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Form 10-Q AMERICAN VANGUARD CORP For: Jun 30

August 8, 2022 4:09 PM EDT

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hi

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                      

Commission file number 001-13795

 

AMERICAN VANGUARD CORPORATION

 

 

Delaware

95-2588080

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer

Identification Number)

 

 

4695 MacArthur Court, Newport Beach, California

92660

(Address of principal executive offices)

(Zip Code)

(949) 260-1200

(Registrant’s telephone number, including area code)

 

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

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.10 par value

 

AVD

 

New York Stock Exchange

 

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

 

Smaller reporting company

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value—30,869,520 shares as of August 2, 2022.

 

 

 

 


 

 

AMERICAN VANGUARD CORPORATION

INDEX

 

 

 

 

Page Number

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

3

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

 

4

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

5

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

6

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

8

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

28

 

 

 

 

Item 4.

Controls and Procedures

 

28

 

 

 

PART II—OTHER INFORMATION

 

29

 

 

 

 

Item 1.

Legal Proceedings

 

29

 

 

 

 

Item 1A.

Risks Factors

 

29

 

Item 2.

Purchases of Equity Securities by the Issuer

 

30

 

Item 6.

Exhibits

 

31

 

 

 

SIGNATURES

 

32

 

 

2


 

 

PART I. FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months

Ended June 30,

 

 

For the Six Months

Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

148,084

 

 

$

134,610

 

 

$

297,519

 

 

$

250,765

 

Cost of sales

 

 

(88,305

)

 

 

(82,471

)

 

 

(176,547

)

 

 

(153,495

)

Gross profit

 

 

59,779

 

 

 

52,139

 

 

 

120,972

 

 

 

97,270

 

Operating expenses

 

 

(48,966

)

 

 

(43,080

)

 

 

(95,410

)

 

 

(84,524

)

Adjustment to bargain purchase gain on business acquisition

 

 

 

 

 

(88

)

 

 

 

 

 

(121

)

Operating income

 

 

10,813

 

 

 

8,971

 

 

 

25,562

 

 

 

12,625

 

Change in fair value of an equity investment

 

 

(486

)

 

 

(295

)

 

 

(403

)

 

 

771

 

Other income

 

 

 

 

 

 

 

 

 

 

 

672

 

Interest expense, net

 

 

(772

)

 

 

(1,013

)

 

 

(1,170

)

 

 

(1,959

)

Income before provision for income taxes and loss on equity

   method investment

 

 

9,555

 

 

 

7,663

 

 

 

23,989

 

 

 

12,109

 

Income tax expense

 

 

(2,725

)

 

 

(2,445

)

 

 

(7,224

)

 

 

(3,807

)

Income before loss on equity method investment

 

 

6,830

 

 

 

5,218

 

 

 

16,765

 

 

 

8,302

 

Loss on equity method investment

 

 

 

 

 

(74

)

 

 

 

 

 

(87

)

Net income

 

$

6,830

 

 

$

5,144

 

 

$

16,765

 

 

$

8,215

 

Earnings per common share—basic

 

$

.23

 

 

$

.17

 

 

$

.57

 

 

$

.28

 

Earnings per common share—assuming dilution

 

$

.23

 

 

$

.17

 

 

$

.55

 

 

$

.27

 

Weighted average shares outstanding—basic

 

 

29,602

 

 

 

29,930

 

 

 

29,639

 

 

 

29,834

 

Weighted average shares outstanding—assuming dilution

 

 

30,225

 

 

 

30,499

 

 

 

30,289

 

 

 

30,511

 

 

See notes to the Condensed Consolidated Financial Statements.

 

3


 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

For the Three Months

Ended June 30,

 

 

For the Six Months

Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

6,830

 

 

$

5,144

 

 

$

16,765

 

 

$

8,215

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax effects

 

 

(6,064

)

 

 

2,914

 

 

 

1,016

 

 

 

411

 

Comprehensive income

 

$

766

 

 

$

8,058

 

 

$

17,781

 

 

$

8,626

 

 

See notes to the Condensed Consolidated Financial Statements.

 

 

4


 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

ASSETS

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,057

 

 

$

16,285

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $4,411 and $3,938, respectively

 

 

165,711

 

 

 

149,326

 

Other

 

 

13,208

 

 

 

9,595

 

Total receivables, net

 

 

178,919

 

 

 

158,921

 

Inventories

 

 

182,203

 

 

 

154,306

 

Prepaid expenses

 

 

16,368

 

 

 

12,488

 

Income taxes receivable

 

 

523

 

 

 

 

Total current assets

 

 

400,070

 

 

 

342,000

 

Property, plant and equipment, net

 

 

67,453

 

 

 

66,111

 

Operating lease right-of-use assets

 

 

24,449

 

 

 

25,386

 

Intangible assets, net

 

 

191,560

 

 

 

197,841

 

Goodwill

 

 

46,997

 

 

 

46,260

 

Other assets

 

 

13,099

 

 

 

16,292

 

Deferred income tax assets, net

 

 

16

 

 

 

270

 

Total assets

 

$

743,644

 

 

$

694,160

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

1,367

 

 

$

802

 

Accounts payable

 

 

86,944

 

 

 

67,140

 

Customer prepayments

 

 

272

 

 

 

63,064

 

Accrued program costs

 

 

99,152

 

 

 

63,245

 

Accrued expenses and other payables

 

 

20,180

 

 

 

20,745

 

Income taxes payable

 

 

 

 

 

3,006

 

Current operating lease liabilities

 

 

5,029

 

 

 

5,059

 

