f130dli
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ta
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Year Ended December 31, 2024
OR
☐
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, $0.10 par value
AVD
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ☐ No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error
to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b).
☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting stock of the registrant held by non-affiliates is $240.6 million. This figure is estimated as of June 30, 2024 at which date the closing price of the
registrant’s Common Stock on the New York Stock Exchange was $8.60 per share. For purposes of this calculation, shares owned by executive officers, directors, and 5% stockholders known to the
registrant have been deemed to be owned by affiliates. The number of shares of $0.10 par value Common Stock outstanding as of June 30, 2024, was 34,655,429. The number of shares of $.10 par
value Common Stock outstanding as of March 5, 2025 was 28,266,826.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement relating to its 2024 annual meeting of shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K where
indicated. The Registrant’s definitive proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
1
AMERICAN VANGUARD CORPORATION
ANNUAL REPORT ON FORM 10-K
December 31, 2024
Page No.
PART I
Item 1.
Business
3
Item 1A.
Risk Factors
9
Item 1B.
Unresolved Staff Comments
16
Item 1C.
Cybersecurity
16
Item 2.
Properties
17
Item 3.
Legal Proceedings
18
Item 4.
Mine Safety Disclosures
18
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
19
Item 6.
Reserved
20
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
31
Item 8.
Financial Statements and Supplementary Data
32
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
66
Item 9A.
Controls and Procedures
66
Item 9B.
Other Information
70
Item 9C.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
70
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
71
Item 11.
Executive Compensation
82
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
110
Item 13.
Certain Relationships and Related Transactions, and Director Independence
111
Item 14.
Principal Accountant Fees and Services
112
PART IV
Item 15.
Financial Statement, Schedule, and Exhibits
114
Item 16.
Form 10-K Summary
118
SIGNATURES AND CERTIFICATIONS
119
2
AMERICAN VANGUARD CORPORATION
(Dollars in thousands, except per share data)
PART I
Unless otherwise indicated or the context otherwise requires, the terms “Company,” “we,” “us,” and “our” refer to American Vanguard Corporation
and its consolidated subsidiaries (“AVD”).
The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results
and prospects. Generally, “may,” “could,” “will,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue” and similar words identify
forward-looking statements. Forward-looking statements appearing in this report are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause 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
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; availability of capital resources given that interest rate and inflation affect the debt market; the
impact of, and our ability to, remediate the identified material weaknesses in our internal controls over financial reporting; and 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. Security and Exchange Commission
(“SEC”). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements
contained in this report. You should evaluate all forward-looking statements made in this Form 10-K in the context of the risks and uncertainties disclosed in
Part I, Item 1A of this Form 10-K under the heading "Risk Factors," in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and in Item 7A "Quantitative and Qualitative Disclosures About Market Risk."
The forward-looking statements included in this Form 10-K are made only as of the date hereof. We undertake no obligation to publicly update or revise
any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more
forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
All dollar amounts reflected in the consolidated financial statements are expressed in thousands, except per share data.
Strategic Direction and Major Initiatives
During 2024, AVD took decisive and necessary measures to transform its entire enterprise into a platform for stronger growth and profitability. Leading
up to 2024, it had become increasingly clear that while the Company had successfully grown in size and geographical reach through several years of acquisition
activity, its operating leverage had eroded in the process. This, in turn, caused management and the board to take a close look at the consolidated enterprise with
the goal of returning to higher EBITDA margins, achieving greater efficiency and laying the foundation for growth. To that end, the Company invested its
resources by engaging outside consultants to study the business in depth and to map out a plan for transformation. Through these collective efforts, the
Company defined a blueprint for success including both business transformation (e.g., driving down supply chain cost, optimizing manufacturing, establishing
strategic go-to-market approach and structural reorganization). In addition, we are working with ERP provider QAD, to establish a robust, digital platform (to
place the global business on a single platform, with standardized processes to support well-informed planning and business management). The vast majority of
business transformation expenses were incurred in 2024. In subsequent years, the Company will be advancing the implementation plan largely through internal
resources.
3
In the interest of expediting these transformation efforts, AVD recruited and hired a new CEO, Douglas A. Kaye III, in mid-December 2024. Mr. Kaye
brings extensive experience in the crop protection industry, a keen business acumen and strong relationships with the Company's customers. Under Mr. Kaye's
leadership, while establishing a new organizational structure, AVD has added experienced senior executives to newly created positions in supply chain and
strategy roles to ensure sustainable, efficient operations and to help expand through new product launches while engendering a culture of accountability to KPIs
captured in the mantra "simplify, execute and deliver".
Further, in the course of its assessment of development projects, investments, inventory trends and sales by product line, the Company identified a
number of assets that have not maintained their current or future value and, under applicable accounting principles, are considered to be impaired. Chief among
these assets is the Company's SIMPAS precision application technology, the adoption of which, after having improved modestly in prior years, came to a virtual
halt in 2024. While SIMPAS has attained full functionality among current users, the Company has concluded that it is not positioned to commercialize this
technology more broadly and cannot justify continued, significant investment. Similarly, AVD has concluded two herbicide products purchased in 2019 are
impaired, their markets having largely evaporated. Taken together, nonrecurring charges including business transformation expenses, the impairment of the
investment in SIMPAS, costs of voluntarily canceling Dacthal, goodwill and intangible assets impairment, inventory write downs, and certain other expenses
during 2024 totaled $117,355. With these expenses behind us, the Company is moving with speed and intention to realize the substantial benefits of
transformation and to return greater value to shareholders, as the new CEO leads the Company toward greater operational efficiency, growth and beneficial
change.
ITEM 1 BUSINESS
American Vanguard Corporation (“AVD”) was incorporated under the laws of the State of Delaware in January 1969 and operates as a holding
company. The Company conducts its business through its principle operating subsidiaries, including AMVAC Chemical Corporation (“AMVAC”) for its
domestic business and AMVAC Netherlands BV (“AMVAC BV”) for its international business.
The operating subsidiaries in the U.S. include: AMVAC, GemChem, Inc. (“GemChem”), Envance Technologies, LLC (“Envance”), TyraTech Inc.
(“TyraTech”) and OHP Inc. (“OHP”).
Internationally, the Company operates its business through the following subsidiaries: AMVAC BV, AMVAC Hong Kong Limited (“AMVAC Hong
Kong”), AMVAC Mexico Sociedad de Responsabilidad Limitada (“AMVAC M”), AMVAC de Costa Rica Sociedad de Responsabilidad Limitada (“AMVAC
CR Srl”), Grupo AgriCenter (including the parent AgriCenter S.A. and its subsidiaries) (“AgriCenter”), AMVAC do Brasil Representácoes Ltda (“AMVAC do
Brasil”), AMVAC do Brazil 3p LTDA (“AMVAC 3p”), American Vanguard Australia PTY Ltd (“AVD Australia”), AgNova Technologies PTY Ltd
(“AgNova”), and the Agrinos group entities (“Agrinos”).
The Company has one reportable segment.
AMVAC is a California corporation that traces its history from 1945 and is a manufacturer of chemical, biological and biorational products that develops
and markets solutions for agricultural, commercial and consumer uses. It synthesizes and formulates chemicals and ferments and extracts microbial products for
crops, turf, ornamental plants, and human and animal health protection. These products, which include insecticides, fungicides, herbicides, soil health, plant
nutrition, molluscicides, growth regulators, soil fumigants, and biorationals, are marketed in liquid, powder, and granular forms. AMVAC primarily
synthesizes, formulates, and distributes its own proprietary products or custom manufactures, formulates or distributes for others. In addition, the Company has
carved out a leadership position in closed delivery systems, through the offering of certain of its products in SmartBox, Lock ‘n Load and EZ Load systems.
AMVAC has historically expanded its business through both the acquisition of established chemistries, and the development and commercialization of new
formulations or compounds through licensing arrangements. Beginning in 2021, we commenced basic molecular research and development of intellectual
property related to our green solutions portfolio, which we have continued for purposes of addressing this growing market.
4
AMVAC BV is a Netherlands Corporation that was established in 2012 and is based in the Netherlands. AMVAC BV sells products both directly and
through its network of subsidiaries in various international territories.
Below is a description of the Company’s acquisition/licensing during 2023. There were no acquisitions in 2024.
On October 5, 2023, the Company completed the purchase of all the outstanding shares of Punto Verde, a well-established distributor of agricultural
products, located in Guayaquil, Ecuador. The acquired assets included product registration, trade names and trademarks, customer lists, workforce, fixed assets,
and existing working capital.
On January 4, 2023, the Company completed the purchase of certain assets from American Bio-Systems, Inc. related to the proprietary-formula
microbial cleaning products BioMopPlus® and DrainGel®. The assets acquired include end-use registrations, trademarks, formulation know-how, and books
and records.
Seasonality
The agricultural chemical industry, in general, is cyclical in nature. The demand for AVD’s products tends to be seasonal. Seasonal usage, however, does
not necessarily follow calendar dates, but more closely follows growing patterns, weather conditions, geography, weather related pressure from pests and
customer marketing programs. Further, growing seasons vary by geographical region; thus, there is no single seasonal cycle affecting our sales. Rather, multiple
seasons transpire over the course of the calendar year.
Backlog
AVD primarily sells its products based on purchase orders. The purchase orders are typically fulfilled within a short time frame. As a result, backlog is
not considered a significant factor of, or a valid metric for, AVD’s business. In 2024, the Company has been impacted by customers preferring to buy smaller
quantities closer to the time of use, preferring to rely on suppliers to hold inventory in readiness to respond to orders.
Customers
The Company’s largest three customers accounted for 14%, 13%, and 11% of the Company's sales in 2024; 15%, 14% and 8% in 2023; and 18%, 13%
and 8% in 2022.
Distribution
In the U.S. AMVAC predominantly distributes its products through national distribution companies and buying groups or co-operatives, which purchase
AMVAC’s goods on a purchase order basis and, in turn, sell them to retailers/growers/end-users.
Internationally, the Company has sales offices or wholly owned distributors in Central America, Mexico, Brazil, Australia, New Zealand and India, and
sales force executives or sales agents in several other territories. The Company’s domestic and international distributors and agents typically have long-
established relationships with retailers/end-users, far-reaching logistics and transportation capabilities, and/or customer service expertise. The markets for
AVD’s products vary by region, target crop, use and type of distribution channel. AVD’s distributors and agents are experienced at addressing the needs of
these various markets.
Competition
In its many marketplaces, AVD faces competition from both domestic and foreign manufacturers. Many of our competitors are larger and have
substantially greater financial and technical resources than AVD. AVD’s capacity to compete depends on its ability to develop additional formulations of our
proven grower solutions and/or expand its product lines, geographic footprint and customer base. AVD competes principally based on quality, product efficacy,
price, technical service and customer support. In some cases, AVD has positioned itself in smaller niche markets, which are no longer addressed by larger
companies. In other cases, for example in the Midwest corn and soybean markets, the Company competes directly against larger competitors.
5
Manufacturing
Through its six manufacturing facilities (see Item 2, Properties), AVD synthesizes many of the technical grade active ingredients that are in its end-use
products. Further, the Company formulates and packages its end-use products at four of its own facilities or at the facilities of third-party formulators in the U.S.
and at various international locations. Furthermore, the Company owns and operates two biological fermentation sites, one site in the U.S. and one in Mexico,
and, in addition, has a certain biological product manufactured under a long-term arrangement at a third-party facility in India.
Raw Materials
AVD utilizes numerous companies to supply the various raw materials and components used in manufacturing its products. Many of these materials are
readily available from domestic sources. In instances where there is a single source of supply, AVD seeks to secure its supply by either long-term (multi-year)
arrangements or purchasing on long lead times from its suppliers. Further, where the availability or cost of certain raw materials may be subject to the effect of
tariffs and/or supply chain disruption, the Company may order goods at times or in volumes out of the ordinary course to optimize pricing and to ensure supply.
Intellectual Property
AVD’s proprietary product formulations are protected, to the extent possible, as trade secrets and, to a lesser extent, by patents. Certain of the
Company’s closed delivery systems are patented, and the Company has both pending and issued patents relating to its equipment portfolio. In addition, the
Company owns multiple issued patents relating to both its low-impact Envance solutions as well as its Agrinos biological and microbial solutions. We have also
developed our intellectual property portfolio by registering our trademarks and service marks. The Company believes that AVD’s trademarks bring value to its
products in both domestic and foreign markets. AVD considers that, in the aggregate, its product registrations, trademarks, licenses, customer lists and patents
constitute valuable assets. The Company does not regard its current business as being materially dependent upon any single product registration, trademark,
license, or patent.
EPA Registrations
In the U.S., AVD’s products also receive protection afforded by the terms of the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”),
pursuant to which it is unlawful to sell any pesticide in the U.S., unless such pesticide has first been registered by the U.S. Environmental Protection Agency
(“USEPA”). Most of the Company’s products that are sold in the U.S. are subject to USEPA registration and periodic re-registration requirements and are
registered in accordance with FIFRA. This registration by USEPA is based, among other things, on data demonstrating that the product will not cause
unreasonable adverse effects on human health or the environment, when used according to approved label directions. In addition, each state requires a specific
registration before any of AVD’s products can be marketed or used in that state. State registrations are predominantly renewed annually with a smaller number
of registrations that are renewed on a multiple year basis.
Similarly, all foreign countries in which we have registered products have their own regulatory laws and agencies which, like those in the U.S., require
the submission of data to demonstrate that the subject products will not cause unreasonable adverse effects on human health or the environment. Some regions,
such as the EU, follow a hazard-based approach, in which the cognizant agency typically evaluates a product based upon whether a less hazardous alternative is
available, notwithstanding potential benefits. Many foreign agencies recognize data submissions in the form of international dossiers. Nevertheless, the laws
governing registration, maintenance and expansion of our products vary from region to region.
In addition, certain of the Company’s biological products are labeled organic under the Organic Materials Review Institute (“OMRI”), Washington State
Department of Agriculture (“WSDA”) and/or California Department of Food and Agriculture (“CDFA”) and, as such, are subject to the requirements of those
certification standards, including with respect to raw materials and processes. As is the case with synthetic products, these biological products are also subject to
specific labeling requirements that may vary from state to state.
6
The USEPA, state, and foreign agencies have required, and may require in the future, that certain scientific data requirements be performed on registered
products sold by AVD. AVD, on its own behalf and in joint efforts with other registrants, has furnished, and is currently furnishing, required data relative to
specific products. Under FIFRA, the federal government requires registrants to submit a wide range of scientific data to support U.S. registrations, including in
the case of adding labeled uses. This requirement results in operating expenses in such areas as regulatory compliance, with USEPA and other such bodies in
the markets in which the Company sells its products. In addition, at times, the Company is required to generate new formulations of existing products and/or to
produce new products in order to remain compliant. The Company recorded expenses in the amounts of $18,086, $21,833 and $18,081, during 2024, 2023 and
2022, respectively, on these activities. The costs are included within Research, Product Development and Regulatory in the Company’s consolidated statements
of operations.
2024
2023
2022
Registration
$
11,934 $
14,498 $
11,979
Product development
6,152
7,335
6,102
Total
$
18,086 $
21,833 $
18,081
Environmental
American Vanguard is committed to be a part of the global solution to reduce the overall impact on the environment through our focused improvement
efforts that minimize energy consumption, greenhouse gas emission, waste generation, and water consumption at our manufacturing and laboratory facilities.
We cover our commitment and the specifics of our environmental stewardship program in our 2024 Corporate Sustainability Report, which can be found on the
Company's website.
AMVAC is subject to numerous federal and state laws and governmental regulations concerning environmental matters and employee health and safety
at its six manufacturing facilities. The Company continually adapts its manufacturing process to the latest environmental control standards of the various
regulatory agencies. The USEPA and other federal and state agencies have the authority to promulgate regulations that could have a material impact on the
Company’s operations.
AMVAC expends substantial effort to minimize the risk of discharge of materials in the environment and to comply with the governmental regulations
relating to protection of the environment. Wherever feasible, AMVAC recovers and recycles raw materials and increases product yield in order to partially
offset increasing pollution abatement costs.
The Company is committed to a long-term environmental protection program that reduces emissions of hazardous materials into the environment, as
well as to the remediation of identified existing environmental concerns.
Human Capital Resources
We believe that, beyond being essential to our operations, our people have inestimable worth independent of our business. As outlined in our Human
Rights Policy (see, www.american-vanguard.com under ESG tab), we believe that it is fundamental to our corporate responsibility and, indeed, to our humanity,
that we recognize, respect and nurture the freedom and dignity of all persons. Accordingly, we have insinuated that belief throughout the fabric of our
operations in our approach toward our employees. Indeed, the first two core values underlying our commitment to sustainability (see, Update to Corporate
Sustainability Report, www.american-vanguard.com under ESG tab) are “Safety First” – which is a culture that begins with highly-regulated manufacturing
plants, continues into the design of science-backed products and extends into market-leading delivery systems – and “Making a Difference” – under which, by
rewarding achievement and giving our employees a voice, we attract diverse employees who want to make a difference in their careers, in the company and in
the communities that we serve.
The Company’s Chief Human Resources Officer will lead our Human Capital program, which consists of the following elements:
•
Board Oversight –through our Nominating and Corporate Governance Committee (“N&CG”), our board of directors oversees human capital-related
risks and opportunities. Annually, the N&CG Committee requires that management provides an update on succession planning for key executives,
emphasizing a forward-looking approach with a commitment to strategic leadership planning. We are developing Human Capital programs that drive a
culture of performance and engagement.
7
•
Strategy – the Company’s human capital strategy has two primary elements: employee engagement and providing them with competitive benefits
(including an outstanding health benefits plan). As we have covered in our Update to Corporate Sustainability Report, our Company is a destination for
highly qualified employees who are drawn to a workplace where they can make a difference. Our management philosophy prioritizes collaborative and
consistent execution to fulfill our commitments, fostering a performance-driven culture. This strategic approach has empowered the company to
optimize retention, even amidst the challenges of a competitive employment market.
•
Compensation – as highlighted in our strategy, compensation is a pivotal component of our human capital approach. We consistently motivate our
workforce through competitive compensation and comprehensive welfare benefits. Additionally, we proactively educate our employees on the totality of
their compensation, encompassing wages, stock-based compensation arrangements, health benefits, and paid time off.
•
Employee Engagement –our management style is to solicit good ideas from employees, involve them in implementation and give them recognition for
ideas that succeed.
The Company employed 755 employees as of December 31, 2024, and 845 employees as of December 31, 2023. From time to time, due to the
seasonality of its business, AVD uses temporary contract personnel to perform certain duties primarily related to packaging of its products. None of the
Company’s employees are subject to a collective bargaining agreement. The Company believes it maintains positive relations with its employees.
Domestic operations
AMVAC is a California corporation that was incorporated under the name of Durham Chemical in August 1945. The name of the corporation was
subsequently changed to AMVAC in January 1971. As the Company’s main operating subsidiary, AMVAC owns and/or operates the Company’s domestic
manufacturing facilities. AMVAC manufactures, formulates, packages and sells its products in the U.S. and is a wholly owned subsidiary of AVD.
GemChem is a California corporation that was incorporated in 1991 and was subsequently purchased by the Company in 1994. GemChem sells into the
pharmaceutical, cosmetic and nutritional markets. GemChem is a wholly owned subsidiary of AVD.
2110 Davie Corporation ("DAVIE") owns real estate for corporate use only. The site is the home to the Company’s research center and provides
accommodation for the Company’s production control team. DAVIE is a wholly owned subsidiary of AVD.
On October 2, 2017, AMVAC purchased substantially all the assets of OHP, a domestic distribution company specializing in products for the turf and
ornamental market. OHP markets and sells end use products for third parties, either under third-party brands or else as its own label products.
Envance is a Delaware Limited Liability Company that was formed in 2012 by AMVAC and joint venture partner TyraTech. Envance and TyraTech
became wholly owned subsidiaries of the Company on November 9, 2018. Envance has the rights to develop and commercialize pesticide products and
technologies based on TyraTech’s intellectual property. Products are made from natural oils and are marketed in global consumer, commercial, professional,
crop protection and seed treatment markets. Envance is taking products to market primarily by licensing its intellectual property to third parties.
International operations
AMVAC BV is a registered Dutch private limited liability company that was formed in July 2012 to manage foreign sales on behalf of the Company.
AMVAC BV is located in the Netherlands and is a wholly owned subsidiary of AMVAC Hong Kong. AMVAC Hong Kong is a wholly owned subsidiary of
AMVAC. During 2024, 2023, and 2022, the international business sold the Company's products in 45 countries.
AMVAC M is a wholly owned subsidiary of AMVAC BV and was originally formed in 1998 (as Quimica Amvac de Mexico S.A. de C.V and
subsequently changed to AMVAC Mexico Sociedad de Responsabilidad Limitada “AMVAC M”) to conduct the Company’s business in Mexico.
8
On October 27, 2017, AMVAC BV purchased 100% of the stock of AgriCenter with subsidiaries located in Costa Rica, Panama, Nicaragua, Honduras,
the Dominican Republic, Mexico, Guatemala, and El Salvador. AgriCenter markets, sells and distributes end-use chemicals, including the Company’s own
products, and biological products throughout Central America primarily for crop applications.
On January 10, 2019, AMVAC BV acquired 100% of the stock of Agrovant and Defensive, two distribution companies based in Brazil. Agrovant and
Defensive marketed and distributed crop protection products and micronutrients with focus on the fruit and vegetable market segments throughout Brazil. On
December 31, 2020, Agrovant and Defensive merged and the Company renamed the resulting entity AMVAC 3p.
On October 8, 2020, AVD Australia acquired 100% of the stock of AgNova, an Australian company that sources, develops, and distributes specialty
crop protection and production solutions for agricultural and horticultural producers, and for selected non-crop users.
On October 2, 2020, the Company’s principal operating subsidiary, AMVAC, completed the purchase of all outstanding shares of Agrinos and certain
intellectual property rights. Agrinos is a fully integrated biological input supplier with proprietary technology, manufacturing, and global distribution
capabilities and has operating entities in the U.S., Mexico, India, Brazil, China, Ukraine, and Spain.
On July 27, 2023, AgNova established a new subsidiary in New Zealand called AgNova Technologies NZ Limited (“AgNova NZ”). This new entity is a
wholly owned subsidiary of AgNova and was created to expand our business in the Australasia region.
On October 5, 2023, AgriCenter acquired Punto Verde, an Ecuadorian company that distributes crop protection products primarily in Ecuador.
The Company classifies as international sales all products bearing foreign labeling shipped to a foreign destination.
2024
2023
2022
International sales
$
236,579 $
234,855 $
244,282
Percentage of net sales
43.2%
40.5%
40.1%
Available Information
The Company makes available free of charge (through its website, www.american-vanguard.com), its Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed
with the Securities and Exchange Commission (“SEC”). All reports filed with the SEC are available free of charge on the SEC website, www.sec.gov. Also
available free of charge on the Company’s website are the Company’s Audit Committee, Compensation Committee, Finance Committee and Nominating and
Corporate Governance Committee Charters, the Company’s Corporate Governance Guidelines, the Company’s Code of Conduct and Ethics, and the Company’s
Employee Complaint Procedures for Accounting and Auditing Matters. Beneath the ESG tab at that site, you will also find links to the Company’s Corporate
Sustainability Reports, Climate Change Commitment and Human Rights Policy. The Company’s Internet website and the information contained therein or
incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K.
9
ITEM 1A. RISK FACTORS
Regulatory/ Supply Chain/Other Risks
Compliance with environmental and other regulations or changes in such regulations or regulatory enforcement priorities could increase our cost of
doing business or limit our ability to market all our products. All pesticide products sold in the United States must comply with FIFRA and most must be
registered with the U.S. EPA and similar state agencies. Our inability to obtain or maintain such registrations, or the cancellation of any such registration of our
products, could have an adverse effect on our business, the severity of which would depend on a variety of factors, including the product(s) involved, whether
another product could be substituted and whether our competitors were similarly affected. Various agencies within the U.S. (both federal and state) and foreign
governments continue to exercise increased scrutiny in permitting continued uses (or the expansion of such uses) of many chemistries, including several of the
Company’s products and, in some cases, have initiated or entertained challenges to these uses. The challenge of the regulatory climate is more pronounced in
certain U.S. states and geographical regions outside the U.S. where the Company faces resistance to the continued use of certain of its products. For example,
the European Union (“EU”) employs a hazard-based analysis when considering whether product registrations can be maintained; under this approach, EU
regulatory authorities typically do not weigh benefit against risk in their assessments and routinely cancel products for which a safer alternative is available,
notwithstanding the benefit of the cancelled product.
