provided a comprehensive statement of critical accounting policies. These policies have been reviewed in detail as part of the preparation work for this Form 10-Q. After our review of these matters, we have determined that, during the subject reporting period, except to the extent stated below, there has been no material change to the critical accounting policies that are listed in the Company’s Form 10-K for the year ended December 31, 2023.
Certain of the Company’s policies require the application of judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on historical experience, terms of existing contracts, commonly accepted industry practices and other assumptions that the Company believes are reasonable under the circumstances. These estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the condensed consolidated financial statements in the period that revisions are determined to be necessary. Actual results may differ from these estimates under different outcomes or conditions.
Goodwill—The Company reviews goodwill for impairment utilizing either a qualitative or quantitative assessment. If the Company decides that it is appropriate to perform a qualitative assessment and concludes that the fair value of a reporting unit more likely than not exceeds its carrying value, no further evaluation is necessary. If the Company performs a quantitative assessment, the Company compares the fair value of a reporting unit with its carrying value and recognizes an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. The Company annually tests goodwill for impairment at the beginning of the fourth quarter, or earlier if triggering events occur. Fair value determinations require considerable judgment and are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenue growth rates, gross margins, expenses, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, and synergies available to market participants. As of October 1, 2023, the Company conducted its annual impairment test by quantitatively testing goodwill assigned to its domestic and international reporting units. Based on the results of the quantitative test, the Company concluded that the fair value of both the domestic and international reporting units exceed their respective carrying value by 18% and 9%, respectively.
On April 9, 2024, out of an abundance of caution, the Company voluntarily suspended sales of Dacthal pending review and potential approval of a significantly narrower label submitted to the USEPA (refer to Note 12 to the condensed consolidated financial statements for further details). The Company performed an interim test for goodwill impairment in April 2024, excluding all Dacthal sales from its projected net sales. Based on the results of this quantitative test, the Company concluded that the fair value of both the domestic and international reporting units still exceed their respective carrying value by 11% and 6%, respectively.
The carrying value of both reporting units is mainly sensitive to discount rates, the projected net sales growth rates, gross margin improvements, and terminal growth rates. Negative deviations from the Company’s projections and assumptions used in its quantitative impairment test may result in an impairment. As of September 30, 2024, goodwill related to the domestic and international reporting units amounted to $9,132 and $38,880, respectively.
26
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates, primarily from its borrowing activities. The Company’s indebtedness to its primary lender is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate. For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, 2023.
The Company faces market risk to the extent that changes in foreign currency exchange rates affect our non-U.S. dollar functional currency as to foreign subsidiaries’ revenues, expenses, assets and liabilities. The Company currently does not engage in hedging activities with respect to such exchange rate risks.
Assets and liabilities outside the U.S. are located in regions where the Company has subsidiaries or joint ventures: Central America, South America, North America, Europe, Asia, and Australia. The Company’s investments in foreign subsidiaries and joint ventures with a functional currency other than the U.S. dollar are generally considered long-term. Accordingly, the Company does not hedge these net investments.
Item 4. CONTROLS AND PROCEDURES
As of September 30, 2024, the Company has a comprehensive set of disclosure controls and procedures designed to ensure that all information required to be disclosed in our filings under the Securities Exchange Act (1934) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of September 30, 2024, the Company’s management, including the Company’s Acting Chief Executive Officer and Chief Financial Officer, has concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective to provide reasonable assurance of the achievement of the objectives described above.
There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
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PART II. OTHER INFORMATION
The Company was not required to report any matters or changes for any items of Part II except as disclosed below.
Item 1. Legal Proceedings
Please refer to Note 12 in the accompanying notes to the condensed consolidated financial statements for legal updates.
Item 1A. Risk Factors
The Company continually re-assesses the business risks, and as part of that process detailed a range of risk factors in the disclosures in American Vanguard’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on March 27, 2024. The following disclosure amends and supplements those risk factors and, except to the extent stated below, there are no material changes to the risk factors as so stated.
Public statements made by USEPA regarding their preliminary findings in connection with the registration review of DCPA could expose the Company to future claims for personal injury which, in turn, could adversely affect the Company’s financial performance. In connection with USEPA’s review of the registration of DCPA products (herbicides used on high-value vegetables), based upon a single comparative thyroid assay study (which is comparatively rare and complex), the USEPA found an adverse effect upon neonate rodents. Consequently, in June 2024, the agency published preliminary findings, noting its concern that based upon current, permitted use patterns, the product could have an adverse effect upon human health. Accordingly, out of an abundance of caution, the Company submitted a significantly narrower label and voluntarily suspended sales of Dacthal pending review and potential approval of that label. Nevertheless, on August 6, 2024, the agency issued an emergency suspension of DCPA products, which prohibits their distribution, sale and use. On August 19, 2024, the Company filed a notice of voluntary cancellation of DCPA registration. In the course of this chronology and in spite of the Company’s voluntary efforts to mitigate risk, EPA has published multiple press releases in which it has repeatedly warned users of potential risk in using the product. Due to EPA’s public statements, the Company was unable to obtain product liability insurance coverage for claims relating to DCPA for the period postdating the renewal date of September 15, 2024. There is no guarantee that the agency’s statements will not result in future claims and/or lawsuits arising from alleged exposure to DCPA. Further, such claims and/or lawsuits could have a material adverse effect upon the Company’s financial performance.
Item 2. Purchases of Equity Securities by the Issuer
Pursuant to Amendments Number Six and Seven to the Third Amended Loan and Security Agreement, the Company is currently prevented from making stock repurchases, effective November 7, 2023.
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Item 6. Exhibits
Exhibits required to be filed by Item 601 of Regulation S-K:
Exhibit No. |
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Description |
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31.1 |
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31.2 |
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Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. |
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32.1 |
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Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002. |
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101 |
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The following materials from American Vanguard Corp’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. |
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104 |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, has been formatted in Inline XBRL. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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american vanguard corporation |
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Dated: November 12, 2024 |
By: |
/s/ Timothy J. Donnelly |
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Timothy J. Donnelly |
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Acting Chief Executive Officer |
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Dated: November 12, 2024 |
By: |
/s/ david t. johnson |
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David T. Johnson |
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Chief Financial Officer & Principal Accounting Officer |
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