Total current liabilities

 

 

212,944

 

 

 

223,061

 

Long-term debt, net

 

 

100,779

 

 

 

52,240

 

Long-term operating lease liabilities

 

 

19,852

 

 

 

20,780

 

Other liabilities, net of current installments

 

 

5,584

 

 

 

5,335

 

Deferred income tax liabilities, net

 

 

19,651

 

 

 

20,006

 

Total liabilities

 

 

358,810

 

 

 

321,422

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $.10 par value per share; authorized 40,000,000 shares; issued

  34,443,234 shares at June 30, 2022 and 34,248,218 shares at December 31, 2021

 

 

3,445

 

 

 

3,426

 

Additional paid-in capital

 

 

103,456

 

 

 

101,450

 

Accumulated other comprehensive loss

 

 

(12,768

)

 

 

(13,784

)

Retained earnings

 

 

319,672

 

 

 

304,385

 

Less treasury stock at cost, 3,694,050 shares at June 30, 2022 and 3,361,040 shares at

   December 31, 2021

 

 

(28,971

)

 

 

(22,739

)

Total stockholders’ equity

 

 

384,834

 

 

 

372,738

 

Total liabilities and stockholders' equity

 

$

743,644

 

 

$

694,160

 

 

See notes to the Condensed Consolidated Financial Statements.

 

 

5


 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Three and Six Months Ended June 30, 2022

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Loss

 

 

Retained

Earnings

 

 

Shares

 

 

Amount

 

 

Total

 

Balance, December 31, 2021

 

 

34,248,218

 

 

$

3,426

 

 

$

101,450

 

 

$

(13,784

)

 

$

304,385

 

 

 

3,361,040

 

 

$

(22,739

)

 

$

372,738

 

Common stock issued under ESPP

 

 

26,751

 

 

 

2

 

 

 

434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

436

 

Cash dividends on common stock ($0.025 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(736

)

 

 

 

 

 

 

 

 

(736

)

Foreign currency translation adjustment, net

 

 

 

 

 

 

 

 

 

 

 

7,080

 

 

 

 

 

 

 

 

 

 

 

 

7,080

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,563

 

Stock options exercised; grants, termination

   and vesting of restricted stock units

   (net of shares in lieu of taxes)

 

 

(183,093

)

 

 

(18

)

 

 

(2,156

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,174

)

Shares repurchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

332,404

 

 

 

(6,219

)

 

 

(6,219

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,935

 

 

 

 

 

 

 

 

 

9,935

 

Balance, March 31, 2022

 

 

34,091,876

 

 

 

3,410

 

 

 

101,291

 

 

 

(6,704

)

 

 

313,584

 

 

 

3,693,444

 

 

 

(28,958

)

 

 

382,623

 

Cash dividends on common stock ($0.025 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(742

)

 

 

 

 

 

 

 

 

(742

)

Foreign currency translation adjustment, net

 

 

 

 

 

 

 

 

 

 

 

(6,064

)

 

 

 

 

 

 

 

 

 

 

 

(6,064

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,273

 

Stock options exercised; grants, termination

   and vesting of restricted stock units

   (net of shares in lieu of taxes)

 

 

351,358

 

 

 

35

 

 

 

892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

927

 

Shares repurchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

606

 

 

 

(13

)

 

 

(13

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,830

 

 

 

 

 

 

 

 

 

6,830

 

Balance, June 30, 2022

 

 

34,443,234

 

 

$

3,445

 

 

$

103,456

 

 

$

(12,768

)

 

$

319,672

 

 

 

3,694,050

 

 

$

(28,971

)

 

$

384,834

 

 

See notes to the Condensed Consolidated Financial Statements.

 

 

6


 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Three and Six Months Ended June 30, 2021

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Loss

 

 

Retained

Earnings

 

 

Shares

 

 

Amount

 

 

AVD

Total

 

Balance, December 31, 2020

 

 

33,922,433

 

 

$

3,394

 

 

$

96,642

 

 

$

(9,322

)

 

$

288,182

 

 

 

3,061,040

 

 

$

(18,160

)

 

$

360,736

 

Common stock issued under ESPP

 

 

25,120

 

 

 

2

 

 

 

338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

340

 

Cash dividends on common stock ($0.02 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(596

)

 

 

 

 

 

 

 

 

(596

)

Foreign currency translation adjustment, net

 

 

 

 

 

 

 

 

 

 

 

(2,503

)

 

 

 

 

 

 

 

 

 

 

 

(2,503

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,792

 

Stock options exercised; grants, termination

   and vesting of restricted stock units

   (net of shares in lieu of taxes)

 

 

(73,231

)

 

 

(7

)

 

 

(2,787

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,794

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,071

 

 

 

 

 

 

 

 

 

3,071

 

Balance, March 31, 2021

 

 

33,874,322

 

 

 

3,389

 

 

 

95,985

 

 

 

(11,825

)

 

 

290,657

 

 

 

3,061,040

 

 

 

(18,160

)

 

 

360,046

 

Cash dividends on common stock ($0.02 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(600

)

 

 

 

 

 

 

 

 

(600

)

Foreign currency translation adjustment, net

 

 

 

 

 

 

 

 

 

 

 

2,914

 

 

 

 

 

 

 

 

 

 

 

 

2,914

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,806

 

Stock options exercised; grants, termination

   and vesting of restricted stock units

   (net of shares in lieu of taxes)

 

 

387,329

 

 

 

39

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,144

 

 

 

 

 

 

 

 

 

5,144

 

Balance, June 30, 2021

 

 

34,261,651

 

 

$