Additionally, changes in the regulatory environment could adversely impact our ability to continue producing and/or selling certain products in our
domestic and foreign markets or could increase the cost of doing so. We are sensitive to regulatory risk given the need to obtain and maintain pesticide
registrations in every country in which we sell our products. Moreover, we are required to comply with protocols or applicable regulatory requirements of
biological products. Protocols and regulations may change, or regulatory agencies may determine that a biological product is not approvable. There is a risk that
future regulatory requirements may lead to delays in development of biologicals or limit growth from biologicals. Many countries require re-registration of
pesticides to meet new and more challenging requirements; while we defend our products vigorously, these re-registration processes may result in significant
additional data costs, reduced number of permitted product uses, or potential product cancellation. Compliance with changing laws and regulations may involve
significant costs or capital expenditures or require changes in business practice that could result in reduced profitability. There is no guarantee that this
regulatory climate will change in the near term or that the Company will be able to maintain or expand the use of many of its products in the face of such
regulatory challenges.
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.
10
Several of the Company’s organophosphates are subject to a petition to revoke tolerances under the FFDCA which, if granted, could result in the
limitation and/or cancellation of one or more registrations for such products. Presently, several of the Company’s organophosphate products are under
registration review before the USEPA and, at the same time, subject to a petition to revoke tolerances under the Federal Food, Drug, and Cosmetic Act
("FFDCA"). The Company continues to provide data and other analysis to USEPA in support of its registrations and in response to that agency’s requests for
clarification. Pursuant to a petition filed by NGOs NRDC and PANNA in 2007, USEPA revoked tolerances for chlorpyrifos (an OP not sold by the Company)
finding that food residues from that product could not be deemed with reasonable certainty to cause no harm. Consequently, the agency cancelled the
registrations for chlorpyrifos. The cancellation was appealed and subsequently overturned by the Eighth Circuit Court of Appeal in 2023, which noted that the
agency had exceeded its authority in canceling even uses that had been shown to be within applicable safety tolerances. That said, there is no guarantee that
USEPA will not make a similar finding with respect to one or more of the Company’s OPs, and that some or all uses of the Company’s OP products could be
limited or cancelled. Accordingly, the Company intends to take all action necessary to defend its registrations. Such limitations and/or cancellations could have
a material adverse effect on the Company’s financial performance in future reporting periods.
USEPA has issued a proposed final decision (“PFD”) to cancel PCNB. In mid-2022, the USEPA issued a “proposed final decision” to cancel the
fungicide PCNB, which is registered by the Company for use on golf courses and potatoes, among other uses. Under this mandate, the Company must meet a
truncated schedule for defending this product, all of which is posted on a public docket. The Company has submitted proposed mitigation measures, and
discussion with the program office continues. There is no guarantee that the Company will succeed in persuading USEPA not to cancel the PCNB registration.
Product liability judgments on glyphosate and cases involving other pesticides by domestic courts present a litigation risk to companies in this
industry. Multiple judgments have been rendered by domestic courts in product liability cases against Bayer/Monsanto in connection with injuries allegedly
arising from exposure to the herbicide product, glyphosate. The basis was purported carcinogenicity based largely upon the findings of a certain international
organization, despite significant scientific evidence to the contrary. While the Company does not sell glyphosate, the theory of these results could put one or
more of the Company’s products at risk. There is no guarantee that one or more product liability actions would not be brought against the Company on a similar
basis, and it is possible that adverse rulings in any such actions could have a material adverse effect on the Company’s financial performance in future reporting
periods.
The trend of passing pesticide “ban-bills” in various states could put one or more of the Company’s products at risk. In certain states, including
Maryland and New York, state and/or local legislatures have passed legislation banning the use of specific pesticides, such as chlorpyrifos, or pesticide in
general, in spite of valid registrations at USEPA and/or the equivalent state agency. While the Company does not sell chlorpyrifos products, there is no
guarantee that one or more of its registered products will not be targeted in state or local legislation of this nature. Further, such legislation could have a material
adverse effect on the Company’s financial performance in future reporting periods.
Use of the Company’s products is subject to continuing challenges from activist groups. Use of agrochemical products, including the Company’s
products, is regularly challenged by activist groups in many jurisdictions under a multitude of federal, state and foreign statutes, including FIFRA, the Food
Quality Protection Act, Endangered Species Act (“ESA”) and the Clean Water Act, to name a few. These challenges typically take the form of lawsuits or
administrative proceedings against the USEPA and/or other federal, state or foreign agencies, the filing of amicus briefs in pending actions, the introduction of
legislation that is inimical to the Company’s interests, and/or adverse comments made in response to public comment invited by regulatory agencies in the
course of registration, re-registration or label expansion. The most prominent of these actions include a line of cases under which environmental groups have
sought to suspend, cancel or otherwise restrict the use of pesticides that have been approved by USEPA on the ground that that agency failed to confer with the
National Marine Fishery Service and/or the Fish and Wildlife Service under the ESA with respect to biological opinions relating to the use of such products.
While industry has been active in defending registrations and proposing administrative and legislative approaches to address serious resource issues at the
affected agencies, these cases continue to be brought. It is possible that one or more of these challenges could succeed, resulting in a material adverse effect on
the Company's financial performance in future reporting periods.
11
The Company is dependent upon sole source or a limited number of suppliers for certain of its raw materials and active ingredients. There are a
limited number of suppliers of certain important raw materials used by the Company in a number of its products. Certain of these raw materials are available
solely from single or very few sources either domestically or overseas. There is no guarantee that any of our suppliers will be willing or able to supply products
to the Company reliably, continuously and at the levels anticipated by the Company or required by the market. If these sources prove to be unreliable and the
Company is not able to supplant or otherwise second source these products, it is possible that the Company will not achieve its projected sales which, in turn,
could have a material adverse effect on the Company’s financial performance in future reporting periods.
Our business, financial condition and results of operations could be materially affected by disruptions in the global supply chain, including risks
associated with sourcing and manufacturing outside of the U.S. and risks from tariffs and/or international trade wars. Despite improvement in container
availability and freight costs, the global supply chain continues to present risk and create delays, unavailability of raw materials and adverse conditions for our
industry. Industry consolidation, coupled with longer-term production commitments, has materially affected the Company’s supply of raw materials and
intermediates in the past. Military conflict or related geopolitical tensions and disputes including increased trade barriers or restrictions on global trade could
result in further supply disruptions and changes to foreign exchange rates and financial markets, any of which could adversely affect our business and supply
chains. There is no guarantee that supply chain conditions will materially improve or that the Company will avoid material disruption. Such disruption could
have a material adverse effect on the Company’s financial performance in future reporting periods.
In addition, we import raw materials and finished goods from countries outside of the United States, including but not limited to China. Our import
operations are subject to complex customs laws, regulations, tax requirements, forced labor laws and trade regulations, such as tariffs set by governments, either
through mutual agreements or bilateral actions. Tariffs on goods imported into the U.S., particularly goods from China, Mexico and/or Canada, have increased
the cost of the goods we purchase. Additional tariffs and protectionist duties could be imposed by the U.S. with relatively short notice to us. These
governmental actions could have, and any similar future actions may have, an adverse effect on our business, financial condition and results of operations. The
overall effect of these risks is that our costs may increase or we may experience supply disruptions, which in turn may result in lower profitability if we are
unable to offset such increases through higher prices, and/or that we may suffer a decline in sales if our customers do not accept price increases.
The distribution and sale of the Company’s products are subject to governmental approvals and thereafter ongoing governmental regulation. The
Company’s products are subject to laws administered by federal, state and foreign governments, including regulations requiring registration, approval and
labeling of its products. The labeling requirements restrict the use of, and type of, application for our products. More stringent restrictions could make our
products less available, which would adversely affect our revenues and profitability and cash flows. Substantially all the Company’s products are subject to the
USEPA (and/or similar agencies in the various territories or jurisdictions in which we do business) registration and re-registration requirements and are
registered in accordance with FIFRA or similar laws. Such registration requirements are based, among other things, on data demonstrating that the product will
not cause unreasonable adverse effects on human health or the environment when used according to approved label directions. All states, where any of the
Company’s products are used, also require registration before products can be marketed or used in that state. Governmental regulatory authorities have required,
and may require in the future, that certain scientific data requirements be fulfilled on the Company’s products. The Company, on its behalf and also in joint
efforts with other registrants, has furnished, and is currently furnishing certain required data relative to its products. There can be no assurance, however, that
the USEPA or similar agencies will not request that certain tests or studies be repeated, or that more stringent legislation or requirements will not be imposed in
the future. The Company can provide no assurance that any testing approvals or registrations will be granted on a timely basis, if at all, or that its resources will
be adequate to meet the costs of regulatory compliance.
The manufacturing of the Company’s products is subject to governmental regulations. The Company currently owns and operates six manufacturing
facilities which are located in Commerce, California; Axis, Alabama; Hannibal, Missouri; Marsing, Idaho; Clackamas, Oregon; and Etchojoa, Mexico (the
“Facilities”). The Facilities operate under the laws and regulations imposed by relevant country, state and local authorities. The manufacturing of key
ingredients for certain of the Company’s products occurs at the Facilities. An inability to renew or maintain a license or permit, or a significant increase in the
fees for such licenses or permits, could impede the Company’s manufacture of one or more of its products and/or increase the cost of production; this, in turn,
would materially and adversely affect the Company’s ability to provide customers with its products in a timely and affordable manner.
12
A change in tax laws, treaties or regulations, or their interpretation or application, could have a negative impact on our business and results of
operations. We operate in many different countries and in many states within the United States, and we are subject to changes in applicable tax laws, treaties or
regulations in the jurisdictions in which we operate. A material change in these tax laws, treaties or regulations, or their interpretation or application, could have
a material adverse effect on the Company’s financial performance in future reporting periods.
Our business is subject to fluctuations and volatility in the global economy. The Company’s global business operations give rise to market risk
exposure related to changes in inflation, foreign currency exchange rates, including the impact of foreign currency exchange rates resulting from highly
inflationary economies interest rates, commodity prices and other market factors such as equity prices. In addition, any volatility and disruption of financial
markets could limit the ability of our customers and suppliers to obtain adequate financing to maintain operations, which could result in a decrease in sales
volume and have a negative impact on the Company’s results of operations. If the Company fails to effectively manage such risks, it could have a negative
impact on its results of operations.
Climate Change may adversely affect the Company’s business. Over the course of the past several years, global climate conditions have become
increasingly inconsistent, volatile and unpredictable. Many of the regions in which the Company does business have experienced excessive moisture, cold,
drought and/or heat of an unprecedented nature at various times of the year. In some cases, these conditions have either reduced or obviated the need for the
Company’s products, whether pre-plant, at-plant, post-emergent or at harvest. Further, climate change could disrupt our operations by causing loss of human
life, impacting the availability and cost of materials needed for manufacturing, causing physical damage and partial or complete closure of our manufacturing
sites or distribution centers, temporary or long-term disruption in the manufacturing and supply of products and services and disruption in our ability to deliver
products and services to customers. In addition, these events and disruptions could increase insurance and other operating costs, including impacting our
decisions regarding construction of new facilities to select areas less prone to climate change risks and natural disasters, which could result in indirect financial
risks passed through the supply chain or other price modifications to our products and services.
The Company’s business may be adversely affected by weather effects and commodity prices. Demand for many of the Company’s products tends to
vary with weather conditions and weather-related pressure from pests. Adverse weather conditions, then, may reduce the Company’s revenues and profitability.
In light of the possibility of adverse seasonal effects, there can be no assurance that the Company will maintain sales performance at historical levels in any
particular region. Similarly, demand for the Company’s products used in row crops tends to vary with the commodity prices of those crops, for instance, corn,
soybeans and cotton. These prices may be driven in part by weather, pest pressure, the domestic farm economy and international markets (e.g., yield and pricing
from similar crops grown in Brazil). There is no guarantee that the farm economy and row crop commodity prices will maintain sufficient strength and stability
to support the Company’s products at or above historical levels.
The Company may be subject to environmental liabilities. The Company is fully committed toward minimizing the risk of discharge of materials into
the environment and to complying with governmental regulations relating to protection of the environment, its neighbors and its workforce. Nevertheless,
federal and state authorities may seek fines and penalties for any violation of the various laws and governmental regulations. In addition, while the Company
continually adapts its manufacturing processes to the latest environmental control standards of regulatory authorities, it cannot entirely eliminate the risk of
accidental contamination or injury from hazardous or regulated materials. In short, the Company may be held liable for significant damages or fines relating to
any environmental contamination, injury, or compliance violation which could have a material adverse effect on the Company’s financial performance in future
reporting periods.
The highly competitive nature of our markets could adversely affect our ability to maintain or grow revenues. Increased generic presence in
agricultural chemical markets has been driven by the number of significant product patents and product data protections that have expired in the last decade, and
this trend is expected to continue. Also, there are changing competitive dynamics in the agrochemical industry as some of our competitors have consolidated,
resulting in them having greater scale and diversity, as well as market reach. These competitive differences may not be overcome and may erode our business.
Agriculture in many countries is changing and new technologies (e.g., precision pest prediction or application, data management) continue to emerge. At this
time, the scope and potential impact of these technologies are largely unknown but could have the potential to disrupt our business.
13
Transformation/Credit and Other Risks
We have identified material weaknesses in our internal control over financial reporting, which has led to a conclusion that our internal control over
financial reporting and disclosure controls and procedures were not effective as of December 31, 2024. If we are unable to remediate the material
weaknesses, discover additional weaknesses, or are unable to achieve and maintain effective disclosure controls and procedures and internal control over
financial reporting, our results of operations, stock price and investor confidence in our Company could be adversely affected.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on the effectiveness of their internal control over financial reporting
as of the end of each fiscal year. In addition to the Company’s evaluation, our independent registered public accounting firm provides an opinion regarding the
effectiveness of our internal control over financial reporting. As disclosed in more detail in Part II, Item 9A, “Controls and Procedures” below, we identified
material weaknesses as of December 31, 2024, in our internal control over financial reporting. In particular, we have identified issues in principles associated
with the control environment, control activities and risk assessment components of the Internal Control-Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). Specifically, a) within the Company’s Australian component (AgNova),
the Company identified that the individuals performing control activities within the component were not sufficiently trained or adequately supervised, and
lacked appropriate reporting lines and accountability; b) due to insufficient resources to facilitate a timely financial close process, the Company identified that
there was a material weakness in the operation of internal controls over financial reporting specific to the controls being performed timely and further, within
AgNova, the Company did not have sufficient segregation of duties in place; c) the Company identified that it did not design and implement an effective risk
assessment and specifically, did not identify and assess changes to the business that could significantly impact the system of internal control; and d) the
Company identified a deficiency that constituted a material weakness related to the review of customer agreements related to the accrued program costs and
customer prepayments balances; specifically, the Company did not perform a sufficiently precise review in order to appropriately consider all agreed-upon
terms with customers in its determination of the accrued program costs and customer prepayments balances. Management concluded that these issues constitute
material weaknesses relating to the Company’s internal control over financial reporting (control environment, control activities and risk assessment).
Internal controls related to our financial reporting systems are important to accurately reflect our financial position and results of operations in our
financial reports. If, as a result of the ineffectiveness of our internal controls, we cannot provide reliable financial statements, our business decision processes
may be adversely affected, our business and results of operations could be harmed, investors could lose confidence in our reported financial information, and
our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
Management has taken action to begin remediating the identified material weaknesses; however, we cannot be certain when remediation will be fully
completed, or if our remediation efforts will be successful. Additional information regarding the initial remediation efforts is disclosed in more detail in Part II,
Item 9A, “Controls and Procedures” below. In addition, we could in the future identify additional internal control deficiencies that could rise to the level of a
significant deficiency or material weakness or uncover material errors in financial reporting. During the course of our evaluation, we may identify areas
requiring improvement and may be required to design additional enhanced processes and controls to address issues identified through this review. In addition,
there can be no assurance that such remediation efforts will be successful, that our internal control over financial reporting will be effective as a result of these
efforts or that any such future significant deficiencies identified may not be material weaknesses that would be required to be reported in future periods. In
addition, we cannot provide assurance that our independent registered public accounting firm will be able to attest that such internal controls are effective when
they are required to do so.
If we fail to fully remediate the control deficiencies that contributed to the identified material weaknesses and maintain effective disclosure controls and
procedures or internal control over financial reporting, our ability to accurately record, process, and report financial information and, consequently, our ability
to prepare financial statements within required time periods, could be adversely affected. Failure to maintain effective internal controls could result in a failure
to comply with SEC rules and regulations, stock exchange listing requirements, and the covenants under our debt agreements, subject us to litigation,
investigations or enforcement actions, negatively affect investor confidence in our financial statements, and adversely impact our stock price and ability to
access capital markets. The defense of any such claims, investigations or enforcement actions could cause the diversion of
14
the Company’s attention and resources and could cause us to incur significant legal and other expenses even if the matters are resolved in our favor.
The Company’s transformation initiatives may not generate the full benefit of targeted efficiencies. During the final quarter of 2023 and full year
2024, the Company has invested in activities intended to transform both its digital platform (including business processes) and its business structures (ranging
from organizational change to procurement) in the interest of achieving greater efficiencies, improving operating leverage and achieving greater market
penetration. While the Company continues to pursue these initiatives and is taking all available measures to ensure success, there is no guarantee that these
measures will yield the targeted results that the Company, working with its business consultants, has identified, or that the return on these initiatives will exceed
the investment.
Reduced financial performance may limit the Company’s ability to borrow under its credit facility. The Company has historically grown net sales and
net income through the expansion of current product lines, the acquisition of product lines from third parties and the acquisition of both domestic and
international distributors with strong niche market positions. In order to finance such acquisitions, the Company has drawn upon its senior credit facility.
However, the Company’s borrowing capacity under the senior credit facility depends, in part, upon its satisfaction of a negative covenant that sets a maximum
ratio of borrowed debt to earnings (as measured over the trailing 12-month period). There is no guarantee that the Company will continue to generate earnings
necessary to ensure that it has sufficient borrowing capacity to support future acquisitions or that, when necessary, the lender group will amend the senior credit
facility to provide for such borrowing capacity. Furthermore, there is no guarantee that the Company will be able to obtain capital on equal or better terms than
it enjoys under the current facility. Should that be the case, the higher the cost of capital in a new credit structure, the greater will be the potential adverse effect
upon the Company’s financial performance.
The Company depends in part upon customer prepayments to meet its working capital needs. As is the case with other companies in this industry, the
Company receives cash from certain major customers at year-end in exchange for granting discounts on the Company’s products during the first half of the
following year. The Company typically uses this cash to pay down secured debt and for other working capital needs. This flow of cash obviates the need for
additional borrowing, which, in turn, preserves borrowing capacity used in part for paying customer programs at the end of the calendar year and, consequently,
reduces interest expense. There is no guarantee that the Company’s customers will continue to support the prepayment program at current levels. Further a
material change in this program, or customer response to the current program, could have an adverse effect on the Company’s liquidity and its ability to meet
working capital demands.
The carrying value of certain assets on the Company’s consolidated balance sheets may be subject to impairment depending upon market trends and
other factors. The Company regularly reviews the carrying value of certain assets, including long-lived assets, inventory, fixed assets and intangibles.
Depending upon the class of assets in question, the Company takes into account various factors including, among others, sales, trends, market conditions, cash
flows, profit margins and the like. Based upon this analysis, where circumstances warrant, the Company may leave such carrying values unchanged or adjust
them as appropriate. There is no guarantee that these carrying values can be maintained indefinitely, and it is possible that one or more such assets could be
subject to impairment which, in turn, could have a material adverse effect on the Company’s financial performance in future reporting periods.
The Company’s computing systems are subject to cyber security risks. In the course of its operations the Company relies on its computing systems,
including access to the internet, the use of third-party applications and the storage and transmission of data through such systems. While the Company has
implemented security measures to protect these systems, there is no guarantee that a third-party will not penetrate these defenses through hacking, phishing or
otherwise and either compromise, corrupt or shut down these systems. Further, in the event of such incursion it is possible that confidential business information
and private personal data could be taken and operations, including procurement, customer service, finance, and manufacturing, could be compromised. Such an
event could adversely affect both the Company’s ability to operate, its reputation with key stakeholders and its overall financial performance.
15
To the extent that capacity utilization is not fully realized at its manufacturing facilities, the Company may experience lower profitability. While the
Company continuously endeavors to maximize utilization of its manufacturing facilities, our success in these endeavors is dependent upon many factors,
including fluctuating market conditions, product life cycles, weather conditions in our key markets, availability of raw materials, manufacturing equipment
performance, retention of the workforce and regulatory constraints, among other things. There can be no assurance that the Company will be able to maximize
the utilization of its manufacturing facilities. Underutilization of such manufacturing resources could have a material adverse effect on the Company’s financial
performance in future reporting periods.
Domestic and regional inflation trends, increased interest rates and other factors could lead to the erosion of economies and adversely impact the
Company. Both the US and many other countries are experiencing inflation, which, in turn, is leading to increased costs in multiple industry segments,
including agriculture and related industries. The persistence of inflation has led central bankers to increase interest rates within their regions. There is no
guarantee that these measures will arrest the inflationary trend. Further, these factors, taken together with reduced productivity and constraints on the labor
supply, could lead to recessionary periods in the regions in which the Company does business. While the Company takes measures within its control to manage
the effects of inflation, higher interest rates and other factors, ultimately they are outside of the Company’s control. Further, the persistence and/or severity of
one or more of them could have a material adverse effect on the Company’s financial performance in future reporting periods.
Acquisition/Investment Risks
Newly acquired businesses or product lines may not generate forecasted results. While the Company conducts due diligence using a combination of
internal and third-party resources and applies what it believes to be appropriate criteria for each transaction before making acquisitions, there is no guarantee
that a business or product line acquired by the Company will generate results that meet or exceed results that were forecasted by the Company when evaluating
the acquisition. There are many factors that could affect the performance of a newly acquired business or product line. While the Company uses assumptions
that are based upon due diligence and other market information in valuing a business or product line prior to concluding an acquisition, actual results generated
post-closing could vary widely from the Company’s forecast and, as such, could have a material adverse effect on the Company’s financial performance in
future reporting periods.
The Company’s investment in foreign businesses may pose additional risks. With the expansion of its footprint internationally, the Company now
carries on business at a material level in some jurisdictions that have a history of political, economic or currency-related instability and customers with a
potentially higher risk profile regarding accounts receivable collectability, as compared to the Company’s legacy business. While such instability may not be
present at the current time, there is no guarantee that conditions will not change in one or more jurisdictions quickly and without notice, nor is there any
guarantee that the Company would be able to recoup its investment in such territories in light of such changes and potential losses due to political factors,
economic factors, devaluation of local currencies, or the collectability risk from customers. Adverse changes of this nature could have a material adverse effect
on the Company’s financial performance in future reporting periods.
The Company’s investment in technology may not generate forecasted returns. The Company has had a history of investing in technological
innovation, including with respect to natural oil technology and biorationals, as part of its growth strategy. These investments are based upon the premise that
new technology will allow for safer handling or lower overall toxicity profile of the Company’s product portfolio, appeal to regulatory agencies and the markets
we serve, gain commercial acceptance, and command a return that is sufficiently in excess of the investment. However, there is no guarantee that a new
technology will be successfully commercialized, generate a material return or maintain market appeal. Further, many types of development costs must be
expensed in the period in which they are incurred. This, in turn, tends to put downward pressure on period profitability. There can be no assurance that these
expenses will be recovered through successful long-term commercialization of a new technology.
The Company’s growth has been fueled in part by acquisitions. Over the past few decades, the Company’s growth has been driven primarily by
acquisitions and licensing of both established and developmental products from third parties. There is no guarantee that acquisition targets or licensing
opportunities meeting the Company’s investment criteria will remain available or will be affordable. If such opportunities do not present themselves, then the
Company may be unable to duplicate historical growth rates in future years.
16
The Company faces competition from generic competitors that source products from countries having lower cost structures. The Company continues
to face competition from competitors around the globe that may enter the market through either offers to pay data compensation, or similar means in foreign
jurisdictions, and then subsequently source material from countries having lower cost structures (typically India and China). These competitors typically tend to
operate at thinner gross margins and, with low costs of goods, tend to drive pricing and profitability of subject product lines downward. There is no guarantee
that the Company will maintain market share and pricing when facing such generic competitors, or that such competitors will not offer generic versions of the
Company’s products in the future.
Industry consolidation may threaten the Company’s position in various markets. The global agricultural chemical industry continues to undergo
significant consolidation. Many of the Company’s competitors have grown or are expected to grow through mergers and acquisitions. As a result, these
competitors will tend to be in position to realize greater economies of scale, offer more diverse portfolios and thereby exert greater influence throughout the
distribution channels. Consequently, the Company may find it more difficult to compete in various markets. While such merger activity may generate
acquisition opportunities for the Company, there is no guarantee that the Company will benefit from such opportunities. Further, there is a risk that the
Company’s future performance may be hindered by the growth of its competitors through consolidation.
The Company’s customer base is relatively concentrated, with a small number of customers accounting for a significant portion of our sales. In
2024, our top three customers represented 38% of our sales, compared to 37% in 2023 and 39% in 2022. This concentration exposes us to potential risks, as any
financial instability or changes in the purchasing behavior of these key customers could adversely impact our revenue. The reliance on such a limited number of
customers makes us vulnerable to fluctuations in their financial health and could present challenges in maintaining consistent sales performance.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 1C. CYBERSECURITY
Risk Management & Strategy. AVD has adopted a comprehensive set of controls and processes to encourage a high level of awareness of, and
responsiveness to, cybersecurity threats. The foundational document outlining the program is embodied in Registrant’s Enterprise Information Security Policy
(the “REIS Policy”). The REIS Policy establishes a framework for the continuous monitoring of its computing resources, the maintenance and reporting of audit
logs and the assessment of events that could form the basis of a threat. In addition, the REIS Policy sets forth requirements for employee awareness training,
user authentication, software usage restrictions and boundary protection, among other things. The policy also establishes an incident response plan, including
back-up hosting, alternate processing and system recovery, along with assignment of responsibility and resources for those activities. Within the exhibit of the
REIS Policy, management either working alone or, in case of greater complexity, with consultants, will assess an incident or series of incidents for materiality,
taking into account the nature of the incident, duration, the nature of data compromised, and the nature of damages (including with respect to reputational, third
party, share price, and business interruption) and all within the context of the Company's financial performance during the affected reporting period(s).
Furthermore, AVD has taken measures to prevent cybersecurity breaches, to minimize threats and, to the extent possible, to anticipate trends and identify
vulnerabilities before arising to the level of an incident. In short, AVD is pro-active in its approach and has formulated a specific plan to investigate, respond
and minimize loss of functionality or other damage from an incident. There are no cybersecurity threats, including as a result of prior incidents, that have
materially affected the Company, including our business strategy, results of operations or financial condition as of the date hereof to our knowledge.
17
Governance. The REIS Policy has been drafted in collaboration with one of the largest IT solutions providers in the field and was modeled after NIST
standards relating to governance, documentation and processes. The Company is implementing the REIS Policy through its Cyber and Privacy Risk Steering
Committee (the “CPRSC”), which is chaired by the Chief Administrative Officer (who is also AVD’s Risk Manager) and includes cross functional business
process owners from operations, sales, marketing, finance and Human Resources, as well as our Director of Information Technology, who alone has over 30
years’ experience in IT-related security and whose staff collectively has over 50 years’ experience in this area. In addition, the committee is advised by a virtual
Corporate Information Security Officer who works with the third-party solutions provider.
AVD's Board of Directors maintains oversight of cybersecurity planning, response and reporting as follows. The Lead Director, Scott Baskin, who also
serves as Chair of the Risk Committee and member of the Audit Committee, is Cybersecurity Liaison to AVD’s management team. The Chair of the CPRSC
reports on cybersecurity preparedness, issues and incidents to the Cybersecurity Liaison regularly. Through this reporting structure, the cybersecurity team has
direct interaction with the highest level of the Board and with both the Risk and Audit Committees. Cyber risk has been a subject of regular review and
discussion at the Risk Committee for several years. With the advent of the CPRSC, the delineation of governance and responsibility has become that much more
focused.
ITEM 2 PROPERTIES
AMVAC owns in fee the Facility constituting approximately 152,000 square feet of improved land in Commerce, California (“Commerce”) on which its
West Coast manufacturing, some of its warehouse facilities and some of its manufacturing administrative offices are located.
DAVIE owns in fee approximately 72,000 square feet of warehouse, office and laboratory space on approximately 118,000 square feet of land in
Commerce, California, which is leased to AMVAC. In 2013, the Company made a significant investment in the Glenn A. Wintemute Research Center, which
houses the Company’s primary research laboratory supporting synthesis, formulation and other new product endeavors.
In 2001, AMVAC completed the acquisition of a manufacturing facility (the “Axis Facility”) from E.I. DuPont de Nemours and Company (“DuPont”).
The Axis Facility was one of three such units located on DuPont’s 510-acre complex in Axis, Alabama. The acquisition consisted of a long-term ground lease of
25 acres and the purchase of all improvements thereon. The facility is a multi-purpose plant designed for synthesis of active ingredients and formulation and
packaging of finished products. In 2018, FMC Corporation acquired from DuPont a business unit, which held, among other things, the Axis Facility. Prior to
expiration of the lease, AMVAC and FMC negotiated the terms of a new lease, which has a term of 15 years and the option to renew for two, 5-year periods.
On December 28, 2007, AMVAC purchased certain manufacturing assets relating to the production of Thimet and Counter and located at BASF’s multi-
plant facility situated in Hannibal, Missouri (the “Hannibal Site”). Subject to the terms and conditions of the Agreement, AMVAC purchased certain buildings,
manufacturing equipment, office equipment, fixtures, supplies, records, raw materials, intermediates and packaging constituting the “T/C Unit” of the Hannibal
Site. The parties entered into a ground lease and a manufacturing and shared services agreement, under which BASF continues to supply various shared services
to AMVAC for the Hannibal Site.
On March 7, 2008, AMVAC acquired from Bayer CropScience Limited Partnership, (“BCS LP”), a U.S. business of Bayer CropScience GmbH, a
facility (the “Marsing Facility”) located in Marsing, Idaho, which consists of approximately 17 acres of improved real property. The Marsing Facility is engaged
in the blending of liquid and powder raw materials and the packaging of some of the Company’s finished goods inventory in liquid, powder and pelletized
formulations which are sold both in the U.S. and internationally. In addition, during 2019, the Company purchased approximately three acres of unimproved
real estate immediately adjacent to the Marsing Facility for potential storage and operational use in the future.
On October 2, 2020, AMVAC completed the purchase of all outstanding shares of Agrinos which is a fully integrated biological input supplier with
proprietary technology, internal manufacturing, and global distribution capabilities. Its High Yield Technology® product platform works in conjunction with
other nutritional crop inputs to increase crop yield, improve soil health and reduce the environmental footprint of traditional agricultural practices. Agrinos has
two primary state of the art biological production facilities, located in Clackamas, Oregon, and a second facility in Sonora, Mexico. The Clackamas and Sonora
facilities are used as both manufacturing sites and operational centers for global supply chain and logistics.
18
AVD regularly adds chemical processing equipment to enhance or expand its production capabilities. The Company believes its facilities are in good
operating condition, are suitable and adequate for current needs and have flexibility to change products. Facilities and equipment are insured against losses from
fire as well as other usual business risks. The Company knows of no material defects in title to, or encumbrances on, any of its properties except that
substantially all of the Company’s assets are pledged as collateral under the Company’s credit facility agreements with its lender group. For further information,
refer to Note 3 of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
AVD owns approximately 42 acres of unimproved land in Texas.
AVD leases approximately 19,953 square feet of office space located at 4695 MacArthur Court in Newport Beach, California. In 2020, the lease was
amended and was extended to June 30, 2026. The premises have served as the Company’s corporate headquarters since 1995.
The facilities occupied by GemChem, OHP, Envance and TyraTech (Envance and TyraTech are co-located), AMVAC BV, AMVAC M, AMVAC CR
Srl, AgNova, Agrinos, AMVAC 3p and AgriCenter, consist of administration, development centers (in the case of Envance and TyraTech) and/or sales offices
which are leased. In addition, AMVAC 3p leases warehouse space in Jaboticabal, Brazil.
ITEM 3 LEGAL PROCEEDINGS
Please refer to Note 5 – Litigation and Environmental of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on
Form 10-K.
ITEM 4 MINE SAFETY DISCLOSURES
Not Applicable.
19
PART II
ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information
Effective March 7, 2006, the Company listed its $0.10 par value common stock (“Common Stock”) on the New York Stock Exchange under the ticker
symbol AVD. From January 1998 through March 6, 2006, the Common Stock was listed on the American Stock Exchange under the ticker symbol AVD. The
Company’s Common Stock traded on The NASDAQ Stock Market under the symbol AMGD from March 1987 through January 1998.
Holders
As of March 5, 2025, the number of stockholders of the Company’s Common Stock was approximately 11,025, which includes beneficial owners with
shares held in brokerage accounts under street name and nominees.
Dividends
The Company has issued a cash dividend in each of the last twenty-seven years dating back to 1996. Cash dividends declared during the past three years
are summarized in the table below.
Declaration Date
Record Date
Distribution Date
Dividend
Per Share
Total
Paid
June 10, 2024
June 26, 2024
July 10, 2024
0.030
840
March 11, 2024
March 27, 2024
April 10, 2024
0.030
835
Total 2024
$
0.060
$
1,675
December 15, 2023
December 29, 2023
January 12, 2024
$
0.030
$
834
September 12, 2023
September 22, 2023
October 6, 2023
0.030
834
June 12, 2023
June 28, 2023
July 14, 2023
0.030
848
March 13, 2023
March 24, 2023
April 14, 2023
0.030
851
Total 2023
$
0.120
$
3,367
December 12, 2022
December 28, 2022
January 11, 2023
$
0.030
$
851
September 12, 2022
September 23, 2022
October 7, 2022
0.025
715
June 6, 2022
June 24, 2022
July 8, 2022
0.025
742
March 14, 2022
March 25, 2022
April 15, 2022
0.025
736
Total 2022
$
0.105
$
3,044
Pursuant to the Amended Loan and Security Agreement, the Company is currently prevented from paying cash dividends to shareholders, effective
November 7, 2023.
Share Repurchase Programs
The Company periodically repurchases shares of its common stock under board-authorized repurchase programs through a combination of open market
transactions and accelerated share repurchase (“ASR”) arrangements. The Company did not repurchase any of its common stock during the twelve months
ended December 31, 2024.
Pursuant to the Amended Loan and Security Agreement, the Company is currently prevented from making stock repurchases, effective November 7,
2023.
20
Securities Authorized for Issuance under Equity Compensation Plans
Plan Category
Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
Weighted average
exercise price of
outstanding options,
warrants, rights
Number of securities
remaining available for
future issuance under
equity compensation plans
Equity compensation plans approved by
security holders
424,511 $
10.28
1,141,745
Total
424,511 $
10.28
1,141,745
Stock Performance Graph
The following graph presents a comparison of the cumulative, five-year total return for the Company, the Russell 2000 Stock Index, and a peer group
(S&P 400 Specialty Chemical Industry). The graph assumes that the beginning values of the investments in the Company, the Russell 2000 Stock Index, and the
S&P 400 Specialty Chemical Index (a peer group of companies) each was $100 on December 31, 2019. All calculations assume reinvestment of dividends.
Returns over the indicated period should not be considered indicative of future returns.
ITEM 6 RESERVED
Not applicable
21
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. Generally, “may,” “could,” “will,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue” and similar words identify
forward-looking statements. Forward-looking statements appearing in this Report are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause 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
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; tariffs on imported goods; the potential for
attaining the full benefits of our transformation initiatives; product development and commercialization difficulties; capacity and supply constraints or
difficulties; availability of capital resources; the impact of, and our ability to remediate, the identified material weaknesses in our internal controls over financial
reporting; and 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. Security and Exchange Commission (“SEC”). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in
evaluating the forward-looking statements contained in this Report.
The discussion and analysis of our financial condition and results of operations for 2024, as compared to 2023, appears below.
MANAGEMENT OVERVIEW
During 2024, AVD took decisive and necessary measures to transform its entire enterprise into a platform for stronger growth and profitability. First, the
Company engaged third party consultants to initiate a business transformation on multiple fronts (e.g., driving down supply chain cost, optimizing
manufacturing, establishing strategic go-to-market approach and structural reorganization). These transformation efforts are expected to yield substantial
benefits by 2026. Second, working with ERP provider QAD, the Company initiated a global-wide digital transformation to put all our businesses on one ERP
platform with standardized processes. Third, the Company recruited and hired a new CEO to help expedite the transformation, following a charge to "simplify,
execute and deliver." Fourth, in the process of examining its investments, inventory trends and assets, the Company concluded that certain assets - primarily, the
Company’s investment in SIMPAS, and two herbicide products - were impaired. Taken together with the goodwill impairment, various business transformation
related expenses, the expenses associated with the decision to voluntarily recall Dacthal products, and certain inventory write downs, the Company incurred
nonrecurring charges of $117,355 during 2024. That said, the vast majority of business transformation expenses were incurred in 2024, and in subsequent years,
the Company will be advancing the implementation plan largely through internal resources. Further, the Company proceeds into 2025 with an improved balance
sheet and strong, focused leadership for realizing the benefits from our transformation efforts.
Turning to financial performance, the Company’s overall performance in 2024 declined as compared to 2023 due in part to the uneven impact of
nonrecurring charges as described in the immediately preceding paragraph and in part to persistently low commodity prices and high input costs which
negatively impacted the agricultural economy. Supply chains are beginning to normalize, but given the current economic backdrop it may be some time before
consumers are inclined to meaningfully increase their inventory levels. Some pockets of strength are present, with biofertilizers, biostimulants and biochemicals
growing much faster than the broader agricultural economy. The Company has made significant investment in these areas of growth, has benefited from this
investment and expects to do so in the future. Across the broader agricultural economy, the company expects a gradual recovery looking forward from 2024,
during which channel inventory was higher-than-historically normal.
Within this context, the Company experienced a drop in overall sales of approximately 5% during 2024, with domestic sales down 9% and international
sales increasing by 1%. Most of the underperformance in sales was driven by two factors - a 40% drop in sales of the granular insecticide Aztec following
unusually high sales in the prior year as a result of a period of product unavailability, and the impact of the voluntary cancellation and recall of the herbicide
Dacthal.
22
Cost of sales remained high, increasing by 7% to end at 78% of net sales. The increase is attributed to the impact of the Dacthal recall which resulted in
approximately $12,200 in credits to customers and $3,153 in inventory write downs and disposal costs, the decision to record additional reserves in the amount
of $21,417 regarding obsolete and slow-moving inventories resulting from the Company's strategic review of its product portfolio to identify areas that were not
positively contributing to generating shareholder value. and, where relevant, the estimated disposal costs. Further, the Company experienced some pockets of
generic pressure in our international markets resulting in lowering prices to maintain market position. In addition, the Company incurred higher raw material
costs as a result of inflationary pressure on raw material input prices. Finally, factory performance generated a higher net expense, as compared to 2023, as the
Company worked to manage inventory levels in the face of market destocking activity. As a result, gross margin dropped to 22% in 2024 from 31% as
compared to the prior year.
Operating expenses rose by about 42% in 2024, as compared to 2023, due primarily to certain non-cash asset impairment charges and our digital and
structural transformation strategy. Primarily as a result of the nonrecurring impairment charges, operating expenses rose as a percentage of net sales to 40% in
2024, as compared to 27% in 2023.
With continued comparative lower sales and higher inventory level, during 2024, the Company’s average indebtedness increased to $195,160, as
compared to $167,976 during 2023 and, coupled with higher interest rates, interest expense for the year rose. Net sales improved in the fourth quarter and,
coupled with customer prepayment activity, enabled the Company to reduce inventory and indebtedness by December 31, 2024.
On a full-year basis, the Company generated net loss of $126,340 (or $4.50 per share), as compared to generating a net income of $7,519 (or $0.26 per
share) during 2023. Details of our financial performance are set forth below.
Results of Operations
2024 Compared with 2023:
2024
2023
$ Change
% Change
Net sales:
U.S. crop
$
228,327
$
269,229
$
(40,902)
-15%
U.S. non-crop
82,400
75,287
7,113
9%
Total U.S.
310,727
344,516
(33,789)
-10%
International
236,579
234,855
1,724
1%
Total net sales
$
547,306
$
579,371
$
(32,065)
-6%
Total cost of sales
$
(426,989)
$
(400,207)
$
(26,782)
7%
Total gross profit
$
120,317
$
179,164
$
(58,847)
-33%
Total gross margin
22%
31%
Net sales of our U.S. crop business were 15% lower than those of the prior year. The three key factors driving performance lower were the recall of
Dacthal, lower sales of Aztec and lower agriculture acreage planted. During 2024, the Company halted manufacturing and then voluntarily cancelled the
product registration for Dacthal following USEPA's preliminary findings of a potential adverse effect based upon a single study. The product recall associated
with this cancellation negatively impacted 2024 revenue and profitability. With respect to Aztec, customer purchases exceeded end-user demand in 2023, and
these customers worked down excess inventory in 2024, negatively impacting sales of this high-margin product. We expect demand patterns for Aztec to
normalize over 2025. Further, negatively impacting results were the number of agriculture acres planted, as compared to 2023, with corn acres 4% lower than
the prior year. Weak agricultural commodity prices, leading to lower farm net-income, were the reason that fewer acres were planted in 2024.
Net sales of our U.S. non-crop business were 9% higher than those of the previous year. This improvement was driven by our business-to-business
technical sales, along with growth in mosquito vector solutions. The company expects the non-crop business to continue to grow over the coming quarters
driven by business-to-business gains and growth across all segments.
23
Net sales of our International businesses were 1% higher than those of the previous year. Granular soil insecticides sales, our largest international
product category, exhibited strength, increasing by 10% as compared to the prior period, while herbicide sales decreased by approximately 27%. Generic crop
protection products continued to create a difficult pricing environment for many of our products, and results were negatively impacted near the year-end by
strength in the U.S. Dollar and the attendant effect of foreign currency exchange.
Overall costs of sales increased by 7% across our U.S. crop, U.S. non-crop and International. The increased cost of sales can be attributed to elevated
raw material prices, which were fueled by broad-based inflationary pressures. In addition, as part of its strategic review, the Company has completed a
comprehensive assessment of its inventories and determined that a number of items are either obsolete or slow moving and has taken a write down of $21,417 to
reflect the net realizable value of these items.
Operating expenses increased by $66,003 in 2024 to $221,872, as compared to $155,869 in 2023. The differences in operating expenses by department
are as follows:
2024
2023
Change
% Change
Operating expenses
Selling, general and administrative
$
106,295 $
103,605 $
2,690
3%
Amortization
13,339
13,282
57
0%
Research, product development and regulatory
32,662
38,025
(5,363)
-14%
Transformation
20,162
957
19,205
100%
Asset impairments
50,414
—
50,414
100%
Gain from sale of assets
(1,000)
—
(1,000)
-100%
Total
$
221,872 $
155,869 $
66,003
42%
•
Selling, general and administrative expenses increased to end at $106,295 for the year ended December 31, 2024, as compared to $103,605 in 2023.
Included within this expense, the Company's leadership team made the decision to pay a modest bonus to all employees as a recognition of the steadfast
support for the Company’s transformation efforts during a challenging year.
•
Amortization ended the year at $13,339 which was slightly up in comparison to the prior year and included accelerated amortization of $179 associated
with two small assets.
•
Research, product development and regulatory expenses decreased by 13% to $32,662 in 2024, as compared to $38,025 in 2023. The costs were reduced
by lower spending as the Company made the decision to stop investing in the development and commercialization of the SIMPAS proprietary delivery
systems.
•
Transformation cost of $20,162 relate to the Company’s digital and structural transformation project. The digital transformation effort is intended to
ensure that business process owners have access to current and complete data that has been generated through standardized processes. The structural
transformation effort is intended to improve operating leverage by applying business analytics to current operations, structures, products and services.
Included in these costs, the Company made the decision that it was necessary to recruit a new CEO to drive the business transformation. During 2024,
third party consultants were engaged by the Company to assist it in navigating the project to gain the maximum benefit at the earliest possible time.
•
Asset impairments of $50,414 includes costs associated with the Company’s determination that its investment in its SIMPAS technology is impaired.
The impairment impacted fixed and intangible assets and resulted in a non-cash charges of $17,683. In addition, the Company recorded non-cash
impairment charges related to its domestic and international goodwill assets in the amount of $27,049. Secondly, the Company concluded that there was
an asset impairment related to the purchase of two herbicide products. The market for these two products has been greatly reduced by weed resistance
and competitive products. As such, the Company has decided to no longer market the product, and recorded a non-cash impairment charge of $5,682.
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc. (Clean Seed) in the amount of $1,190. The investment is carried at fair
value and is included in other assets on the Company’s consolidated balance sheets. The Company recorded a gain related to Clean Seed’s change in fair value
in the amount of $513 during 2024, as compared to losses of $359 in 2023. These gains and losses are included in change in fair value of equity investments on
the Company’s consolidated statements of operations.
24
Net interest expense was $16,243 in 2024, as compared to $12,639 in 2023. Interest costs are summarized in the following table:
2024
2023
Average Indebtedness and Interest expense
Average
Debt
Interest
Expense, net
Effective
Interest
Rate
Average
Debt
Interest
Expense, net
Effective
Interest
Rate
Senior credit facility
$
195,160 $
15,518
8.0% $
167,976 $
12,136
7.2%
Interest Income, net
—
(230)
—
—
(368)
—
Amortization of deferred loan fees
—
536
—
—
255
—
Other interest
—
815
—
—
1,183
—
Subtotal
195,160
16,639
8.5%
167,976
13,206
7.9%
Capitalized interest
—
(396)
—
—
(567)
—
Total
$
195,160 $
16,243
8.3% $
167,976 $
12,639
7.5%
The Company’s average debt for the year ended December 31, 2024, was $195,160, as compared to $167,976 for the year ended December 31, 2023.
The increase in average debt can be in large part attributed to the global agriculture market continuing to focus on buying smaller individual order quantities
frequently and closer to the time of use and with enhanced focus on their own inventory levels. This effective destocking of the channel is a global agricultural
market reaction to high interest rates and the drive by distribution to push working capital back to manufacturers. Our effective interest rate on our senior credit
facility increased to 8.0%, as compared to 7.2% in 2023.
Our provision for income taxes for 2024 was $5,882, as compared to $2,778 for 2023. The effective tax rate for 2024 was negative 4.9%, as compared to
27.0% in 2023. The decrease of the effective tax rate in 2024, as compared to 2023, was primarily due to the establishment of a valuation allowance recorded
against the U.S. net deferred tax assets during 2024.
The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company
are subject to Internal Revenue Service (“IRS”) examination for the 2021 through 2023 tax years. State income tax returns are subject to examination for the
2020 through 2023 tax years. The Company has other foreign income tax returns subject to examination.
Net loss was $126,340 or $4.50 per basic share and diluted share in 2024, as compared to a net income of $7,519 or $0.27 per basic and $0.26 per diluted
share in 2023.
Comprehensive loss was $139,170 in 2024, as compared to a comprehensive income of $13,738 in 2023. In addition to net (loss) income, foreign
currency translation adjustment, net of tax is included in comprehensive (loss) income. The foreign currency translation adjustment, net of tax, was negative
$13,824 in 2024, as compared to a positive $6,219 in 2023. The negative adjustment in 2024 was driven by the US Dollar getting stronger compared to the local
currencies of the Company's international operations in Mexico, Brazil, and Australia, which use the respective local currencies as their functional currency.
Liquidity and Capital Resources
Cash in operating activities provided $3,923 during the year ended December 31, 2024, as compared to cash used in operating activities of $58,748 in
the prior year. Included in the $3,923 are net loss of $126,340, plus non-cash depreciation, amortization of intangibles and other long-term assets in the amount
of $22,548, amortization of deferred loan fees and discounted liabilities of $536, gain on disposal of property, plant and equipment of $1,000, impairment of
assets including fixed assets, intangible assets and goodwill of $50,414, and provision for bad debts in the amount of $2,319. In addition, stock-based
compensation of $4,412, change in value of deferred income taxes of $1,462, change in value for uncertain tax positions or unrecognized tax benefits of $1,547,
change in fair value of investments of $2,356, non-cash lease expense of $37, and net foreign currency adjustment of $804, resulted in net cash used in
operating activities (prior to changes in assets and liabilities associated with operations, net of business combinations) of $44,083, as compared to net cash
provided by operating activities of $29,713 for the same period of 2023.
25
The Company’s working capital decreased by $54,983 at December 31, 2024. Included in this change, accounts receivable increased by $11,073 as a
result of timing of orders, mix of customers, products and jurisdictions, inventories decreased by $35,213 as a result of a hard drive to reduce inventories and
the result of recording certain inventory write downs, tax receivable increased by $3,775 driven by losses recorded at the end of 2024, and prepaid expenses
increased by $654. Customer prepayments decreased by $12,882, driven by customer decisions to make early payments in return for future discounts on product
purchases as part of the Company’s early cash incentive programs and their choices about when to utilize the prepaid amounts. Our accounts payable balances
increased by $3,714 primarily due to timing of supplier invoice due dates and the drive by the Company to reduce inventory in the final quarter of the year.
Program accruals increased by $1,775, and other payables and accrued expenses increased by $17,202.
With regard to our program accrual, the year-over-year change is primarily driven by the mix of product line sales and customers in 2024, as compared
to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Most of our programs relate to
domestic sales. Typically, domestic crops have a growing season that ends on August 31st of each year. During 2024, the Company made accruals in the amount
of $93,301 and payments in the amount of $92,188. During 2023, the Company made accruals in the amount of $93,264 and payments in the amount of
$85,931.
Cash used for investing activities amounted to $6,623 for the year ended December 31, 2024, as compared to $17,017 in 2023. In 2024, the Company
spent $7,279 on capital expenditures primarily focused on continuing to invest in manufacturing infrastructure focused on safety and improvement of
production efficiency and capabilities. Furthermore, the Company spent $409 on registrations and patents and received $1,065 in disposal of fixed assets. In
2024, the Company did not make any business acquisitions.
During the year ended December 31, 2024, financing activities provided $4,540 as compared to $66,737 provided during the prior year. This included
increasing net borrowings by $8,431, as compared to an increase of $86,600 in 2023. The Company paid $850 in deferred loan fees during the year ended
December 31, 2024. During 2024, the Company paid dividends to stockholders amounting to $2,510, as compared to $3,384 in 2023. Further, the Company did
not repurchase common stock in 2024, as compared to using $15,539 to repurchase common stock in 2023. The Company made no payments for contingent
consideration in 2024 or 2023.
The Company has long-term debt as of December 31, 2024 and 2023 relating to a senior credit facility as summarized in the following table:
Indebtedness
2024
2023
Senior credit facility
$
147,332 $
138,900
Deferred loan fees
(1,532)
(1,218)
Total indebtedness
$
145,800 $
137,682
The deferred loan fees as of December 31, 2024 and 2023 are included in other assets on the consolidated balance sheets.
The Company and certain of its affiliates are parties to a senior credit facility 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 Agent (including the Company and AMVAC BV), as "Borrowers", on the one hand, and a group of commercial lenders led by BMO
Bank, N.A. (formerly 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 $275,000, an accordion feature of up to $150,000, a letter of credit and swingline sub-facility
(each having limits of $25,000) and has a maturity date of August 5, 2026. The Credit Agreement amended and restated the previous credit facility, which had a
maturity date of June 30, 2022. With respect to key financial covenants, the Credit Agreement contains two: namely, borrowers are required to maintain a Total
Leverage (“TL”) Ratio of no more than 3.5-to-1, during the first three years, stepping down to 3.25-to-1 as of December 31, 2024, and a Fixed Charge Coverage
Ratio ("FCCR") of at least 1.25-to-1. In addition, to the extent that it completes acquisitions totaling $15,000 or more in any 90-day period, AMVAC may step-
up the TL Ratio by 0.5-to-1, not to exceed 4.00-to-1, for the next three full consecutive quarters. Acquisitions below $50,000 did not require Agent consent.
26
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. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with
proper notice, on either (i) London Interbank Offered Rate ("LIBOR") plus the “Applicable Margin” which is based upon the Total Leverage (“TL”) Ratio
(“LIBOR Revolver Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month LIBOR Rate plus
1.00%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). The Company and the Lenders entered into an
amendment to the Credit Agreement, effective March 9, 2023, whereby LIBOR was replaced by the Secured Overnight Financing Rate ("SOFR") with a credit
spread adjustment of 10.0 bps for all SOFR periods. The revolving loans now bear interest at a variable rate based at our election with proper notice, on either
(i) SOFR plus 0.1% per annum and the “Applicable Margin” or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily
One-Month SOFR Rate plus 1.10%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). Interest payments for
SOFR Revolver Loans are payable on the last day of each interest period (either one-, three- or six- month periods, as selected by the Company) and the
maturity date, while interest payments for Adjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date.
On November 7, 2023, the Company entered into Amendment Number Six to the Third Amended Loan and Security Agreement that provided relief in
respect of both financial covenants. On August 8, 2024, the Company and the lenders entered into Amendment Number Seven to the Credit Agreement,
effective June 30, 2024, under which the Maximum Total Leverage Ratio was modified to 4.25 for the period ended June 30, 2024; 5.0 for the period ended
September 30, 2024; 4.5 for the period ended December 31, 2024, 4.5 for the period ending March 31, 2025, 4.25 for the period ending June 30, 2025; 4.0 for
the period ending September 30, 2025, and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The Minimum Fixed Charge Coverage
Ratio remains the same, and a new covenant (added as part of Amendment Number seven), the Minimum Modified Current Ratio of not less than 1.5 (defined
as the ratio of (i) Accounts Receivable plus Inventory, to (ii) Funded Debt of the Company and its Subsidiaries on a consolidated basis). In addition, the
Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent. In addition, for purposes of
calculating Consolidated EBITDA, the basket for transformation and one-time (cash and non-cash charges (which are excluded from such measure) has been
increased from $5,000 to $12,500 in second quarter 2024, $45,000 (in third quarter 2024, fourth quarter 2024 and first quarter 2025), $42,500 in second quarter
2025, $15,000 in third quarter 2025 and $7,500 in fourth quarter 2025, as measured on a four-quarter trailing basis. Finally, the interest rates for the Credit
Agreement, as amended, were increased by 25bps to the extent the Total Leverage Ratio equals or exceeds 4.0 and remains at the rates set forth in the
Amendment Number Six to the extent the Total Leverage Ratio is below 4.0.
On March 12, 2025, the Company entered into Amendment Number Eight to the Third Amended Loan and Security Agreement that provided relief in
respect of both financial covenants, under which the Maximum Total Leverage Ratio was modified to 6.25 for the period ending March 31, 2025; 6.25 for the
period ending June 30, 2025; 5.75 for the period ending September 30, 2025 and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The
Minimum Fixed Charge Coverage Ratio is changed to 1.15 for the period ending March 31, 2025, and returning to 1.25 for the period ending June 30, 2025 and
thereafter. In addition, the Applicable Margins for the Revolver Loans are changed to 3.75% for SOFR and 2.75% as the Adjusted Base Rate; the Unused Line
Fee Rate is 0.35% and the Letter of Credit Fee is 3.75%. Further, notwithstanding financial performance, the borrowing capacity is capped below the facility’s
previous maximum ($275,000) by $50,000 through June 30, 2025, then by $40,000 through December 31, 2025, and then by $75,000 through the expiration of
the facility. Finally, the definition of Consolidated EBITDA was changed to exclude non-recurring non-cash charges as well as cash charges that do not exceed
various sums in various categories over the balance of the term.
On May 27, 2025, the Company and the lenders entered into Amendment Number Eleven to the Third Amended Loan and Security Agreement, under
which events of default arising from the failure of Borrowers to be in compliance with both the Total Leverage Ratio and the Fixed Charge Coverage Ratio as of
March 31, 2025, were waived. In addition, the Total Revolver Commitment was reduced from $275,000 to the following: $245,000, effective from the Closing
Date through November 29, 2025; $225,000 effective from November 30, 2025, through December 30, 2025; and $200,000 from December 31, 2025, through
the expiration of the agreement. In addition, the due date for audited fiscal year-end financial statements was extended to one hundred fifty-seven (157) days
(after the end of the fiscal year) for 2025 only, and the due date for first quarter financial statements was extended to sixty-seven (67) days after March 31,
2025. In addition, the Maximum Total Leverage Ratio covenant was suspended for the quarters ending on June 30, 2025, September 30, 2025, and December
31, 2025, and set at 4.00 to 1.00 for the quarter ending March 31, 2026, and thereafter. Further, the Fixed Charge Coverage Ratio covenant was
27
suspended for the quarter ending June 30, 2025, then set at 1.00 to 1.00 for the quarter ending September 30, 2025, then set at 1.25 to 1:00 for the quarter ending
December 31, 2025, and thereafter.
In addition, under the terms of the Eleventh Amendment, two new covenants were added. First, commencing June 30, 2025, Borrowers must maintain
Liquidity measured on a monthly basis of not less than: $30,000 for the month ending June 30, 2025; $35,000 for the month ending July 31, 2025; $4,042 for
the month ending August 31, 2025; $25,000 for the month ending September 30, 2025; $3,000 for the month ending October 31, 2025; $9,292 for the month
ending November 30, 2025; and $20,000 for the month ending December 31, 2025, it being understood that Liquidity will include the sum of Borrowers’ cash,
plus 50% of cash held in accounts outside of the U.S. plus the amount by which the revolver commitments exceed the revolver balance (net of letters of credit).
Second, Borrowers must attain minimum, year-to-date Consolidated EBITDA (reflecting the exclusion of non-recurring non-cash charges and certain other
charges as per the Eighth Amendment) as measured quarterly in the following amounts: $4,500 as of June 30, 2025; $9,500 as of September 30, 2025; and
$35,000 as of December 31, 2025. With these changes, with respect to Revolver Loans, the Applicable Margins for SOFR are set at 3.75% from the Closing
through September 30, 2025, and then rises to 4.75% as of October 1, 2025, and thereafter, while the Adjusted Base Rate increases to 2.75% and 3.75% during
those respective periods.
At December 31, 2024, by virtue of Amendment Number Eight to the Third Amended Loan and Security Agreement, the Company is deemed to be in
compliance with its financial covenants. According to the terms of the Credit Agreement and based on our performance against the most restrictive covenant,
the Company had the capacity to increase its borrowings by up to $28,623, as compared to $115,002 as of December 31, 2023. Furthermore, at December 31,
2024, the Company’s leverage, as defined in the credit facility agreement was 3.57. Under the terms of the latest amendment to the credit facility agreement,
currently, the Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent.
The Company believes that the combination of its cash flows from future operations, current cash on hand and the availability under the Company’s
credit facility will be sufficient to meet its working capital and capital expenditure requirements and will provide the Company with adequate liquidity to meet
its anticipated operating needs for at least the next 12 months from the issuance of these consolidated financial statements. Although operating activities are
expected to provide cash, to the extent of growth in the future, its operating and investing activities will use cash and, consequently, this growth may require the
Company to access some or all of the availability under the credit facility. It is also possible that additional sources of finance may be necessary to support
additional growth.
Recently Issued Accounting Guidance
Please refer to Note 1 of the Notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for recently issued and
adopted accounting standards.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, sales and
expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Resolution of such uncertainties in a
manner inconsistent with our estimates could have a material effect on our financial condition and operating results.
28
The Company’s critical accounting estimates include:
Current Expected Credit Losses —The Company maintains an allowance to cover its Current Expected Credit Losses ("CECL") on its trade receivables,
other receivables and contract assets arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over the
life of its trade receivables, other receivables and contract assets based on historical information combined with current conditions that may affect a customer’s
ability to pay and reasonable and supportable forecasts. In most instances, the Company’s policy is to write-off trade receivables when they are deemed
uncollectible. The vast majority of the Company's trade receivables, other receivables and contract assets are less than 365 days. Under the CECL impairment
model, the Company develops and documents its allowance for credit losses on its trade receivables based on multiple portfolios. The determination of
portfolios is based primarily on geographical location, type of customer and receivables aging.
Inventories — The Company values its inventories at lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) or
average cost method, including, as appropriate, raw materials, labor, factory overhead and subcontracting services. The Company writes down its inventory to
the net realizable value following assessments of slow-moving and obsolete inventory and other annual adjustments to ensure that our standard costs continue to
closely reflect actual manufacturing cost. During the years ended December 31, 2024 and 2023, the Company recorded inventory adjustments of $21,417 and
$2,700, respectively.
Intangible Assets—The primary identifiable intangible assets of the Company relate to assets associated with its product and business acquisitions. All
of the Company’s intangible assets have finite lives and are amortized. The estimated useful life of an identifiable intangible asset is based upon a number of
factors including the effects of demand, competition, and expected changes in the marketability of the Company’s products. During the year ended December
31, 2024, the Company recorded intangible asset impairment charges in the amount of $9,345. There were no such charges in 2023.
Business Combinations—The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and
liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which
may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and
liabilities assumed, with the corresponding offset to goodwill or an adjustment to the gain from a bargain purchase. In addition, uncertain tax positions and tax-
related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect
information and re-evaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary estimates to goodwill
provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets
acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Company’s consolidated statement of operations.
From time to time, certain of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of
future income thresholds. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective
acquisition dates. For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated
fair value of contingent consideration as a liability on the consolidated balance sheets.
The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis until the contingent period ends, and the
updated fair value could be materially different from the initial estimates or prior quarterly amounts. Changes in the estimated fair value of our contingent earn-
out liabilities are reported in operating results.
Asset Acquisitions—If an acquisition of an asset or group of assets does not meet the definition of a business, the transaction is accounted for as an asset
acquisition rather than a business combination. An asset acquisition does not result in the recognition of goodwill and transaction costs are capitalized as part of
the cost of the asset or group of assets acquired. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets
acquired and liabilities assumed at the acquisition date. In most cases, the Company engages third party valuation specialists to assist the Company in its
assessment. The acquisitions costs are allocated to the assets acquired on a relative fair value basis. From time to time, certain of our acquisition agreements
include contingent
29
earn-out arrangements, which are recognized only when the contingency is resolved, and the consideration is paid or becomes payable.
Goodwill—The Company reviews goodwill for impairment triggers 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, 2024, the
Company conducted its most recent 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 goodwill related to its domestic reporting unit in the amount of $9,131 was fully impaired.
The carrying value of the international reporting unit exceeded its respective fair value by $17,918. As a result, the Company recorded impairment charges to its
goodwill balance in the amount of $27,049 during the year ended December 31, 2024. The remaining carrying value of the international reporting unit is mainly
sensitive to discount rates, the projected net sales growth rates, gross margin improvements, and terminal growth rates. After recording the goodwill
impairment, the carrying value of the international reporting unit equaled its fair value. Therefore, any negative deviations from the Company’s projections and
changes in assumptions used in its quantitative impairment test may result in further impairments of the international reporting unit's remaining goodwill
balance which amounted to $19,701 at December 31, 2024.
Impairment—The carrying values of long-lived assets other than goodwill are reviewed for impairment annually and/or whenever events or changes in
circumstances indicate that the carrying value of such assets may not be recoverable. The Company evaluates recoverability of an asset group by comparing the
carrying value to the future undiscounted cash flows that it expects to generate from the asset group. If the comparison indicates that the carrying value of an
asset group is not recoverable, measurement of the impairment loss is based on the fair value of the asset. In 2024, the Company determined that the carrying
value related to some of its equipment and intangible assets was impaired. These included the following: The Company invested in developing the SIMPAS
technology platform over more than a 10-year period. As part of the strategic review of capital allocation and operating leverage considerations that was
conducted over the last 12 months and completed during the fourth quarter of 2024, the Company has found that, while the SIMPAS technology platform had
attained full functionality and had been adopted by a small group of growers who use the Company’s products, its adoption slowed to a near halt in 2024 and
further, that its primary market appeal was driven not by the technology itself, but, rather, by the products being dispensed by the system. The Company
concluded that it does not have the wherewithal to achieve greater commercialization beyond incumbent users. While we continue to search for a partner that is
better able to fund large-scale commercialization, the Company has concluded that continuing to invest in this technology will not generate a sufficient return
on investment in a manner that would justify retaining such assets at full value. Secondly, the Company concluded that there was an asset impairment related to
the purchase of two herbicide products. The market for these two products has been greatly reduced by weed resistance and competitive products. As a result,
the Company recorded impairment charges of $23,365. No material impairment losses were recorded in 2023 and 2022.
Income taxes—Income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect the Company’s best estimate
of current and future taxes to be paid. The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The Company assessed the ability to
realize deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it
is more likely than not that the net deferred tax assets relating to the Company’s operations in the United States, Brazil, Spain, Dominican Republic, Honduras,
Hong Kong, and Ukraine will not be realized and a full valuation allowance has been recorded in those jurisdictions. Significant judgment is required in
determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, we will adjust these
estimates in future periods, which may result in a change in the effective tax rate in a future period. Accounting for income taxes involves uncertainty and
judgment on how to interpret and apply tax laws and regulations within the Company’s annual tax filings. Such uncertainties from time to time may result in a
tax position that may be challenged and overturned by a tax authority in the future, which could result in additional tax liability, interest charges and possibly
penalties. The Company classifies interest and penalties as a component of income tax expense.
30
Off-Balance Sheet Arrangements
As of December 31, 2024, we did not have any off-balance sheet arrangement.
31
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates, foreign exchange rates, and inflation.
Interest rate risk—The Company is primarily exposed to changes in interest rates related to its borrowing activities. The Company’s indebtedness to its
primary group of lenders is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate (SOFR). An
increase or decrease in interest rates by 25 bps would impact the Company’s net loss by approximately $488 based on the Company’s historical average
borrowing in 2024. The Company may use derivative financial instruments to hedge its exposure to interest rate fluctuations. No such financial instruments
were used by the Company in 2024.
Foreign exchange rate risk—The Company conducts business in various foreign currencies, primarily when doing business in Mexico, Central and
South America, Australia, New Zealand and Europe. Therefore, changes in the value of the currencies of such countries or regions affect the Company’s
financial position and cash flows when translated into U.S. Dollars. The Company has mitigated, and will continue to mitigate, a portion of its currency
exchange exposure through natural hedges based on the operation of decentralized foreign operating companies in which the majority of all costs are local-
currency-based. The remaining currency exchange exposure mainly pertains to intercompany trade accounts and loans granted to wholly owned international
entities which have their local currency as their functional currency. A positive or negative change of 10% between the US Dollar and the respective local
currencies of these entities would amount to a positive or negative change of approximately $6,800. The Company may use derivative financial instruments for
trading purposes to protect trading performance from exchange rate fluctuations on material contracts, though there are no such instruments in place during any
periods presented in this Annual Report on Form 10-K.
Inflation—The Company is working diligently with its critical raw material suppliers to control inflationary pressures, conducting contract negotiations
with focus on the following: reducing or delaying price increases due to higher environmental costs from suppliers mainly in China and India, managing the
tariff impacts by sourcing and leveraging alternate geographies where possible, and lastly, monitoring strengths of the U.S. dollar vs other currencies in order to
secure benefits and balance tariff effects. The Company recognizes there is long-term pressure on demand for raw materials in the developing world and is
utilizing its expertise to minimize inflationary pressure. The Company has been able to push back on many of the proposed price increases for actives and
intermediates that are shipped to our U.S. factories, to either avoid, minimize or forestall them. In response to inflation and other factors that have increased the
cost of goods and services, the Company has successfully implemented price increases on its products. However, inflation resulted in persistently high interest
rates. As a result, customers in many regions implemented destocking directives in order to limit their carrying costs of inventory. This, in turn, led to an overall
drop in demand in late 2022 through the end of 2024. There can be no assurance that inflation will not have a material adverse effect on the Company’s
financial performance in future periods.
As part of an on-going process of assessing business risk, management has identified risk factors which are disclosed in Item 1A. Risk Factors of this
Annual Report on Form 10-K.
32
ITEM 8
Description
Page No
Financial Statements:
Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP; Costa Mesa, California, PCAOB ID#34
33
Report of Independent Registered Public Accounting Firm BDO USA, P.C.; Costa Mesa, California, PCAOB ID#243
36
Consolidated Balance Sheets as of December 31, 2024 and 2023
37
Consolidated Statements of Operations for the Years Ended December 31, 2024, 2023 and 2022
38
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2024, 2023 and 2022
39
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 2023 and 2022
40
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022
41
Notes to Consolidated Financial Statements
42
33
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
American Vanguard Corporation
Newport Beach, California
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of American Vanguard Corporation and subsidiaries (the "Company") as of December 31, 2024
and December 31, 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity and cash flows, for each of the
two years in the period ended December 31, 2024, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and
December 31, 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with
accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 28, 2025, expressed an adverse opinion on the Company's
internal control over financial reporting because of a material weakness.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required
to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Accrued Program Costs — Refer to Note 1 to the financial statements
Critical Audit Matter Description
The Company offers discounts to its customers based on various programs (“programs”), which are primarily volume-based incentives. As of December 31,
2024, accrued program costs were $69.4 million. These discount programs represent variable consideration. Revenues from sales are recorded at the net sales
price, which is the transaction price, less an estimate of variable consideration. The Company uses the expected value method for determining the estimated
variable consideration, which includes amounts expected to be paid to customers. Quarterly, the Company compares individual sale transactions with programs
to determine what, if any, program
34
liabilities have been incurred. Once the quarterly calculation is made, the Company makes an assessment of whether customers are tracking in a manner that
indicates they will meet the requirements of the agreed upon terms and conditions of the applicable programs, making adjustments to the accumulated accrual
based on the liability at the balance sheet date.
Given the nature of the data utilized to analyze the program accruals, and the volume of programs data required to estimate total variable consideration, auditing
the program accrual required extensive audit effort when performing audit procedures and evaluating the results of those procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to accrued program costs included the following, among others:
•
We assessed the reasonableness of management’s program accrual rates used by performing a fluctuation analysis of accrual rates per product line at
December 31, 2024, as compared to the prior period accrual rates.
•
We evaluated the accuracy of the accrued program costs by comparing the accrued program costs calculation inputs and adjustments to supporting
documentation, and testing the mathematical accuracy of management’s calculation.
•
We performed inquiries of appropriate individuals outside of the finance organization to corroborate the completeness and accuracy of the inputs into the
calculation.
•
We performed confirmation procedures with the Company's customers regarding prepayment terms related to the program accrual balance and compared
responses to management’s records and program accrual, and we inspected other relevant correspondence between customers and the Company.
•
We evaluated management’s ability to accurately record accrued program costs by testing actual program related payments made in 2024, and comparing
the payments to management’s historical accrual.
Goodwill — International Reporting Unit — Refer to Notes 1 and 9 to the financial statements
Critical Audit Matter Description
The Company annually tests goodwill for impairment at the beginning of the fourth quarter, or earlier if triggering events occur. 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
the carrying value exceeds the reporting unit’s fair value. The determination of a reporting units’ fair value includes the Company’s use of a discounted cash
flow model and a market approach. Key assumptions in the discounted cash flow include, but are not limited to, discount rates, future net sales growth, gross
margins, expenses, capital expenditures, and terminal growth rates. The market approach key assumption relates to the earnings before interest, taxes,
depreciation, and amortization (EBITDA) multiples. Based on the results of the quantitative test, the Company recorded a goodwill impairment in the amount of
$17.9 million for the international reporting unit in 2024.
Given the significant judgments made by management to estimate the fair value of the international reporting unit, performing audit procedures to evaluate the
reasonableness of management’s estimates and assumptions related to the future net sales growth and expenses, and the selection of EBITDA multiples and
discount rates required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to future net sales growth and expenses, and the selection of EBITDA multiples (“forecasts”) and discount rates, to estimate the
fair value of the international reporting unit included the following procedures:
•
We evaluated the reasonableness of management’s forecasted future net sales growth and expenses by comparing forecasted future net sales growth and
expenses to (1) historical results of the Company, (2) information obtained from inquiries with senior management personnel, (3) internal
communications to
35
management and the board of directors, (4) industry reports of the Company and comparable companies, and (5) evidence obtained in other areas of the
audit.
•
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
•
With the assistance of our fair value specialists, we evaluated discount rates, including testing the source information underlying the determination of
discount rates, testing the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the
discount rates selected by management.
•
With the assistance of our fair value specialists, we evaluated the selection of EBITDA multiples from comparable companies, including testing the
underlying source information and mathematical accuracy of the calculations, and evaluated the appropriateness of the Company’s selection of
companies in its peer public company group.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 28, 2025
We have served as the Company's auditor since 2023.
36
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
American Vanguard Corporation
Newport Beach, California
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows of American Vanguard
Corporation (the “Company”) for the year ended December 31, 2022, and the related notes and schedule (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the
Company for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BDO USA, P.C.
We have served as the Company's auditor from 1991 to 2022.
Costa Mesa, California
March 16, 2023
37
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023
(In thousands, except share data)
2024
2023
Assets
Current assets:
Cash
$
12,514
$
11,416
Receivables:
Trade, net of allowance for credit losses of $9,190 and $7,107, respectively
169,743
182,613
Other
4,699
8,356
Total receivables, net
174,442
190,969
Inventories
179,292
219,551
Prepaid expenses
7,615
6,261
Income taxes receivable
5,030
3,824
Total current assets
378,893
432,021
Property, plant and equipment, net
58,169
74,560
Operating lease right-of-use assets, net
19,735
22,417
Intangible assets, net
150,497
172,508
Goodwill
19,701
51,199
Deferred income tax assets
1,242
2,849
Other assets
8,484
11,994
Total assets
$
636,721
$
767,548
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
69,159
$
68,833
Customer prepayments
52,675
65,560
Accrued program costs
69,449
68,076
Accrued expenses and other payables
31,989
16,354
Operating lease liabilities, current
6,136
6,081
Income taxes payable
2,942
5,591
Total current liabilities
232,350
230,495
Long-term debt
147,332
138,900
Operating lease liabilities, long-term
14,339
17,113
Deferred income tax liabilities
7,989
7,892
Other liabilities
1,601
3,138
Total liabilities
403,611
397,538
Commitments and contingent liabilities (Notes 5 and 10)
Stockholders’ equity:
Preferred stock, $0.10 par value per share; authorized 400,000 shares;
none issued
—
—
Common stock, $0.10 par value per share; authorized 40,000,000 shares;
issued 34,794,548 shares in 2024 and 34,676,787 shares in 2023
3,479
3,467
Additional paid-in capital
114,679
110,810
Accumulated other comprehensive loss
(18,729)
(5,963)
Retained earnings
204,882
332,897
304,311
441,211
Less treasury stock at cost, 5,915,182 shares in 2024 and 5,915,182 in 2023
(71,201)
(71,201)
Total stockholders’ equity
233,110
370,010
Total liabilities and stockholders’ equity
$
636,721
$
767,548
See summary of significant accounting policies and notes to consolidated financial statements.
38
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2024, 2023 and 2022
(In thousands, except per share data)
2024
2023
2022
Net sales
$
547,306 $
579,371 $
609,615
Cost of sales
(426,989)
(400,207)
(417,227)
Gross profit
120,317
179,164
192,388
Operating expenses
Selling, general and administrative
(119,634)
(116,887)
(119,921)
Research, product development and regulatory
(32,662)
(38,025)
(31,816)
Transformation
(20,162)
(957)
—
Asset impairment charges
(50,414)
—
—
Gain from sale of assets
1,000
—
—
Operating (loss) income
(101,555)
23,295
40,651
Change in fair value of equity investments, net
(2,356)
(359)
(732)
Interest and other expenses, net
(16,547)
(12,639)
(3,954)
(Loss) income before provision for income taxes
(120,458)
10,297
35,965
Provision for income taxes
(5,882)
(2,778)
(8,561)
Net (loss) income
$
(126,340)
$
7,519
$
27,404
Earnings per common share—basic
$
(4.50) $
0.27 $
0.94
Earnings per common share—assuming dilution
$
(4.50) $
0.26 $
0.92
Weighted average shares outstanding—basic
28,059
28,128
29,234
Weighted average shares outstanding—assuming dilution
28,059
28,533
29,872
See summary of significant accounting policies and notes to consolidated financial statements.
39
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Years ended December 31, 2024, 2023 and 2022
(In thousands)
2024
2023
2022
Net (loss) income
$
(126,340) $
7,519 $
27,404
Other comprehensive (loss) gain
Foreign currency translation adjustment, net of tax effects
(12,766)
6,219
1,602
Comprehensive (loss) income
$
(139,106) $
13,738 $
29,006
See summary of significant accounting policies and notes to consolidated financial statements.
40
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years ended December 31, 2024, 2023 and 2022
(In thousands, except share data)
Accumulated
Additional
Other
Common Stock
Paid-in
Comprehensiv
e
Retained
Treasury Stock
AVD
Shares
Amount
Capital
loss
Earnings
Shares
Amount
Total
Balance, January 1, 2022
34,248,218 $
3,426 $
101,450 $
(13,784)
$
304,385
3,361,040 $
(22,739) $
372,738
Stocks issued under ESPP
51,240
4
833
—
—
—
—
837
Cash dividends declared on common
stock ($0.10
per share)
—
—
—
—
(3,044)
—
—
(3,044)
Foreign currency translation
adjustment, net
—
—
—
1,602
—
—
—
1,602
Stock based compensation
—
—
5,684
—
—
—
—
5,684
Stock options exercised, grants,
termination,
and vesting of restricted stock units
(net of
shares in lieu of taxes)
146,736
14
(1,254)
—
—
—
—
(1,240)
Shares repurchased
—
—
(1,079)
—
—
1,668,852
(32,923)
(34,002)
Net income
—
—
—
—
27,404
—
—
27,404
Balance, December 31, 2022
34,446,194
3,444
105,634
(12,182)
328,745
5,029,892
(55,662)
369,979
Stocks issued under ESPP
50,025
5
976
—
—
—
—
981
Cash dividends declared on common
stock ($0.12
per share)
—
—
—
—
(3,367)
—
—
(3,367)
Foreign currency translation
adjustment, net
—
—
—
6,219
—
—
—
6,219
Stock based compensation
—
—
6,138
—
—
—
—
6,138
Stock options exercised, grants,
termination,
and vesting of restricted stock units
(net of
shares in lieu of taxes)
180,568
18
(1,938)
—
—
—
—
(1,920)
Shares repurchased
—
—
—
—
—
885,290
(15,539)
(15,539)
Net income
—
—
—
—
7,519
—
—
7,519
Balance, December 31, 2023
34,676,787
3,467
110,810
(5,963)
332,897
5,915,182
(71,201)
370,010
Stocks issued under ESPP
92,767
10
891
—
—
—
—
901
Cash dividends declared on common
stock ($0.06
—
—
—
—
(1,675)
—
—
(1,675)
Foreign currency translation
adjustment, net
—
—
—
(12,766)
—
—
—
(12,766)
Stock based compensation
—
—
4,412
—
—
—
—
4,412
Stock options exercised, grants,
termination,
and vesting of restricted stock units
(net of
shares in lieu of taxes)
24,994
2
(1,434)
—
—
—
—
(1,432)
Net loss
—
—
—
—
(126,340)
—
—
(126,340)
Balance, December 31, 2024
34,794,548
$
3,479 $
114,679 $
(18,729)
$
204,882
5,915,182 $
(71,201) $
233,110
See summary of significant accounting policies and notes to consolidated financial statements.
41
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2024, 2023 and 2022
(In thousands)
2024
2023
2022
Cash flows from operating activities:
Net (loss) income
$
(126,340) $
7,519 $
27,404
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets
22,322
21,780
22,138
Amortization of other long-term assets
226
1,754
3,573
Amortization and accretion of deferred loan fees and discounted liabilities
536
254
289
(Gain) loss on disposal of property, plant and equipment
(1,000)
—
268
Impairment of assets
50,414
—
—
Provision for estimated credit losses
2,319
1,935
1,171
Fair value adjustment of contingent consideration
—
—
610
Stock-based compensation
4,412
6,138
5,684
Deferred income taxes
1,452
(9,710)
(5,278)
Changes in liabilities for uncertain tax positions or unrecognized tax benefits
(1,547)
(508)
(1,441)
Change in equity investment fair value
2,356
359
732
Leases
(37)
256
68
Unrealized foreign currency transaction gains
804
(581)
(29)
Changes in assets and liabilities associated with operations, net of business combinations:
Decrease (increase) in receivables
7,481
(20,278)
(6,447)
Decrease (increase) in inventories
35,178
(27,315)
(29,220)
(Increase) decrease in income tax receivable
(3,775)
3,568
(4,910)
(Increase) decrease in prepaid expenses and other assets
(687)
1,269
(3,082)
(Decrease) increase in accounts payable
3,714
(2,287)
1,704
Increase (decrease) in customer prepayments
(12,882)
(45,079)
47,551
Increase (decrease) in accrued program costs
1,775
7,244
(2,449)
Increase (decrease) in accrued expenses and other payables
17,202
(5,066)
90
Decrease in contingent consideration
—
—
(1,321)
Net cash provided by (used in) operating activities
3,923
(58,748)
57,105
Cash flows from investing activities:
Capital expenditures
(7,279)
(11,878)
(13,261)
Proceeds from disposal of property, plant and equipment
1,065
242
84
Acquisitions of business and product line, net of cash acquired
—
(5,195)
—
Intangible assets
(409)
(186)
(1,293)
Net cash used in investing activities
(6,623)
(17,017)
(14,470)
Cash flows from financing activities:
Payments under line of credit agreement
(294,356)
(172,500)
(254,000)
Borrowings under line of credit agreement
302,787
259,100
253,000
(Increase) in deferred loan fees
(850)
—
—
Payment of contingent consideration
—
—
(68)
Net receipt from the issuance of common stock under ESPP
901
981
837
Net receipt from the exercise of stock options
—
46
827
Payment from common stock purchased for tax withholding
(1,432)
(1,967)
(2,067)
Repurchase of common stock
—
(15,539)
(34,002)
Payment of cash dividends
(2,510)
(3,384)
(2,787)
Net cash provided by (used in) financing activities
4,540
66,737
(38,260)
Net increase (decrease) in cash
1,840
(9,028)
4,375
Effect of exchange rate changes on cash
(742)
116
(332)
Cash at beginning of year
11,416
20,328
16,285
Cash at end of year
$
12,514 $
11,416 $
20,328
See summary of significant accounting policies and notes to the consolidated financial statements.
42
AMERICAN VANGUARD CORPORATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2024, 2023 and 2022
(Dollars in thousands, except per share data)
(1)
Description of Business and Summary of Significant Accounting Policies
American Vanguard Corporation (the “Company” or “AVD”) is primarily a specialty solutions manufacturer that develops and markets safe synthetic,
biological and biorational products for agricultural, commercial and consumer uses. The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company’s Chief Executive Officer is
the Chief Operating Decision Maker (CODM), and the Company operates within a single operating and reportable segment. The Company’s CODM makes
strategic decisions based on the Company’s consolidated financial statements, and market opportunities and synergies across the entire organization. Therefore,
the Company’s CODM allocates resources and assesses financial performance on a consolidated basis.
All U.S. Dollar amounts reflected in the notes to the consolidated financial statements are presented in thousands, except per share data.
Transformation – Transformation expenses on the consolidated statement of operations include costs related to the Company’s digital and structural
transformation projects. The digital transformation effort is intended to ensure that business process owners have access to current and complete data that has
been generated through standardized systems and processes. The structural transformation effort is intended to improve operating leverage by applying business
analytics to current operations, structures, new product development and services, and is focused on identifying process improvements. Transformation
expenses include costs for consulting services, severance costs, retention payments and other costs incurred in connection with staffing and execution of the
Company’s various transformation initiatives.
Cost of Sales— Cost of sales primarily includes inventory procurement, production, warehousing, handling, and outbound freight. These costs include
direct labor, materials, and manufacturing overhead. Depreciation and amortization expense included in cost of sales amounted to $5,157, $6,599, and $8,906
for the years ended December 31, 2024, 2023, and 2022, respectively.
Advertising Expense—The Company expenses advertising costs in the period incurred. Advertising expenses are recognized as selling expenses in the
consolidated statements of operations and were $4,111, $5,736 and $5,836 in 2024, 2023 and 2022, respectively.
Research and Development Expense—Research and development expenses, which are included in research, product development and regulatory, in the
consolidated statements of operations were $10,933, $12,347 and $10,829 for the years ended December 31, 2024, 2023 and 2022, respectively.
Cash—The Company maintains cash balances that exceed federally insured limits with a number of financial institutions.
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.
The components of inventories, consist of the following:
2024
2023
Finished products
$
154,628 $
198,935
Raw materials
24,664
20,616
Total inventories
$
179,292 $
219,551
43
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.
Leases— The Company has operating leases for warehouses, manufacturing facilities, offices, cars, railcars and certain equipment for which operating
lease right-of-use (“ROU”) assets and corresponding lease liabilities are recorded. The Company measures ROU assets throughout the lease term at the carrying
amount of the lease liability, plus initial direct costs, plus any prepaid lease payments, less the unamortized balance of lease incentives received. The lease
liabilities are measured at the present value of the unpaid lease payments at the lease commencement date. Leases that include both lease and non-lease
components are accounted for as a single lease component for each asset class, except for real estate leases.
The minimum payments under operating leases are recognized on a straight-line basis over the lease term in the consolidated statements of operations.
Operating lease expenses related to variable lease payments are recognized in cost of sales or as operating expenses in a manner consistent with the nature of the
underlying lease and as the events, activities, or circumstances in the lease agreement occur. Leases with a term of less than 12 months are not recognized on the
consolidated balance sheets, and the related lease expenses are recognized in the consolidated statements of operations on a straight-line basis over the lease
term.
Accounting for leases requires the Company to exercise judgment and make estimates in determining the applicable discount rate, lease term and
payments due under a lease. Most of our leases do not provide an implicit interest rate, nor is it available to us from our lessors. As an alternative, the Company
uses our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data,
in determining the present value of lease payments. The Company also estimated the fair value of the lease and non-lease components for some of our
warehouse leases based on market data and cost data.
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 1 year to 20 years.
The operating leases of the Company do not contain major restrictions or covenants such as those relating to dividends or additional financial
obligations. Finance leases are immaterial to the consolidated financial statements. There were no lease transactions with related parties during 2024, 2023 and
2022.
The operating lease expense for the years ended December 31, 2024, 2023 and 2022 was $7,687, $7,579 and $6,531, respectively. Lease expenses
related to variable lease payments and short-term leases were immaterial. Additional information related to operating leases are as follows:
Year Ended
December 31,
2024
Year Ended
December 31,
2023
Year Ended
December 31,
2022
Cash paid for amounts included in the measurement of
lease liabilities
$
7,718 $
7,333 $
6,450
ROU assets obtained in exchange for new lease liabilities $
4,628 $
4,466 $
4,468
The weighted-average remaining lease term and discount rate related to the operating leases as of December 31, 2024 and 2023 were as follows:
December 31, 2024
December 31, 2023
Weighted-average remaining lease term (in years)
4.49
5.04
Weighted-average discount rate
4.88%
4.60%
44
Future minimum lease payments under non-cancellable operating leases as of December 31, 2024 were as follows:
2025
$
6,868
2026
5,221
2027
3,609
2028
2,384
2029
1,804
Thereafter
2,873
Total lease payments
$
22,759
Less: imputed interest
(2,284)
Total
$
20,475
Amounts recognized in the consolidated balance sheets:
Operating lease liabilities, current
$
6,136
Operating lease liabilities, long term
$
14,339
Revenue Recognition— The Company recognizes revenue when control of the ordered goods or services are transferred to its customers in an amount
that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Amounts billed for shipping and handling activities
after the transfer of control to the customer are considered fulfillment activities and are recognized as revenue. The costs are accrued when the related revenue is
recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The Company sells
its products mainly to distributors and retailers. In addition, the Company also sells its products direct to end users internationally. The products include
insecticides, herbicides, soil fumigants, fungicides and biologicals. In addition, the Company recognizes royalty income related to licensing arrangements which
qualify as functional licenses rather than symbolic licenses. Upon signing a new licensing agreement, the Company typically receives up-front fees, which are
generally characterized as non-refundable royalties. These fees are recognized as revenue upon the execution of the license agreements. Selective enterprise
information of sales disaggregated by category and geographic region is as follows:
2024
2023
2022
Net sales:
U.S. crop
$
228,327 $
269,229 $
288,624
U.S. non-crop
82,400
75,287
76,709
Total U.S.
310,727
344,516
365,333
International
236,579
234,855
244,282
Total net sales
$
547,306 $
579,371 $
609,615
Accrued Program Costs— The Company offers various discounts to customers based on the volume purchased within a defined period, other pricing
adjustments, some grower volume incentives or other key performance indicator driven payments made to distributors, retailers or growers, usually at the end of
a growing season. The Company describes these payments as “Programs.” Programs are a critical part of doing business in both the U.S. crop and non-crop
chemicals marketplaces. These discount Programs represent variable consideration. Revenues from sales are recorded at the net sales price, which is the
transaction price, less an estimate of variable consideration. Variable consideration includes amounts expected to be paid to its customers using the expected
value method. Each quarter the Company compares individual sale transactions with Programs to determine what, if any, Program liabilities have been incurred.
Once this initial calculation is made for the specific quarter, sales and marketing management, along with executive and financial management, review the
accumulated Program balance and, for volume driven payments, make assessments of whether or not customers are tracking in a manner that indicates that they
will meet the requirements set out in agreed upon terms and conditions attached to each Program. Following this assessment, the Company adjusts the
accumulated accrual to properly reflect the liability at the balance sheet date. Programs are paid out predominantly on an annual basis, usually in the final
quarter of the financial year or the first quarter of the following year.
45
Customer Prepayments—From time to time, the Company receives prepayments from customers which are recorded as customer prepayments on the
Company’s consolidated balance sheets. The Company does not recognize revenue on any such payments until the customer places binding purchase orders, the
goods are shipped, and control is transferred to the customer. Revenue recognized for the years ended December 31, 2024, 2023, and 2022 that were included in
the customer prepayments balance at the beginning of 2024, 2023, and 2022 was $64,947, $88,097, and $63,064, respectively. The Company made refunds in
the amount of $613 and $22,500 to customers for the year ended December 31, 2024 and 2023, respectively.
Current Expected Credit Losses— The Company maintains an allowance to cover its Current Expected Credit Losses ("CECL") on its trade receivables,
other receivables and contract assets arising from the possible failure of customers to make contractual payments. The Company estimates credit losses
expected over the life of its trade receivables, other receivables and contract assets based on historical information combined with current conditions that may
affect a customer’s ability to pay and reasonable and supportable forecasts. In most instances, the Company’s policy is to write off trade receivables when they
are deemed uncollectible regarding likely future payments. The vast majority of the Company's trade receivables, other receivables and contract assets are less
than 365 days. Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on
multiple portfolios. The determination of portfolios is based primarily on geographical location, type of customer and accounts receivables aging. A roll-
forward of the allowances for current expected credit losses is presented in supplemental information.
Deferred Loan Fees— These fees in connection with the Company’s senior credit facility are capitalized and amortized on a straight-line basis over the
life of the borrowing and included in interest expense, net.
Property, Plant and Equipment and Depreciation— Property, plant and equipment includes the cost of land, buildings, machinery and equipment,
office furniture and fixtures, automobiles, construction projects and improvements to existing plant and equipment. Interest costs related to construction projects
are capitalized at the Company’s current weighted average effective interest rate. Expenditures for minor repairs and maintenance are expensed as incurred.
When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the
gain or loss realized on disposition is reflected in operations. All plant and equipment are depreciated using the straight-line method, utilizing the estimated
useful lives.
Business Combinations— The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and
liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which
may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and
liabilities assumed, with the corresponding offset to goodwill or an adjustment to the gain from a bargain purchase. In addition, when appropriate uncertain tax
positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company
continues to collect information and re-evaluates these estimates and assumptions quarterly and records any adjustments to the Company’s preliminary
estimates to goodwill or an adjustment to the gain from a bargain purchase, provided that the Company is within the measurement period. Upon the conclusion
of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments
are recorded to the Company’s consolidated statement of operations.
From time to time, certain of our acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of
future income thresholds. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective
acquisition dates. For each transaction, the Company engages third-party valuation specialists to assist it in making estimates of the fair value of contingent
earn-out payments, both as part of the initial purchase price and at each subsequent financial statement date until the end of the related performance period. The
Company records the estimated fair value of contingent consideration as a liability on the consolidated balance sheets. The Company reviews and re-assesses
the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could be materially different from the initial estimates or
prior quarterly amounts. Changes in the estimated fair value of the contingent earn-out liabilities are reported in operating results.
46
Asset Acquisitions— If an acquisition of an asset or group of assets does not meet the definition of a business, the transaction is accounted for as an asset
acquisition rather than a business combination. An asset acquisition does not result in the recognition of goodwill and transaction costs are capitalized as part of
the cost of the asset or group of assets acquired. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets
acquired and liabilities assumed at the acquisition date. The acquisitions costs are allocated to the assets acquired on a relative fair value basis.
Intangible Assets— The primary identifiable intangible assets of the Company relate to assets associated with its product and business acquisitions. All
the Company’s intangible assets are amortizing assets with finite lives. The estimated useful life of an identifiable intangible asset is based upon several factors
including the effects of demand, competition, and expected changes in the marketability of the Company’s products.
Impairment— The carrying values of long-lived assets other than goodwill are reviewed for impairment annually and/or whenever events or changes in
circumstances indicate that the carrying value of such assets may not be recoverable. The Company evaluates recoverability of an asset group by comparing the
carrying value to the future undiscounted cash flows that it expects to generate from the asset group. If the comparison indicates that the carrying value of an
asset group is not recoverable, measurement of the impairment loss is based on the fair value of the asset. In 2024, the Company determined that the carrying
value related to some of its equipment and intangible assets was impaired. These included the following: The Company invested in developing the SIMPAS
technology platform over more than a 10-year period. As part of the strategic review of capital allocation and operating leverage considerations that was
conducted over the last 12 months and completed during the fourth quarter of 2024, the Company has found that, while the SIMPAS technology platform had
attained full functionality and had been adopted by a small group of growers who use the Company’s products, its adoption slowed to a near halt in 2024 and
further, that its primary market appeal was driven not by the technology itself, but, rather, by the products being dispensed by the system. The Company
concluded that it does not have the wherewithal to achieve greater commercialization beyond incumbent users. While we continue to search for a partner that is
better able to fund large-scale commercialization, the Company has concluded that continuing to invest in this technology will not generate a sufficient return
on investment in a manner that would justify retaining such assets at full value. Secondly, the Company concluded that there was an asset impairment related to
the purchase of two herbicide products. The market for these two products has been greatly reduced by weed resistance and competitive products. As a result,
the Company recorded impairment charges of $23,365, including an impairment of fixed assets in the amount of $14,020, and intangible assets of $9,345. No
material impairment losses were recorded in 2023 and 2022.
The Company annually tests goodwill for impairment at the beginning of the fourth quarter, or earlier if triggering events occur. 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 value exceeds the reporting unit’s fair value. The determination of a reporting units’
fair value includes the Company’s use of a discounted cash flows model and a market approach. Key assumptions in the discounted cash flow include, but are
not limited to, discount rates, future net sales growth, gross margins, expenses, capital expenditures, and terminal growth rates. The market approach key
assumption relates to the earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples. As of October 1, 2024, the Company conducted its
most recent 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 goodwill related to its domestic reporting unit in the amount of $9,131 was fully impaired. The carrying value of
the international reporting unit exceed its respective fair value by $17,918. Based on the results of the quantitative test, the Company recorded goodwill
impairments in the amount of $9,131 and $17,918 for the domestic and international reporting units in 2024, respectively. No impairment losses were recorded
in 2023 and 2022.
47
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:
•
Level 1 – Quoted prices in active markets for identical assets or liabilities.
•
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or
liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the
assets or liabilities.
•
Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing
the asset or liability.
The Company did not have any significant Level 1 investments as of December 31, 2024. The Company's equity investment in Clean Seed Capital
Group Ltd. was a Level 1 investment as of December 31, 2023 (see Note 13 – Equity Investments).
The carrying amount of the Company’s financial instruments, which principally include cash, 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,
approximates fair value as they bear interest at a variable rate that represents current market rates.
Foreign Currency Translation— Certain international operations use the respective local currencies as their functional currency, while other
international operations use the U.S. Dollar as their functional currency. The Company considers the U.S. Dollar as its reporting currency. Translation
adjustments for subsidiaries where the functional currency is its local currency are included in other comprehensive (loss) income. Foreign currency transaction
gains (losses) resulting from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are reported in earnings.
Assets and liabilities of the foreign operations denominated in local currencies are translated at the rate of exchange at the balance sheet date. Revenues and
expenses are translated at the weighted average rate of exchange during the period. Translations of intercompany loans of a long-term investment nature are
included as a component of translation adjustment in other comprehensive income (loss).
Income Taxes—The Company utilizes the asset and liability method of accounting for income taxes as set forth in ASC 740. Under the liability method,
deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected
to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the
deferred tax assets will not be realized. In determining the need for valuation allowances, the Company considers projected future taxable income and the
availability of tax planning strategies. If in the future the Company determines that it will not be able to realize its recorded deferred tax assets, an increase in
the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.
The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the
facts, circumstances, and information available at the reporting date. For those tax positions where there is greater than 50% likelihood that a tax benefit will be
sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has
full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax
benefit has been recognized in the consolidated financial statements.
48
Per Share Information—Basic earnings per share (“EPS”) is computed as net income divided by the weighted average number of shares of common
stock outstanding during the period. Diluted EPS reflects potential dilution to EPS that could occur if securities or other contracts, which, for the Company,
consists of restricted stock grants and options to purchase shares of the Company’s common stock, are exercised as calculated using the treasury stock method.
The components of basic and diluted earnings per share were as follows:
2024
2023
2022
Numerator:
Net (loss) income
$
(126,340) $
7,519 $
27,404
Denominator:
Weighted average shares outstanding—basic
28,059
28,128
29,234
Dilutive effect of stock options and grants
—
405
638
Weighted average shares outstanding—diluted
28,059
28,533
29,872
For the year ended December 31, 2024, 130 options and grants were excluded from the computation as including such options or grants would be anti-
dilutive. For the years ended December 31, 2023 and 2022, no options or grants were excluded from the computation because none were anti-dilutive. Unvested
shares that are considered legally issued are excluded from the computation.
Use of Estimates—The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, and revenues, at the
date that the consolidated financial statements are prepared. Significant estimates relate to the allowance for expected credit losses, inventory valuation,
impairment of long-lived assets, investments and goodwill, assets acquired, and liabilities assumed in connections with business combinations and asset
acquisitions, accrued program costs, stock-based compensation and income taxes. Actual results could materially differ from those estimates.
Total comprehensive (loss) income—In addition to net (loss) income, total comprehensive (loss) income includes changes in equity that are excluded
from the consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the consolidated balance sheets. For
the years ended December 31, 2024, 2023 and 2022, total comprehensive (loss) income consisted of net income and foreign currency translation adjustments.
Stock-Based Compensation—The Company estimates the fair value of share-based payment awards on the date of grant. The value of the portion of the
award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations.
Compensation expense on awards subject to performance conditions is based on the quantity of awards that is probable of vesting.
Stock-based compensation expense recognized is reduced for estimated forfeitures. Estimated forfeitures recognized in the Company’s consolidated
statements of operations reduced compensation expense by $67, $322, and $370 for the years ended December 31, 2024, 2023, and 2022, respectively. The
Company estimates that 20.4% of restricted stock grants and performance-based restricted shares and 11.7% of stock option grants that are currently subject to
vesting will be forfeited. These estimates are reviewed quarterly and revised as necessary.
The Company values restricted stock grants using the Company’s traded stock price at closing on the date of grant. For issuances of performance stock
units subject to market vesting conditions, the Company calculates the fair value of the award using a Monte Carlo simulation valuation model on the grant date.
The Company determines the grant-date fair value of option grants using the Black-Scholes option-pricing model and the Monte Carlo simulation valuation
model for stock options subject to a market vesting/exercisability conditions.
Recently Adopted 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.
The Company retrospectively adopted the standard for the year ended December 31, 2024. Refer to "Note 17 - Segment Reporting" for additional information.
49
Recently Issued Accounting Guidance—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.
In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses", and in January 2025, the FASB issued ASU No. 2025-01, "Income Statement - Reporting
Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date". ASU 2024-03 requires public companies to
disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. For public business entities, ASU 2024-03,
as clarified by ASU 2025-01, is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual
reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. 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 on its consolidated financial statements.
(2) Property, Plant and Equipment
Property, plant and equipment at December 31, 2024 and 2023 consist of the following:
2024
2023
Estimated
useful lives
Land
$
2,755 $
2,765
Buildings and improvements
21,124
21,088
10 to 40 years
Machinery and equipment
146,662
148,912
3 to 25 years
Office furniture, fixtures and equipment
5,201
10,622
3 to 10 years
Automotive equipment
1,039
1,247
5 to 20 years
Construction in progress
2,299
10,553
Total gross value
179,080
195,187
Less accumulated depreciation
(120,911)
(120,627)
Total net value
$
58,169 $
74,560
Domestic
$
54,643 $
69,615
International
3,526
4,945
Total net value
$
58,169 $
74,560
For the years ended December 31, 2024, 2023 and 2022, the Company’s aggregate depreciation expense related to property, plant and equipment was
$8,983, $8,352 and $7,974, respectively. For the years ended December 31, 2024, 2023 and 2022, the Company disposed fully depreciated assets in the amount
of $876, $4,056 and $416, respectively. For the year ended December 31, 2024, the Company recorded an impairment relating to its investment in its SIMPAS
assets in the amount of $14,020. There were no impairment charges in 2023 and 2022. Interest capitalized amounted to $396, $567 and $317 for the years ended
December 31, 2024, 2023 and 2022, respectively.
(3) Long-Term Debt
Long-term debt of the Company at December 31, 2024 and 2023 is summarized as follows:
2024
2023
Senior credit facility
$
147,332 $
138,900
Less deferred loan fees
(1,532)
(1,218)
$
145,800 $
137,682
50
Principal payments on long-term debt at December 31, 2024 of $147,332 are due in August 2026. The deferred loan fees are included in other assets on
the consolidated balance sheet at December 31, 2024 and 2023.
The Company and certain of its affiliates are parties to a senior credit facility 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 Agent (including the Company and AMVAC BV), as "Borrowers", on the one hand, and a group of commercial lenders led by BMO
Bank, N.A. (formerly 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 $275,000, an accordion feature of up to $150,000, a letter of credit and swingline sub-facility
(each having limits of $25,000) and has a maturity date of August 5, 2026. The Credit Agreement amended and restated the previous credit facility, which had a
maturity date of June 30, 2022. With respect to key financial covenants, the Credit Agreement contains two: namely, borrowers are required to maintain a Total
Leverage (“TL”) Ratio of no more than 3.5-to-1, during the first three years, stepping down to 3.25-to-1 as of December 31, 2024, and a Fixed Charge Coverage
Ratio ("FCCR") of at least 1.25-to-1. In addition, to the extent that it completes acquisitions totaling $15,000 or more in any 90-day period, AMVAC may step-
up the TL Ratio by 0.5-to-1, not to exceed 4.00-to-1, for the next three full consecutive quarters. Acquisitions below $50,000 did not require Agent consent.
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. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with
proper notice, on either (i) London Interbank Offered Rate ("LIBOR") plus the “Applicable Margin” which is based upon the Total Leverage (“TL”) Ratio
(“LIBOR Revolver Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month LIBOR Rate plus
1.00%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). The Company and the Lenders entered into an
amendment to the Credit Agreement, effective March 9, 2023, whereby LIBOR was replaced by the Secured Overnight Financing Rate ("SOFR") with a credit
spread adjustment of 10.0 bps for all SOFR periods. The revolving loans now bear interest at a variable rate based at our election with proper notice, on either
(i) SOFR plus 0.1% per annum and the “Applicable Margin” or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily
One-Month SOFR Rate plus 1.10%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). Interest payments for
SOFR Revolver Loans are payable on the last day of each interest period (either one-, three- or six- month periods, as selected by the Company) and the
maturity date, while interest payments for Adjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date.
On November 7, 2023, the Company entered into Amendment Number Six to the Third Amended Loan and Security Agreement that provided relief in
respect of both financial covenants. On August 8, 2024, the Company and the lenders entered into Amendment Number Seven to the Credit Agreement,
effective June 30, 2024, under which the Maximum Total Leverage Ratio was modified to 4.25 for the period ended June 30, 2024; 5.0 for the period ended
September 30, 2024; 4.5 for the period ended December 31, 2024, 4.5 for the period ending March 31, 2025, 4.25 for the period ending June 30, 2025; 4.0 for
the period ending September 30, 2025, and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The Minimum Fixed Charge Coverage
Ratio remains the same, and a new covenant (added as part of Amendment Number seven), the Minimum Modified Current Ratio of not less than 1.5 (defined
as the ratio of (i) Accounts Receivable plus Inventory, to (ii) Funded Debt of the Company and its Subsidiaries on a consolidated basis). In addition, the
Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent. In addition, for purposes of
calculating Consolidated EBITDA, the basket for transformation and one-time (cash and non-cash charges (which are excluded from such measure) has been
increased from $5,000 to $12,500 in second quarter 2024, $45,000 (in third quarter 2024, fourth quarter 2024 and first quarter 2025), $42,500 in second quarter
2025, $15,000 in third quarter 2025 and $7,500 in fourth quarter 2025, as measured on a four-quarter trailing basis. Finally, the interest rates for the Credit
Agreement, as amended, were increased by 25bps to the extent the Total Leverage Ratio equals or exceeds 4.0 and remains at the rates set forth in the
Amendment Number Six to the extent the Total Leverage Ratio is below 4.0.
On March 12, 2025, the Company entered into Amendment Number Eight to the Third Amended Loan and Security Agreement that provided relief in
respect of both financial covenants, under which the Maximum Total Leverage Ratio was modified to 6.25 for the period ending March 31, 2025; 6.25 for the
period ending June 30, 2025; 5.75 for the period ending September 30, 2025 and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The
Minimum Fixed Charge Coverage Ratio is changed to 1.15 for the period ending March 31, 2025, and returning to 1.25 for the period ending June 30, 2025 and
thereafter. In addition, the Applicable Margins
51
for the Revolver Loans are changed to 3.75% for SOFR and 2.75% as the Adjusted Base Rate; the Unused Line Fee Rate is 0.35% and the Letter of Credit Fee
is 3.75%. Further, notwithstanding financial performance, the borrowing capacity is capped below the facility’s previous maximum ($275,000) by $50,000
through June 30, 2025, then by $40,000 through December 31, 2025, and then by $75,000 through the expiration of the facility. Finally, the definition of
Consolidated EBITDA was changed to exclude non-recurring non-cash charges as well as cash charges that do not exceed various sums in various categories
over the balance of the term.
On May 27, 2025, the Company and the lenders entered into Amendment Number Eleven to the Third Amended Loan and Security Agreement, under
which events of default arising from the failure of Borrowers to be in compliance with both the Total Leverage Ratio and the Fixed Charge Coverage Ratio as of
March 31, 2025, were waived. In addition, the Total Revolver Commitment was reduced from $275,000 to the following: $245,000, effective from the Closing
Date through November 29, 2025; $225,000 effective from November 30, 2025, through December 30, 2025; and $200,000 from December 31, 2025, through
the expiration of the agreement. In addition, the due date for audited fiscal year-end financial statements was extended to one hundred fifty-seven (157) days
(after the end of the fiscal year) for 2025 only, and the due date for first quarter financial statements was extended to sixty-seven (67) days after March 31,
2025. In addition, the Maximum Total Leverage Ratio covenant was suspended for the quarters ending on June 30, 2025, September 30, 2025, and December
31, 2025, and set at 4.00 to 1.00 for the quarter ending March 31, 2026, and thereafter. Further, the Fixed Charge Coverage Ratio covenant was suspended for
the quarter ending June 30, 2025, then set at 1.00 to 1.00 for the quarter ending September 30, 2025, then set at 1.25 to 1:00 for the quarter ending December
31, 2025, and thereafter.
In addition, under the terms of the Eleventh Amendment, two new covenants were added. First, commencing June 30, 2025, Borrowers must maintain
Liquidity measured on a monthly basis of not less than: $30,000 for the month ending June 30, 2025; $35,000 for the month ending July 31, 2025; $4,042 for
the month ending August 31, 2025; $25,000 for the month ending September 30, 2025; $3,000 for the month ending October 31, 2025; $9,292 for the month
ending November 30, 2025; and $20,000 for the month ending December 31, 2025, it being understood that Liquidity will include the sum of Borrowers’ cash,
plus 50% of cash held in accounts outside of the U.S. plus the amount by which the revolver commitments exceed the revolver balance (net of letters of credit).
Second, Borrowers must attain minimum, year-to-date Consolidated EBITDA (reflecting the exclusion of non-recurring non-cash charges and certain other
charges as per the Eighth Amendment) as measured quarterly in the following amounts: $4,500 as of June 30, 2025; $9,500 as of September 30, 2025; and
$35,000 as of December 31, 2025. With these changes, with respect to Revolver Loans, the Applicable Margins for SOFR are set at 3.75% from the Closing
through September 30, 2025, and then rises to 4.75% as of October 1, 2025, and thereafter, while the Adjusted Base Rate increases to 2.75% and 3.75% during
those respective periods.
The interest rate on December 31, 2024, was 7.68%. Interest incurred, including amortization of deferred loan fees, was $16,054, $12,391, and $4,238
for the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024, by virtue of Amendment Number 8 to the Third Amended Loan and Security Agreement, 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 $28,623 as of December 31, 2024.
Substantially all the Company’s assets are pledged as collateral under the Credit Agreement, as amended.
52
(4) Income Taxes
The provision for income taxes are:
2024
2023
2022
Current:
Federal
$
(1,131) $
8,038 $
7,439
State
(271)
1,211
2,173
Foreign
5,629
3,238
3,943
4,227
12,487
13,555
Deferred:
—
Federal
783
(6,263)
(2,763)
State
1,208
(1,029)
(1,243)
Foreign
(336)
(2,417)
(988)
1,655
(9,709)
(4,994)
Total
$
5,882 $
2,778 $
8,561
Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax
expense, as a result of the following:
2024
2023
2022
Computed tax expense at statutory federal rates
$
(25,296) $
2,162 $
7,553
Increase (decrease) in taxes resulting from:
State taxes, net of federal income tax benefit
(3,117)
756
1,493
Unrecognized tax benefits
(191)
(585)
(1,441)
Income tax credits
(288)
(720)
(1,342)
Foreign tax rate differential
2,710
1,025
785
Stock based compensation
685
219
55
Global intangible low-taxed income
—
685
—
Change in valuation allowance
29,730
1,376
379
Return to provision
(1,189)
158
(693)
Nondeductible expenses / (tax deductions)
2,161
(327)
989
Gross receipts taxes
398
425
602
IP migration
—
(2,455)
—
Other
279
59
181
Total
$
5,882 $
2,778 $
8,561
(Loss) income before provision for income taxes and losses on equity investments are:
2024
2023
2022
Domestic
$
(103,918) $
6,672 $
28,739
International
(16,540)
3,625
7,226
Total
$
(120,458) $
10,297 $
35,965
53
Temporary differences between the consolidated financial statements’ carrying amounts and tax bases of assets and liabilities that give rise to significant
portions of the net deferred tax liability at December 31, 2024 and 2023 relate to the following:
2024
2023
Deferred tax assets
Inventories
$
9,322 $
2,764
Program accrual
10,486
9,742
Vacation pay accrual
682
864
Accrued bonuses and severance
882
37
Bad debt expense
2,550
2,143
Stock compensation
1,047
1,536
Domestic NOL carryforward
4,604
543
Foreign NOL carryforward
6,297
6,322
Tax credits
1,794
1,582
Lease liability
5,078
5,812
Accrued expenses
678
696
Unrealized foreign exchange loss
2,521
(1,182)
Capitalized R&D costs
7,587
7,140
Other
2,970
—
Deferred tax assets
56,498
37,999
Less valuation allowance
(33,855)
(3,317)
Deferred tax assets, net
$
22,643 $
34,682
Deferred tax liabilities
Plant and equipment
$
(22,686) $
(32,336)
Lease assets
(4,895)
(5,617)
Prepaid expenses
(1,809)
(1,406)
Other
—
(366)
Deferred tax liabilities
$
(29,390) $
(39,725)
Total net deferred tax assets (liabilities)
$
(6,747) $
(5,043)
As of December 31, 2024, the Company maintained a full valuation allowance against its net deferred income tax assets related to the Company’s
operations in the United States, Brazil, Dominican Republic, Honduras, Hong Kong, Spain, and Ukraine totaling $33,855. The valuation allowance increased by
$30,538 for the year ended December 31, 2024, of which $808 relates to unrealized foreign exchange gains and foreign currency translation included in other
comprehensive income for 2024, and $29,730 included in the provision for income taxes for 2024. As of December 31, 2023, the Company maintained a full
valuation allowance against the net deferred income tax assets related to the Company’s operations in Brazil, Spain, Singapore, and Ukraine totaling $3,317.
Gross foreign NOLs related to the Company's foreign operations were $19,577 and $19,699, for the years ended December 31, 2024 and 2023,
respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.
Gross domestic federal and state NOLs available across all jurisdictions in which we operate were $30,062 and $3,598 as of December 31, 2024 and
2023, respectively. The Company’s federal NOL can be carried forward indefinitely and is subject to annual limitations in accordance with IRC Section 382.
The Company’s state NOLs expire over varying intervals in the future and are subject to annual limitations in accordance with IRC Section 382.
54
The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended
December 31, 2024 and 2023 included in other liabilities on the Company’s consolidated balance sheets:
2024
2023
Balance at beginning of year
$
1,796 $
2,006
Additions for tax positions related to the current year
63
230
Additions for tax positions related to the prior years
—
302
Reduction for tax positions related to the prior years
(995)
(799)
Effect of exchange rate changes
39
57
Balance at end of year
$
903 $
1,796
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s
consolidated financial statements. As of December 31, 2024 and 2023, the Company incurred $138 and $1,342, respectively in interest and penalties related to
unrecognized tax benefits on its consolidated balance sheets.
It is expected that the amount of unrecognized tax benefits will change and $290 of unrecognized tax benefits is expected to be released within the next
twelve months due to expiration of the statute of limitations.
The Company believes it is more likely than not that the deferred assets detailed in the table above, exclusive of those in the United States, Brazil,
Dominican Republic, Honduras, Hong Kong, Spain, and Ukraine with the previously mentioned full valuation allowances, will be realized in the normal course
of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries that amounted to $89,429 at December 31, 2024, are permanently
reinvested. Determination of the unrecognized deferred tax liability is not practical due to the complexities of a hypothetical calculation.
The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company
are subject to Internal Revenue Service (“IRS”) examination for the 2021 through 2023 tax years. State income tax returns are subject to examination for the
2020 through 2023 tax years. The Company has foreign income tax returns subject to examination.
Beginning in 2022, The Tax Cuts and Jobs Act of 2017 ("TCJA"), requires taxpayers to capitalize and amortize research and development expenditures
pursuant to Internal Revenue Code, or IRC, Section 174, which resulted in increases in the Company’s deferred tax asset balance of $7,587 as of December 31,
2024. There was an increase in cash tax payments in the amount of $1,431 and $3,344 for the years ended December 31, 2024 and December 31, 2023,
respectively.
(5) Litigation and Environmental
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 October 25, 2024, the U.S. District Court for the Southern District of
Alabama approved, and entered a plea agreement pursuant to which the Company had entered a plea of guilty to one count of transporting hazardous waste
without a waste manifest. This matter arose from the reimportation of used, substantially empty containers in 2014. Under the terms of the plea agreement, the
Company paid a fine and entered into a three-year probation during which it will be subject to an environmental compliance plan, the form of which is currently
before the court for its approval.
55
DBCP Cases
Over the course of the past 30 years, AMVAC and/or the Company have been named or otherwise implicated in a number of lawsuits concerning
injuries allegedly arising from either contamination of water supplies or personal exposure to 1, 2-dibromo-3-chloropropane (“DBCP®”). DBCP was
manufactured by several chemical companies, including Dow Chemical Company, Shell Oil Company and AMVAC (which ceased manufacture in about 1980)
and was approved by the USEPA to control nematodes. DBCP was also applied on banana farms in Latin America. The USEPA suspended registrations of
DBCP in October 1979, except for use on pineapples in Hawaii. That suspension was partially based on 1977 studies by other manufacturers that indicated a
possible link between male fertility and exposure to DBCP among their factory production workers involved with producing the product.
Delaware DBCP Cases
Chavez & Marquinez. Two cases were filed independently in 2012 by the same law firm (HendlerLaw, P.C.) in Louisiana and Delaware involving
claims on behalf of banana workers for personal injury allegedly arising from exposure to DBCP. Through several years of law and motion practice, the
number of plaintiffs in the actions has been reduced from about 2,750 to 290 banana workers from Costa Rica, Ecuador, Guatemala and Panama, and both
cases have been consolidated before the United States District Court for the District of Delaware (USDC DE No. 1:12-CV-00695 & 00697). Discovery
commenced in 2018 and has consisted largely of seeking medical examinations from the remaining plaintiffs. In December 2022, defendants in this matter filed
a motion for summary judgment against the Ecuadorian plaintiffs under the theory that the statute of limitations for negligence barred the action. In January
2024, the court denied defendants’ motion for summary judgment on the basis of “the most analogous case” doctrine. In July 2024, the magistrate entered a
scheduling order by which trials have been set for the approximately 60 plaintiffs from Ecuador to occur in groups of ten, beginning in February 2026. Law and
motion continued over the course of the fourth quarter with various motions to dismiss individuals and motions for summary judgment along with further
depositions and requests for admission. At this stage in the proceedings, the Company does not believe that a loss is probable or reasonably estimable and has
not recorded a loss contingency for these matters.
Other Matters
Pitre etc. v. Agrocentre Ladauniere et al. On February 11, 2022, a strawberry grower named Les Enterprises Pitre, Inc. filed a complaint in the Superior
Court, District of Labelle, Province of Quebec, Canada, entitled Pitre, etc. v. Agrocentre Ladauniere, Inc. etal, including Amvac Chemical Corporation, seeking
damages in the amount of approximately $5 million arising from stunted growth of, and reduced yield from, its strawberry crop allegedly from the application
of Amvac’s soil fumigant, Vapam, in spring of 2021. Examinations of plaintiff were held in mid-August 2022, during which plaintiff in effect confirmed that he
had planted his seedlings before expiration of the full time interval following product application (as per the product label), that he had failed to follow the
practice of planting a few test seedlings before planting an entire farm, and that he had placed his blind trust in his application adviser on all manner of timing
and rate. An examination of the Company’s most knowledgeable witness took place in April 2024. Follow-up undertakings (discover requests) continued
thereafter. The Company believes that the claims have no merit and intends to defend the matter. At this stage in the proceedings, there is not sufficient
information to form a judgment as to either the probability or amount of loss; thus, the company has not set aside a reserve in connection with this matter.
Catalano v. AMVAC Chemical Corp. On June 6, 2022, AMVAC was served with a summons and complaint for a matter entitled Andrew Catalano and
Ruth Catalano v. AMVAC in the Superior Court of the State of California, County of Orange (30-2022-01263987-CU-PL-CXC) in which plaintiff, who worked
as a professional applicator of pesticides, including Orthene (for which AMVAC is registrant) seeks damages for an injury (specifically, cardiomyopathy)
allegedly arising from his exposure to this product. AMVAC is unaware of any link between cardiovascular disease and Orthene (which has been commercially
available for over 30 years) and believes that this case has no merit and intends to defend it vigorously. The Company filed an answer in early July 2022,
including multiple affirmative defenses. Further, the parties continue to engage in discovery, and plaintiffs have been unable to supply any data establishing a
causal link between use of this product and the heart condition that plaintiff alleges. At this stage, there is not sufficient information to form a judgment as to
either the probability or amount of any loss; thus, the company has not set aside a reserve in connection with this matter.
56
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 host 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, encaptioned Jorge Reyes v. AMVAC etc., etal.,
with the Superior Court for the County of Los Angeles, Central District. Plaintiff alleges various wages and hours violations, including overtime, minimum
wage, sick leave, rest periods and so on. The parties attended a mediation on September 4, 2024, during which they agreed in principle to a settlement pursuant
to which the Company has recorded a reserve that is not material to its financial statements and is sufficient to cover the settlement amount. The settlement is
subject to court approval, which we expect will be forthcoming during Q3 2025.
Region 9, Notice of Violation re: FPAS. On November 25, 2024, EPA Region IX issued to American Vanguard Chemical Corporation a letter requesting
that AMVAC show cause why a civil penalty should not be assessed with respect to allegations that, from 2020 through 2023, AMVAC violated Section 12(a)
(2)(N) of FIFRA by exporting 18 unregistered pesticides to foreign purchasers in 14 countries without submitting a Foreign Purchaser Acknowledgement
Statement (“FPAS”) from each foreign purchaser to EPA, as required by 40 C.F.R. § 168.75(c). The Company is performing internal analysis on the matter and
has entered into a tolling agreement with the agency to extend the time for resolution into June 2025. At this stage, the Company believes that a loss is probable
and has set a reserve in an amount that is not material to its financial statements.
(6) U.S. Employee Deferred Compensation and Stock Purchase Plans
The Company maintains a deferred compensation plan (“the Plan”) for all eligible employees. The Plan calls for each eligible employee, at the
employee’s election, to participate in an income deferral arrangement under Internal Revenue Code Section 401(k). The plan allows eligible employees to make
contributions, which cannot exceed 100% of compensation, or the annual dollar limit set by the Internal Revenue Code. The Company matches the first 5% of
employee contributions. The Company’s contributions to the Plan amounted to $2,525, $2,507 and $2,409 in 2024, 2023 and 2022, respectively.
During 2001, the Company’s Board of Directors adopted the AVD Employee Stock Purchase Plan (the “ESPP Plan”). The Plan allows eligible
employees to purchase shares of common stock through payroll deductions at a discounted price. An original aggregate number of approximately 1,000,000
shares of the Company’s Common Stock, par value $0.10 per share (subject to adjustment for any stock dividend, stock split or other relevant changes in the
Company’s capitalization) were allowed to be sold pursuant to the Plan, which is intended to qualify under Section 423 of the Internal Revenue Code. The Plan
allows for purchases in a series of offering periods, each six months in duration, with new offering periods (other than the initial offering period) commencing
on January 1 and July 1 of each year. The initial offering period commenced on July 1, 2001. Pursuant to action taken by the Company’s Board of Directors on
December 10, 2010, the expiration of the Plan was extended to December 31, 2013. The Plan was amended and restated on June 30, 2011, following
stockholders’ ratification of the extended expiration date. The Plan was amended as of June 6, 2018, following stockholders’ ratification of a ten-year extension
to the expiration date (which now stands at December 31, 2028). Under the Plan, as amended as of June 6, 2018, 995,000 shares of the Company’s common
stock were authorized. As of December 31, 2024 and 2023, 349,148 and 441,915 shares, respectively, remained available under the plan. The expense
recognized under the Plan was immaterial during the years ended December 31, 2024, 2023 and 2022, respectively.
Shares of common stock purchased through the Plan in 2024, 2023 and 2022 were 92,767, 50,025 and 51,240, respectively.
(7) Major Customers
In 2024, there were three customers that accounted for 14%, 13% and 11%, of the Company’s consolidated sales. In 2023, there were three customers
that accounted for 15%, 14% and 8%, of the Company’s consolidated sales. In 2022, there were three customers that accounted for 18%, 13%, and 8% of the
Company’s consolidated sales.
57
The Company primarily sells its products to distributors, buying cooperatives, other co-operative groups and, in certain territories, end users, and extends
credit based on an evaluation of the customer’s financial condition. The Company had three significant customers who each accounted for approximately 5%,
3% and 3% of the Company’s receivables as of December 31, 2024. The Company had three significant customers who each accounted for approximately 6%,
5% and 3% of the Company’s receivables as of December 31, 2023. The Company has long-standing relationships with its customers and considers its credit
risk associated with its domestic business for accounts receivable to be insignificant.
The Company’s receivables, excluding allowances for expected credit losses, by geography as of December 31, 2024 and 2023 are summarized as
follows:
2024
2023
Domestic receivables
$
71,794 $
89,315
International receivables
107,139
108,761
Total receivables
$
178,933 $
198,076
International sales by territory based on customer location for 2024, 2023 and 2022 were as follows:
2024
2023
2022
South and Central America
$
118,159
$
117,727
$
124,525
Mexico
48,463
49,800
45,995
Asia
34,123
28,071
26,588
Australia & New Zealand
21,687
19,712
19,674
Canada
8,513
12,268
14,860
Africa
5,646
3,715
8,840
Europe
1,893
2,208
1,964
Middle East
739
1,354
1,836
Total international net sales
$
239,223
$
234,855
$
244,282
(8) Product and 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
$4,492, which was net of cash acquired of $233. The acquisition was accounted for as a business combination and the purchase consideration was allocated as
follows:
Preliminary Allocation at
December 31, 2023
Measurement Period
Adjustments
Final Allocation
Trade receivables
$
1,883
$
— $
1,883
Inventory and other current assets
1,330
—
1,330
Property, plant, and equipment
45
90
135
Customer relationships
—
1,300
1,300
Product registrations and product rights
104
396
500
Goodwill
2,949
(1,339)
1,610
Liabilities assumed
(1,819)
(447)
(2,266)
Total
$
4,492
$
— $
4,492
Liabilities assumed include liabilities of $447 related to income tax matters. Goodwill is not expected to be deductible for income tax purposes. The
operating results of Punto Verde have been included in the Company's consolidated statements of operations from the date of acquisition. Pro-forma financial
information is not included herein as the pro-forma impact of the acquisition is not material.
58
(9) Intangible Assets and Goodwill
The following schedule represents intangible assets recognized in connection with product acquisitions (See Note 1 for the Company’s accounting policy
regarding intangible assets):
Amount
Intangible assets at January 1, 2022
$
197,841
Additions during fiscal 2022
1,292
Impact of movement in exchange rates
(516)
Amortization expense
(13,953)
Intangible assets at December 31, 2022
184,664
Additions during fiscal 2023
941
Impact of movement in exchange rates
177
Amortization expense
(13,274)
Intangible assets at December 31, 2023
172,508
Measurement period adjustment
1,696
Additions during fiscal 2024
418
Impact of movement in exchange rates
(1,441)
Amortization expense
(13,339)
Asset impairments
(9,345)
Intangible assets at December 31, 2024
$
150,497
Goodwill at January 1, 2022
$
46,260
Impact of movement in exchange rates
750
Goodwill at December 31, 2022
47,010
Additions during fiscal 2023
2,949
Impact of movement in exchange rates
1,240
Goodwill at December 31, 2023
51,199
Measurement period adjustment
(1,339)
Impact of movement in exchange rates
(3,110)
Goodwill impairment
(27,049)
Goodwill at December 31, 2024
$
19,701
Intangible assets and goodwill at December 31, 2024
$
170,198
The Company recorded impairment charges related to its SIMPAS precision application technology platform and two of its herbicide products and one
of its fungicide products in the amount of $9,345 during the year ended December 31, 2024. In addition, the Company recorded $27,049 in goodwill
impairment charges for the year ended December 31, 2024. No impairment charges were recorded during the years ended December 31, 2023.
59
The following schedule represents the gross carrying amount and accumulated amortization of intangible assets as of December 31, 2024 and 2023.
Product rights and trademarks are amortized over the lesser of the useful life ranging from 10 to 25 years, or the patent life. Customer lists are amortized over
their expected useful lives of nine to ten years. The amortization expense is included in operating expenses on the consolidated statements of operations.
2024
2023
Gross
Accumulated
Amortization
Net Book
Value
Gross
Accumulated
Amortization
Net Book
Value
Product rights and patents
$
260,928 $
138,090 $
122,838 $
272,879 $
131,778 $
141,101
Trademarks
38,475
14,375
24,100
40,896
13,290
27,606
Customer lists
11,874
8,315
3,559
11,549
7,748
3,801
Total intangibles assets
$
311,277 $
160,780 $
150,497 $
325,324 $
152,816 $
172,508
Domestic intangible assets
172,755
102,347
70,408
186,134
99,598
86,536
International intangible assets
138,522
58,433
80,089
139,190
53,218
85,972
Total intangibles assets - domestic and international
$
311,277 $
160,780 $
150,497 $
325,324 $
152,816 $
172,508
The following schedule represents future amortization charges related to intangible assets:
Year ending December 31,
Amount
2025
$
12,417
2026
12,370
2027
12,173
2028
11,356
2029
11,005
Thereafter
91,176
$
150,497
The following schedule represents the balance of goodwill at December 31, 2024 and 2023:
2024
2023
Domestic
$
—
$
9,131
International
19,701
42,068
Total goodwill, domestic and international
$
19,701
$
51,199
(10) Commitments
Our minimum commitments under our take-or-pay purchase obligations associated with the sourcing of materials total approximately $9,700 as of
December 31, 2024. Since the majority of our minimum obligations under these contracts are over the length of the contract on a year-by-year basis, the
Company is unable to determine the periods in which these obligations could be payable under these contracts. However, the Company intends to fulfill the
obligations associated with these contracts through its purchases during the normal course of business.
60
(11) Equity Plan Awards
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, options to purchase common stock, and other forms of equity. As of December 31, 2024, the number of securities remaining available for future
issuance under the Plan is 1,141,745.
The below tables illustrate the Company’s stock-based compensation, unamortized stock-based compensation, and remaining weighted average period
for the years ended December 31, 2024, 2023 and 2022. This projected expense will change if any stock options and restricted stock are granted or cancelled
prior to the respective reporting periods, or if there are any changes required to be made for estimated forfeitures.
Stock-Based
Compensation
Unamortized
Stock-Based
Compensation
Remaining
Weighted
Average
Period (years)
December 31, 2024
Options
$
314 $
686
2.1
Restricted Stock
2,499
2,595
2.1
Unrestricted Stock
596
270
0.4
Performance-Based Restricted Stock
1,003
909
2.0
Total
$
4,412 $
4,460
December 31, 2023
Restricted Stock
$
4,830 $
6,593
1.8
Unrestricted Stock
520
217
0.4
Performance-Based Restricted Stock
788
2,500
1.8
Total
$
6,138 $
9,310
December 31, 2022
Restricted Stock
$
4,407 $
6,585
1.8
Unrestricted Stock
499
217
0.4
Performance-Based Restricted Stock
778
2,441
1.8
Total
$
5,684 $
9,243
Restricted and Unrestricted Stock
A summary of nonvested restricted and unrestricted stock is presented below:
2024
2023
2022
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Nonvested shares at January 1
686,185 $
21.24
742,050 $
18.86
817,290 $
17.04
Granted
238,585
7.65
306,515
20.31
256,417
23.53
Vested
(348,934)
17.65
(319,751)
14.90
(262,521)
17.84
Forfeited
(144,611)
19.55
(42,629)
20.61
(69,136)
18.58
Nonvested shares at December 31
431,225 $
17.20
686,185 $
21.24
742,050 $
18.86
The total grant-date fair value of stocks vested during the years ended December 31, 2024, 2023, and 2022 were $6,158, $4,763, and $4,685, respectively.
st
st
61
Performance-Based Restricted Stock
A summary of nonvested performance-based stock is presented below:
December 31, 2024
December 31, 2023
December 31, 2022
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Number
of Shares
Weighted
Average
Grant
Date Fair
Value
Nonvested shares at January 1
263,325 $
21.37
318,699 $
18.05
379,061 $
16.43
Granted
177,010
2.13
94,028
21.51
83,190
23.63
Change based on performance achievement
(49,806)
19.81
(58,827)
14.73
(68,484)
16.87
Vested
(80,570)
21.51
(86,188)
13.99
(51,308)
17.09
Forfeited
(58,331)
22.23
(4,387)
17.67
(23,760)
17.21
Nonvested shares at December 31
251,628 $
7.90
263,325 $
21.37
318,699 $
18.05
The total grant-date fair value of stocks vested during the years ended December 31, 2024, 2023, and 2022 were $1,733, $1,206, and $877, respectively.
Performance Based Restricted Stock Granted in 2024—During the year ended December 31, 2024, the Company issued a total of 177,010 performance
based restricted stock subject to market vesting conditions to its CEO. The shares granted have an average fair value of $2.13. The fair value was determined by
using the Monte Carlo valuation method. The fair value of these shares will be expensed over the requisite service period. 118,007 of the shares have a five-year
performance period beginning on December 9, 2024 and ending on December 9, 2029. These shares are based upon the relative growth of the fair market value
of the Company's stock price over the course of the performance period as compared to the Company's stock price at December 9, 2024. For 59,003 of the
shares, the performance period is one-, three-, and five-year periods beginning on December 9, 2024, and ending on December 9, 2025, December 9, 2027, and
December 9, 2029. These shares are based upon the relative growth of the fair market value of the Company's stock price over the course of the performance
period compared to the Russell 2000 Index as measured at the end of each performance period.
Performance Based Restricted Stock Granted in 2023— During the year ended December 31, 2023, the Company issued a total of 94,028 performance-
based shares to employees. The shares granted during 2023 have an average fair value of $21.51. The fair value was determined by using the publicly traded
share price as of the market close on the date of grant or the Monte Carlo valuation method for shares subject to market vesting conditions. The Company will
recognize as expense the value of the performance-based shares over the required service period from grant date. The shares will cliff vest on April 20, 2026,
with a measurement period commencing January 1, 2023, and ending December 31, 2025. Eighty percent of these performance-based shares are based upon the
financial performance of the Company, specifically, earnings before interest and tax (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. The
remaining 20% of performance-based shares are based upon AVD stock price appreciation over the same performance measurement period. The EBIT and net
sales goals measure the relative growth of the Company’s EBIT and net sales for the performance measurement period, as compared to the median growth of
EBIT and net sales for an identified peer group. The stockholder return goal measures the relative growth of the fair market value of the Company’s stock price
over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the
comparator companies, identified in the Company’s 2022 Proxy Statement. All parts of these awards vest in three years but are subject to reduction to a
minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted
performance.
st
st
62
Performance Based Restricted Stock Granted in 2022— During the year ended December 31, 2022, the Company issued a total of 83,190 performance-
based shares to employees. The shares granted during 2022 have an average fair value of $23.63. The fair value was determined by using the publicly traded
share price as of the market close on the date of grant. The Company will recognize as expense the value of the performance-based shares over the required
service period from grant date. The shares will cliff vest on April 20, 2025, with a measurement period commencing January 1, 2022, and ending December 31,
2024. Eighty percent of these performance-based shares are based upon the financial performance of the Company, specifically, earnings before interest and tax
(“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. The remaining 20% of performance-based shares are based upon AVD stock price
appreciation over the same performance measurement period. The EBIT and net sales goals measure the relative growth of the Company’s EBIT and net sales
for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder return goal
measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the
Russell 2000 Index and the median fair market value of the common stock of the comparator companies, identified in the Company’s 2021 Proxy Statement.
All parts of these awards vest in three years but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to
increase to a maximum of 200% for achieving in excess of the targeted performance.
During 2024, the Company concluded that the performance measure based on EBIT and net sales for the performance-based shares granted in 2021,
when compared to the peer group, was met at 0% for EBIT and 150% for net sales of targeted performance and all related additional expenses were recorded as
of December 31, 2024. The 2021 performance shares based on market price was met at 0% when compared to the Russell 2000 Index.
Stock Options
Under the terms of the Company’s ISOP, under which options to purchase common stock can be issued, all employees are eligible to receive non-
assignable and non-transferable options to purchase shares. The exercise price of any option may not be less than the fair market value of the shares on the date
of grant; provided, however, that the exercise price of any option granted to an eligible employee owning more than 10% of the outstanding common stock may
not be less than 110% of the fair market value of the shares underlying such option on the date of grant. No options granted may be exercisable more than ten
years after the date of grant.
In 2024, the Company granted incentive stock options to employees and recorded an expense of $314. All outstanding stock options are not yet vested
and exercisable. No stock options were granted and no expense was recorded during the years ended December 31, 2023 and 2022.
Incentive Stock Option Plans
Activity of the incentive stock option plans:
Number of
Shares
Weighted Average
Exercise Price Per
Share
Balance outstanding, January 1, 2022
108,036 $
11.49
Options exercised
(39,140)
11.49
Balance outstanding, December 31, 2022
68,896 $
11.49
Options exercised
(4,024)
11.49
Balance outstanding, December 31, 2023
64,872 $
11.49
Options granted
253,853
10.28
Options exercised
—
—
Options expired
(64,872)
11.49
Balance outstanding, December 31, 2024
253,853 $
10.28
All the incentive stock options outstanding as of December 31, 2024, have an exercise price per share of $10.28 and a remaining life of 73 months.
63
Performance Incentive Stock Option Plan
Activity of the performance incentive stock option plan:
Number of
Shares
Weighted
Average Exercise
Price Per
Share
Balance outstanding, January 1, 2022
81,808
$
11.49
Options exercised
—
11.49
Balance outstanding, December 31, 2023
81,808
$
11.49
Options granted
337,542
10.28
Options expired
(81,808)
11.49
Options forfeited
(166,884)
10.28
Balance outstanding, December 31, 2024
170,658
$
10.28
All the performance incentive stock options outstanding as of December 31, 2024, have an exercise price per share of $10.28 and a remaining life of 73
months.
The total intrinsic value of options exercised during 2024, 2023, and 2022 was $0, $35, and $877, respectively. Cash received from stock options
exercised during 2024, 2023 and 2022 was $0, $46, and $827, respectively. None of the outstanding options are vested or exercisable as of December 31, 2024.
(12) Accumulated Other Comprehensive Loss
The following table lists the beginning balance, annual activity and ending balance of foreign currency translation adjustment included as a component
of accumulated other comprehensive loss:
Balance, January 1, 2022
$
(13,784)
Foreign currency translation adjustment, net of tax effects of ($245)
1,602
Balance, December 31, 2022
(12,182)
Foreign currency translation adjustment, net of tax effects of ($277)
6,219
Balance, December 31, 2023
(5,963)
Foreign currency translation adjustment, net of tax effects of $198
(12,766)
Balance, December 31, 2024
$
(18,729)
(13) Equity Investments
In February 2016, AMVAC BV made an equity investment of $3,283 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 December 31, 2024, 2023 and 2022, the Company’s
ownership position in Bi-PA was 15%. Since this investment does not have readily determinable fair value, the Company has elected to measure the investment
at cost less impairment, if any, and to record an increase or decrease for changes resulting from observable price changes in orderly transactions for the identical
or a similar investment of Bi-PA. The Company periodically reviews the investment for possible impairment and concluded in the fourth quarter of 2024 that its
investment in Bi-PA is fully impaired. As a result, the Company recorded an impairment charge in the amount of $2,884 during the year ended December 31,
2024. There were no impairment or observable price changes on the investment during the years ended December 31, 2023 and 2022. The investment is
recorded within other assets on the consolidated balance sheets and amounted to $0 and $2,884 as of December 31, 2024 and 2023, respectively. Total
cumulative impairment charges amounted to $3,283 and $399 as of December 31, 2024 and 2023, respectively.
64
On April 1, 2020, AMVAC purchased 6,250,000 shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. The
shares were publicly traded, had a readily determinable fair value, and were considered a Level 1 investment. In Q1 2024, Clean Seed's shares temporarily
ceased trading. Since this investment does not have readily determinable fair value at this time, the Company has elected to measure the investment at the last
trading price less impairment, if any, and also records an increase or decrease for changes resulting from observable price changes in orderly transactions for the
identical or a similar investment of Clean Seed. The fair value of the stock amounted to $938 and $425 as of December 31, 2024 and 2023, respectively. The
Company recorded a gain of $513 for the year ended December 31, 2024 and losses of $359 and $732 for the years ended December 31, 2023 and 2022,
respectively. The investment is within other assets on the consolidated balance sheets. The Company initially invested $1,190 to purchase its stock in Clean
Seed Capital Group Ltd. Since that time, the Company has recorded net charges in the amount of $252.
(14) Share Repurchase Programs
The Company periodically repurchases shares of its common stock under a board-authorized repurchase program through a combination of open market
transactions and accelerated share repurchase ("ASR") arrangements.
On May 25, 2023, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase up to $15,000 of its common stock
under a 10b5-1 plan, par value $0.10 per share, in the open market over the succeeding one year, subject to limitations and restrictions under applicable
securities laws. During the year ended December 31, 2023, the Company repurchased 857,455 shares of its common stock for a total of $14,982 at an average
price of $17.55 per share under this plan.
On August 22, 2022, pursuant to a Board of Directors resolution, the Company entered into an ASR to repurchase $20,000 of its common stock. Under
the ASR agreement, the Company paid $20,000 and immediately received an initial delivery of 802,810 shares in the amount of $16,000, based on a price of
$19.93 per share, which represented 80% of the notional amount of the ASR based on the closing price of the Company’s common stock on the New York
Stock Exchange ("NYSE") on August 22, 2022. On December 14, 2022, the ASR was completed, and pursuant to the settlement terms of the ASR, the
Company received an additional 131,892 shares of its common stock. The average price paid for all of the shares delivered under the ASR was $21.40 per
share.
On March 8, 2022, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate number of up to
1,000,000 shares of its common stock under a 10b5-1 plan, par value $0.10 per share, in the open market over the succeeding one year, subject to limitations
and restrictions under applicable securities laws. The plan terminated on March 8, 2023. During 2023, the Company purchased 27,835 shares of its common
stock for a total of $557 at an average price of $19.96 per share under this plan. During 2022, the Company purchased 734,150 shares of its common stock for a
total of $14,002 at an average price of $19.07 per share under this plan.
The shares and respective amount are recorded as treasury shares on the Company’s consolidated balance sheets. The table below summarized the
number of shares of the Company's common stock that were repurchased during the years ended December 31, 2023 and 2022. No shares were repurchased in
2024.
Year ended
Total number of
shares purchased
Average price paid
per share
Total amount paid
December 31, 2024
— $
— $
—
December 31, 2023
885,290 $
17.55 $
15,539
December 31, 2022
1,668,852 $
20.37 $
34,002
Pursuant to Amendments Number Six, Seven, and Eight to the Third Amended Loan and Security Agreement, the Company is currently prevented from
making stock repurchases, effective November 7, 2023.
65
(15) Supplemental Cash Flows Information
2024
2023
2022
Supplemental cash flow information:
Cash paid during the year for:
Interest
$
15,585
$
11,902
$
3,834
Income taxes, net
$
8,762
$
9,428
$
19,960
Non-cash transactions:
Cash dividends declared and included in accrued expenses
$
—
$
834
$
851
(16) Segment Information
The Company operates as a single operating segment, which is the business of developing, manufacturing and distributing chemical, biological and
biorational products for agricultural, commercial and consumer uses. The Company synthesizes and formulates chemicals and ferments and extracts microbial
products for crops, turf, ornamental plants, and human and animal health protection.
The Company’s CODM is the Chief Executive Officer, who manages the Company’s operations based on consolidated financial information for
purposes of evaluating financial performance and allocating resources. The financial information reviewed by the CODM includes revenue by product line and
region, and key expense categories that are regularly provided for the consolidated company.
The accounting policies of the Company’s single operating segment are the same as those described in the summary of significant accounting policies.
Although there are other measures of operating performance used by the CODM, the Company concluded that consolidated operating (loss) income is the
measure required to be disclosed as the segment measure of profit or loss. Operating (loss) income is utilized to evaluate to monitor budget versus actual results
in order to gain more depth and understanding of the factors driving the business. When evaluating the Company’s financial performance, the following table
sets forth significant expense categories regularly provided to the CODM:
2024
2023
2022
Net sales
$
547,306
$
579,371
$
609,615
Cost of sales:
Material and other costs
(381,784)
(354,580)
(368,263)
Warehousing, handling, and outbound freight
(45,205)
(45,627)
(48,964)
Total cost of sales
(426,989)
(400,207)
(417,227)
Gross profit
120,317
179,164
192,388
Operating expenses
Selling, general and administrative
(119,634)
(116,887)
(119,921)
Research, product development and regulatory
(32,662)
(38,025)
(31,816)
Transformation
(20,162)
(957)
—
Asset impairment charges
(50,414)
—
—
Gain from sale of assets
1,000
—
—
Operating (loss) income
(101,555)
23,295
40,651
Change in fair value of equity investments, net
(2,356)
(359)
(732)
Interest and other expenses, net
(16,547)
(12,639)
(3,954)
(Loss) income before provision for income taxes
(120,458)
10,297
35,965
Provision for income taxes
(5,882)
(2,778)
(8,561)
Net (loss) income
$
(126,340)
$
7,519
$
27,404
Assets provided to the CODM are consistent with those reported on the consolidated balance sheet.
66
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, periodically evaluate the effectiveness of the design
and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for ensuring that the
information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported on a timely
basis, and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate
to allow timely decisions regarding required disclosure. Based upon their evaluation, as of December 31, 2024, the Chief Executive Officer and the Chief
Financial Officer have concluded that these disclosure controls and procedures were not effective due to the material weaknesses in internal control over
financial reporting described below.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) of the Securities Exchange Act of 1934 for the Company. The Company’s internal control system over financial reporting is designed to provide
reasonable assurance to management and the Board of Directors as to the fair, reliable and timely preparation and presentation of consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America filed with the SEC.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even processes determined to be
effective can provide only reasonable assurance with respect to the financial statement preparation and presentation.
Management conducted an evaluation of the Company’s internal controls over financial reporting based on a framework set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013) (the “COSO framework”). This evaluation included
review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the effectiveness of controls and a conclusion on the
evaluation. Based on this evaluation, management believes that, as of December 31, 2024, the Company’s internal control over financial reporting were not
effective as a result of the material weaknesses detailed below.
Assessment and Conclusion
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the
following material weaknesses associated with the control environment, control activities and risk assessment components of the COSO framework:
•
Control Environment – within the Company’s Australian component (AgNova), the Company identified that the individuals performing control
activities within the component were not sufficiently trained or adequately supervised, and lacked appropriate reporting lines and accountability in
accordance with principles of the COSO framework.
•
Control Activities – due to insufficient resources to facilitate a timely financial close process, the operation of internal controls over financial
reporting specific to the controls being performed timely in accordance with principles of the COSO framework were not operating effectively.
Further, within AgNova, the Company did not have sufficient segregation of duties in place in accordance with a principle of the COSO framework.
67
•
Risk Assessment – the Company identified that it did not design and implement an effective risk assessment based on the criteria established in the
COSO framework. Specifically, the Company did not identify and assess changes to the business that could significantly impact the system of
internal control in accordance with principles of the COSO framework.
In addition, management identified a deficiency that constituted a material weakness related to the review of customer agreements related to the accrued
program costs and customer prepayments balances. The Company did not perform a sufficiently precise review in order to appropriately consider all agreed-
upon terms with customers in its determination of the accrued program costs and customer prepayments balances.
Notwithstanding the material weaknesses described above, we have concluded that the financial statements included in this Form 10-K present fairly, in all
material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally
accepted in the United States of America.
Deloitte & Touche, LLP, the independent registered public accounting firm that audited the consolidated financial statements as of and for the year ended
December 31, 2024, included in this Annual Report on Form 10-K, was engaged to attest to and report on the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2024. Their report is included herein.
Remediation Measures
Management is committed to addressing and remediating the material weaknesses described above. During the Company’s first fiscal quarter of 2025, the
period during which the Company was completing its year-end closing and Annual Report on Form 10-K for the prior fiscal year, the Company failed to
anticipate and prepare for several events that impacted the timely filing of our Annual Report on Form 10-K. These events included the need to obtain an
amendment to the financial covenants required under the Company’s credit agreement, commencing work to renew, replace or restructure our current credit
agreement and issues with oversight and accountability of accounting activities within the Company’s Australian component (AgNova).
Accordingly, the Company has identified the following remediation measures:
•
Enhancing the oversight, reporting lines and authorities, and accountability processes within our finance organization and including improved
training, additional personnel with appropriate skillsets, dedicated personnel regarding risk assessment, more comprehensive supervisory
processes and completing the implementation of, and standardized processes relating to, the global ERP system.
•
Implementing additional resources to mitigate risks and facilitate a timely financial close process including enhancing policies and procedures
including implementing changes to the segregation of duties within AgNova.
•
Enhancing our risk assessment process to ensure it is sufficiently robust to identify and analyze significant events affecting our business,
including the impact of these events on the timely completion of our financial statements and SEC filings.
•
Enhancing our review process of agreed upon terms related to the accrued program costs and customer prepayments balances to ensure it is
sufficiently precise to identify changes that may impact the balances.
Though remediation measures are subject to continual review, we expect the remediation measures described above will contribute to addressing the identified
material weaknesses. Implementation of the remediation measures is subject to oversight by the Audit Committee of our Board of Directors, and the identified
material weaknesses will not be considered remediated until the remediation measures have been fully designed and implemented, the applicable controls
operate for a sufficient period of time, and we have concluded through testing that the newly implemented controls are operating effectively.
Changes in Internal Control over Financial Reporting
Other than the material weaknesses described above, there were no changes in internal control over financial reporting during the fourth quarter of the year
ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
American Vanguard Corporation
Newport Beach, California
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of American Vanguard Corporation and subsidiaries (the "Company") as of December 31, 2024,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control
criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
financial statements as of and for the year ended December 31, 2024, of the Company and our report dated May 28, 2025, expressed an unqualified opinion on
those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is
to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
69
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material
weaknesses have been identified and included in management's assessment:
The Company has identified material weaknesses in the design and operation of internal controls over financial reporting in principles associated with the
control environment, control activities, and risk assessment components of the COSO framework:
•
Control Environment - within the Company’s Australian component (AgNova), the Company identified that the individuals performing control activities
within the component were not sufficiently trained or adequately supervised, and lacked appropriate reporting lines and accountability in accordance with
principles of the COSO framework.
•
Control Activities - due to insufficient resources to facilitate a timely financial close process, the operation of internal controls over financial reporting
specific to the controls being performed timely in accordance with principles of the COSO framework were not operating effectively. Further, within
AgNova, the Company did not have sufficient segregation of duties in place in accordance with a principle of the COSO framework.
•
Risk Assessment - the Company identified that it did not design and implement an effective risk assessment based on the criteria established in the COSO
framework. Specifically, the Company did not identify and assess changes to the business that could significantly impact the system of internal control in
accordance with principles of the COSO framework.
In addition, the Company identified a deficiency that constituted a material weakness related to the review of customer agreements related to the accrued
program costs and customer prepayments balances. The Company did not perform a sufficiently precise review in order to appropriately consider all agreed-
upon terms with customers in its determination of the accrued program costs and customer prepayments balances.
These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial
statements as of and for the year ended December 31, 2024, of the Company, and this report does not affect our report on such financial statements.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 28, 2025
70
AMERICAN VANGUARD CORPORATION
ITEM 9B OTHER INFORMATION
None.
ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
AMERICAN VANGUARD CORPORATION
71
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information set forth under the captions “Executive Officers of the Company,” “Election of Directors,” “Information about the Board of Directors
and Committees of the Board” and “Transactions with Management and Others—Section 16(a) Beneficial Ownership Reporting Compliance” is set forth
below.
NOMINEES FOR ELECTION AS DIRECTORS—QUALIFICATIONS, EXPERIENCE AND COMPETENCIES
The following sets forth the names and certain information with respect to the persons nominated for election as directors. All such nominees have
consented to serve and are currently directors. Six of the nine nominees were elected by the stockholders at the 2024 Annual Meeting of Stockholders.
Following summary information on the experience of each nominee we have included a matrix that outlines the key skills and competencies of all nominees.
Marisol Angelini, age 63, was elected to the Board in December 2021.
•
Experience: Ms. Angelini is a senior leader with over 30 years of experience in global consumer product companies, focusing on growing and
transforming businesses. During her career at The Coca-Cola Company, she served as CMO (Central and Eastern Europe, Mexico and Brazil),
VP of Global Tea/Water categories, and General Manager of Glaceau Smartwater. Prior to that, Ms. Angelini led personal care, household
cleaners, oral care, and paper businesses, which she ran while working for Procter & Gamble in Latin America. She has been involved in multiple
acquisitions within P&G and Coca-Cola and has been instrumental in sourcing, integrating and making these businesses profitable. She has board
experience in public, private and non-profit companies and is a certified board director. She served on the board of Bush’s Brothers (a $1 billion
family company) and is also a member of NACD (National Association of Corporate Directors), which is dedicated toward director education
and best practices for public company boards. Ms. Angelini holds an MBA from Mercer University in Atlanta and a BA from Georgia State
University. Ms. Angelini’s experience in the food sector (which is our ultimate customer), LATAM, marketing, new product launching, and
governance are all valuable traits for our board of directors.
Dr. Mark R. Bassett, age 64, was elected to the Board in June 2022.
•
Experience: Dr. Bassett brings strong operational expertise and a continuous improvement mindset. He has a long and accomplished history over
the last 30 years of building and growing chemical businesses. Until December 31, 2021, Dr. Bassett was the Chairman and CEO of Hemlock
Semiconductor (HSC). The leadership of The Dow Chemical Company (NYSE: DOW) selected him to manage the transition of HSC to
becoming a standalone company of approximately $1 billion in revenue and roughly 1,200 of employees. HSC is a leading provider of ultra-pure
polycrystalline silicon and other silicon-based products used in the manufacture of semiconductor devices, solar cells and modules. Prior to
leading HSC, from 2012-2016 he was a global VP, Polyurethanes at The Dow Chemical Company responsible for a multi-billion dollar global
P&L with over 2000 associates at over 35 sites globally. From 2009-2012, he led the formation of Dow Oxygenated Solvents which consolidated
three separate businesses into a multi-billion dollar portfolio with 10 sites and approximately 500 employees. He graduated magna cum laude
from Notre Dame with a B.S. in Chemical Engineering and holds an M.S. and Ph.D in Chemical Engineering from the University of Virginia. He
was selected as a National Science Foundation post-doctoral fellow.
AMERICAN VANGUARD CORPORATION
72
Scott D. Baskin, age 71, was elected to the Board in January 2014.
•
Experience: Mr. Baskin has extensive experience as a litigator arising from his 35-year career with the law firm of Irell & Manella, from which
he retired at the end of 2013. During his tenure at Irell & Manella, Mr. Baskin concentrated his practice on intellectual property, technology, real
estate, business torts and securities actions for a multitude of corporate clients. A frequent lecturer and writer, he has published many articles on
intellectual property rights, patent infringement, trial preparation and discovery. He was an assistant instructor at Yale Law School and clerked
for Hon. Y. C. Choy, United States Court of Appeals for the Ninth Circuit. Mr. Baskin holds a B.A. in Political Science and History from
Stanford University and a J.D. from Yale Law School. Mr. Baskin brings legal acumen and extensive experience in intellectual property matters,
which complement the Company’s commitment to technology innovation.
Patrick E. Gottschalk, age 62, was elected to the Board in June 2022.
•
Experience: Mr. Gottschalk is a leader with significant operational experience who helps executives develop and implement strategic goals. He
served as Chairman and CEO of Union Carbide from 2007 until 2012. Most recently Mr. Gottschalk served as President of Coatings, Monomers
and Additives, a multi-billion dollar business within The Dow Chemical Company (NYSE: DOW), which is a chemicals manufacturer, and
served in this capacity from 2012 until 2016. Mr. Gottschalk currently serves as a director of the Superior Plus Corporation, which is a publicly
listed corporation on the Toronto stock exchange (TSX: SPB). He received a BS in Chemical Engineering from the University of Texas and an
MBA from Pepperdine University.
Emer Gunter, age 64, was elected to the Board in 2019.
•
Experience: Ms. Gunter joined the Board after a 34 year career at Monsanto, during which she served as Director of Manufacturing for Latin
America (overseeing 20 plants), Asia Pacific (overseeing 15 plants) and, ultimately, as Vice President of Environmental, Safety and Health.
During that time, she led multiple initiatives in various countries relating to process optimization, de-bottlenecking, quality, cost reliability, ESH
(environmental, safety and health), six sigma, factory automation, succession planning and new facility construction. She also served as a
member of the Manufacturing Leadership Team and Monsanto Advisory Council, where she operationalized human rights initiatives, influenced
ESH throughout the culture and led a step-change in contractor and employee safety performance, reducing the number of recordables by half,
while the company doubled in size. Ms. Gunter’s extensive expertise in manufacturing, international business operations and ESH make her a
valuable resource to the Company, which has a long history in manufacturing, and is committed to the principles of sustainability.
Douglas A. Kaye III, age 56, is a nominee for election to the Board for the first time via this proxy statement.
•
Experience: Mr. Kaye joined the Company as Chief Executive Officer in December, 2024. For the past 13 years, he has served in a variety of
senior leadership roles at Albaugh, LLC, a top ten global crop protection company. He most recently held the role of President, North America,
which is the largest region in the Company. Previously, he was Group Chief Commercial Officer, where he oversaw the commercial activities,
which included North America, Europe, Brazil, Argentina, and Latin America regions. Mr. Kaye also served as President of the European region
for seven years. Prior to his work at Albaugh, Dak was the CFO and a Director at a non-crop subsidiary of the crop protection company, Adama,
and previously held the role of Co-CEO at an international automotive logistics organization. Mr. Kaye began his career at Arthur Andersen,
LLP. He has a Masters of Accountancy and a Bachelor of Science in Business Administration, both from Auburn University. Mr. Kaye was
recently elected to the Executive Board of the industry group CropLife America (CLA).
AMERICAN VANGUARD CORPORATION
73
Steven D. Macicek, age 67, was elected to the Board in March 2024.
•
Experience: Mr. Macicek joined the Board in March 2024 and was appointed to the position of Chair of the Audit Committee. Mr. Macicek
formerly served in positions of increasing responsibility at Ernst & Young from 2002-2019, serving as Global Service Partner, Leader of the
Center for Board Matters (Southwest Region) and Energy Services Market Leader. Prior to that time, he held positions of increasing
responsibility at Arthur Andersen, LLP from 1980-2002. Throughout his career, Mr. Macicek has provided audit, tax and advisory services to
numerous corporate clients, including high-growth mid-caps and large multinationals across multiple industries, including, distribution,
manufacturing, construction, engineering, oil and gas, energy services and software. He is an audit committee financial expert, a Certified Public
Accountant and has advised numerous boards and C-suite executives on complex accounting and business issues.
Keith M. Rosenbloom, age 56, was elected to the Board in June 2022.
•
Experience: Mr. Rosenbloom has over 30 years of public and private investing experience. He is committed to helping AVD create long-term
shareholder value by improving its asset allocation paradigm, corporate finance analysis, capital markets credibility and focus on improving long-
term stakeholder returns. Mr. Rosenbloom is the co-founder of Cruiser Capital Advisors, LLC, which acts as the investment advisor to pooled
investment vehicles on a discretionary basis. Over the past eight years, Mr. Rosenbloom has helped the boards of public companies such as A.
Schulman (formerly NASDAQ: SHLM), Ashland Global (NYSE: ASH) and Dow Chemical (NYSE: DOW), add highly qualified members to
their boardrooms, seeking to improve stockholder value at those companies. Mr. Rosenbloom also serves on a number of charitable boards
including, Hillel International (Board of Governors), and Hatzalah (Israel's private EMT service). Mr. Rosenbloom graduated cum laude from
Yale University.
Carmen Tiu de Mino, age 62, was elected to the Board in December 2024.
•
Experience: Ms. Tiu has over 30 years in the agricultural chemical sector, having joined Dow AgroSciences in 1987 (including its successor
company Corteva AgroSciences) in roles of increasing responsibility until her retirement in early 2024. During her career at Dow/Corteva, Ms.
Tiu worked primarily in regulatory strategy, food standards, risk, and government affairs. She is the author of over 100 scientific publications and
contributed to hundreds of regulatory strategies. Ms. Tiu earned a Bachelor of Science degree in Chemical Engineering and a Masters of Science
degree in Organic Chemistry from the University Politechnic Timisoara and is a Fellow of the American Chemical Society.
As indicated in the table below, our director nominees collectively possess a wide-range of key skills and competencies that provide a strong foundation
for strategic oversight, risk management, corporate governance and practical business decision making. We believe that such individuals are qualified to serve
on our Board in light of these skills and competencies, among others.
Key Skills/Competencies
Angelini
Baskin
Bassett
Gottschalk
Gunter
Kaye III
Macicek
Rosenbloom
Tiu de Mino
Agribusiness
●
●
●
●
C-Suite / Senior Mgt.
●
●
●
●
●
●
Cybersecurity/IT
●
●
●
●
ESG/Sustainability
●
●
●
●
Financial Expert/Literate
●
●
●
●
●
●
●
●
Global
●
●
●
●
●
●
●
Gov't/Regulatory
●
●
●
●
●
Human Capital
●
●
●
●
●
●
●
Merger and Acquisition
●
●
●
●
●
●
●
●
Operational Excellence
●
●
●
●
●
Supply Chain
●
●
●
●
Strategy
●
●
●
●
●
●
●
●
●
Transformation
●
●
●
●
●
AMERICAN VANGUARD CORPORATION
74
Key to Skills Matrix:
Agribusiness – 10+ years in Agriculture, Food or Agrochemical business;
C-Suite/Senior Management – 10+ years;
Cybersecurity/IT – oversaw digital tools for business efficiency, security, privacy;
ESG/Sustainability – experience in overseeing sustainability initiatives including sustainability reports;
Finance Expert/Literate – qualifies as Audit Committee expert or as financially literate under SEC rules;
Global Experience – managed multinational company or lived and/or worked abroad;
Government/regulatory – served or interacted extensively with a regulatory agency;
Human Capital – oversaw human capital, talent management, rewards and/or HR systems;
Mergers & Acquisitions – self-evident;
Operational Excellence – led initiatives to improve operational and/or financial efficiency;
Supply Chain – managed procurement, vendor relations and/or pricing policies related thereto;
Strategy – oversaw corporate strategy for near- and mid-term growth and profitability;
Transformation – oversaw initiatives to achieve operating greater operating leverage through business, operational and product changes.
AMERICAN VANGUARD CORPORATION
75
BOARD SKILLS AND LEADERSHIP
General Qualifications. In evaluating persons for potential service on the Board, we seek, above all, the most qualified candidates and, as more fully
discussed below, nominees should have experience in, or an aptitude for, certain competencies that are essential to our business. Viable candidates must also
have ample professional experience and business acumen befitting a director of a public company.
Board Refreshment/Succession. On March 6, 2024, Morton D. Erlich submitted his resignation to the Board. After conducting a search with an
external recruiting firm, on March 6, 2024, the Board resolved to accept Mr. Erlich’s resignation and to appoint Steve Macicek to the Board to fill the vacancy
left by Mr. Erlich. Mr. Erlich’s resignation and Mr. Macicek’s appointment became effective on March 28, 2024.
In addition, on December 10, 2024, Deborah Edwards submitted her resignation to the Board, effective December 10, 2024, at which time the Board
appointed Carmen Tiu to fill the vacancy left by Ms. Edwards. Ms. Tiu assumed positions on both the Finance and Risk Committees that had been vacated by
Ms. Edwards.
In the past three years, the Board has undergone significant refreshment, particularly in respect of leadership positions, Ms. Baskin, the Lead Director,
and Ms. Gunter, the Chair of the Nominating and Corporate Governance Committee, have served in these roles for three years. Mr. Macicek, the Chair of the
Audit Committee, has served in that role for approximately one year; and Ms. Agelini, the Chair of the Compensation Committee, and Mr. Basset, the Chair of
the Finance Committee, have served in those roles for under one year.
Lead Director v. CEO. At present, Scott Baskin, an indepdendent director, serves as lead director and, in that capacity, sets the agenda for all meetings
of the Board. Prior to his departure from the position of CEO in July 2024, Eric Wintemute had served as both Chair of the Board and CEO. With the
appointment of Douglas Kaye to the position of CEO in December 2024, then, the role of Chair and CEO was separated. The Board believes that having an
independent lead director ensures a high degree of objectivity, whether or not the roles of Chair and CEO are combined. Further, in the future, the Board intends
to segregate the roles of Chair and CEO.
RISK OVERSIGHT
The Company’s Board of Directors has formal responsibility for risk oversight. In 2011 the Board formed a Risk Committee, which now consists of
Scott Baskin (as chairman), Mark Bassett, Debra Edwards, Patrick Gottschalk and Emer Gunter (as Environmental, Social Responsibility & Governance “ESG”
Liaison). The Risk Committee meets regularly (at least four times per year) and coordinates primarily with the Risk Manager (Timothy J. Donnelly) of the
Company. All members of the Board are invited to, and typically attend, Risk Committee meetings.
Senior management has also appointed a team of managers to serve as an executive risk committee, with responsibility to identify and assess areas of
risks, to identify mitigation measures and to implement those measures. The Company has identified several material risks facing the Company and has
identified risk owners responsible for marshalling the resources and leading a team to address those risks. These identified risks are updated from time to time
and presently include:
•
Adverse regulatory climate and poor industrywide public image;
•
Maintaining supply chain continuity for raw materials and intermediates;
•
Succession planning and retention;
•
Vulnerability to environmental or safety events;
•
Underperformance v. peers;
•
Sustainable growth of core business and green solutions;
•
Cyber-security;
•
Risks related to the implementation of artificial intelligence into our processes;
•
Potential that the company’s transformation initiatives will not generate the efficiencies or leverage benefits that they are designed to achieve;
and
AMERICAN VANGUARD CORPORATION
76
•
Potential for intangible impairment that are material in size in light of the significant level of goodwill associated with prior acquisitions.
These risks are incorporated into the risk-owners’ annual performance goals and are important factors in determining both job performance and incentive
compensation. Executives serving as risk-owners periodically report their progress through the Risk Manager to the Risk Committee.
Cyber-security
Risk Management & Strategy. AVD has adopted a comprehensive set of controls and processes to encourage a high level of awareness of, and
responsiveness to, cybersecurity threats. The foundational document outlining the program is embodied in Registrant’s Enterprise Information Security Policy
(the “REIS Policy”). The REIS Policy establishes a framework for the continuous monitoring of its computing resources, the maintenance and reporting of audit
logs and the assessment of events that could form the basis of a threat. In addition, the REIS Policy sets forth requirements for employee awareness training,
user authentication, software usage restrictions and boundary protection, among other things. The policy also establishes an incident response plan, including
back-up hosting, alternate processing and system recovery, along with assignment of responsibility and resources for those activities. Within the exhibit of the
REIS Policy, management either working alone or, in case of greater complexity, with consultants, will assess an incident or series of incidents for materiality,
taking into account the nature of the incident, duration, the nature of data compromised, and the nature of damages (including with respect to reputational, third
party, share price, and business interruption) and all within the context of the Company's financial performance during the affected reporting period(s).
Furthermore, AVD has taken measures to prevent cybersecurity breaches, to minimize threats and, to the extent possible, to anticipate trends and identify
vulnerabilities before arising to the level of an incident. In short, AVD is pro-active in its approach and has formulated a specific plan to investigate, respond
and minimize loss of functionality or other damage from an incident.
Governance. The REIS Policy has been drafted in collaboration with one of the largest IT solutions providers in the field and was modeled after NIST
standards relating to governance, documentation and processes. The Company is implementing the REIS Policy through its Cyber and Privacy Risk Steering
Committee (the “CPRSC”), which is chaired by the Chief Information Officer (who is also AVD’s Risk Manager) and includes cross functional business
process owners from operations, sales, marketing, finance and Human Resources, as well as our Director of Information Technology, who alone has over 30
years’ experience in IT-related security and whose staff collectively has over 50 years’ experience in this area. In addition, the committee is advised by a virtual
Corporate Information Security Officer who works with the third-party solutions provider.
AVD's Board of Directors maintains oversight of cybersecurity planning, response and reporting as follows. The Lead Director, Scott Baskin, who also
serves as Chair of the Risk Committee and member of the Audit Committee, is Cybersecurity Liaison to AVD’s management team. The Chair of the CPRSC
reports on cybersecurity preparedness, issues and incidents to the Cybersecurity Liaison regularly. Through this reporting structure, the cybersecurity team has
direct interaction with the highest level of the Board and with both the Risk and Audit Committees. Cyber risk has been a subject of regular review and
discussion at the Risk Committee for several years. With the advent of the CPRSC, the delineation of governance and responsibility has become that much more
focused.
AMERICAN VANGUARD CORPORATION
77
ENVIRONMENTAL, SOCIAL RESPONSIBILITY AND GOVERNANCE
Human Capital Resources
We believe that, beyond being essential to our operations, our people have inestimable worth independent of our business. As outlined in our Human
Rights Policy (see, the "ESG" tab on our website, www.american-vanguard.com), we believe that it is fundamental to our corporate responsibility that we
recognize, respect and nurture the freedom and dignity of all persons. Accordingly, we have insinuated that belief throughout the fabric of our operations in our
approach toward our employees. Indeed, the first two core values underlying our commitment to sustainability (see, Update to Corporate Sustainability Report,
under the "ESG" tab on our website at www.american-vanguard.com) are “Safety First” – which is a culture that begins with highly-regulated manufacturing
plants, continues into the design of science-backed products and extends into market-leading delivery systems – and “Making a Difference” – under which, by
rewarding achievement and giving our employees a voice, we attract a diverse array of employees who want to make a difference in their careers, in the
company and in the communities that we serve. Our website is not part of this Proxy Statement, and references to our website address in this Proxy Statement
are intended to be inactive textural references only.
During 2023, the Company hired its first Senior Vice President of Human Resources who is leading our Human Capital program, which consists of the
following elements:
•
Board Oversight – through our Nominating and Corporate Governance Committee (“N&CG”), our board of directors oversees human capital-
related risks and opportunities. Annually, the N&CG Committee requires that management provides an update on succession planning for key
executives, emphasizing a forward-looking approach within a culture of performance and engagement.
•
Strategy – the Company’s human capital strategy has two primary elements: employee engagement and provision of competitive benefits
(including an outstanding health benefits plan). As we have covered in our Update to Corporate Sustainability Report, our Company is a
destination for highly qualified employees who are drawn to a workplace where they can make a difference. Our management philosophy
prioritizes collaborative and consistent execution to fulfill our commitments, fostering a performance-driven culture. This strategic approach has
empowered the Company to optimize retention, even amidst the challenges of a competitive employment market.
•
Compensation – as highlighted in our strategy, compensation is a pivotal component of our human capital approach. We consistently motivate
our workforce through competitive compensation and comprehensive welfare benefits. Additionally, we proactively educate our employees on
the totality of their compensation, encompassing wages, stock options, health benefits, and paid time off.
•
Employee Engagement – our management style is to solicit ideas from employees, involve them in implementation and give them recognition for
ideas that succeed. For example, personnel from virtually any department (be it sales, technology, product development or otherwise) can submit
ideas to our Innovation Review Committee (“IRC”) for consideration and potential funding. Ideas that originate within the IRC are then subject
to a Stage Gate process through which the investment thesis of each idea is rigorously tested. Those projects that survive this scrutiny are placed
on a project timeline and receive appropriate resources on a path toward commercialization.
•
Representative Population – based upon the Company’s most current EEO-1 (“Equal Employment Opportunity”) Report, representation of
African Americans in our domestic workforce exceeds the prevalence of that group in the national population, while representation of Hispanic
personnel is slightly below the national average. Our average employee age is 45 and our gender diversity is approximately 30% female and 70%
male.
The Company employed 755 employees as of December 31, 2024, and 845 employees as of December 31, 2023. From time to time, due to the
seasonality of its business, AVD uses temporary contract personnel to perform certain duties primarily related to packaging of its products. None of the
Company’s employees are subject to a collective bargaining agreement. The Company believes it maintains positive relations with its employees.
AMERICAN VANGUARD CORPORATION
78
SUSTAINABILITY
At the core of our sustainability strategy is the acknowledgment that the Agriculture industry, in general, and AVD, in particular, can help mitigate
climate change. In fact, we believe are already doing so with our portfolio of products and technologies. As a foundation to our strategy, we believe that an
important solution toward mitigating climate change lies beneath our feet – literally, in the form of soil, which is the single largest repository for sequestering
carbon. We are placing an emphasis on various forms of Climate-Smart Technology in the form of soil health products. Among the over 120 GreenSolutions™
products currently offered by the Company, we develop and market AMVAC Greenplants™ micronutrients, which are tailored to accommodate plant
development cycles in order to enable greater uptake of important nutrients while saving water and reducing the use of application equipment. Our Agrinos
product lines consist of bacterial consortia that enhance a plant’s uptake of phosphorus, nitrogen and potassium. Further we are committed to environmental
stewardship, and, in our periodically published sustainability reports, we provide updated metrics on greenhouse gas emissions, energy, water withdrawal and
waste. During 2024, we retained a third-party audit firm to give limited assurance related to the data supporting certain of these metrics under ISAE 3000.
Please see the Company’s current Corporate Sustainability Report at http://www.american-vanguard.com/esg for further details on our commitment to
sustainability.
CORPORATE GOVERNANCE OF THE COMPANY
The Company is committed to sound corporate governance principles and practices. Please visit the Company’s website at www.american-vanguard.com
for the Company’s current Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Finance
Committee Charter, the Code of Ethics and Conduct, the Employee Complaint Procedures for Accounting and Auditing Matters, and Corporate Governance
Guidelines, all of which are also available to any stockholder upon request in printed form.
PROHIBITIONS ON INSIDER TRADING AND HEDGING
We have adopted an Insider Trading Policy that prohibits the purchase or sale of our securities by any director, officer, or employee who is in possession
of material, non-public information regarding the Company. The policy provides guidance on what constitutes material information and when such information
becomes public. It covers transactions by family members and entities controlled by insiders, and outlines procedures for pre-clearance of trades, blackout
periods, and the use of Rule 10b5-1 trading plans. The policy also discusses the serious consequences of violating insider trading laws, including disciplinary
action and potential criminal penalties. A copy of our Insider Trading Policy is filed as an exhibit to our Annual Report on Form 10-K filed with the SEC. It is
also the policy of the Company that the Company will not engage in transactions in Company securities, or adopt any securities repurchase plans, while in
possession of material non-public information relating to the Company or its securities other than in compliance with applicable law, subject to the policies and
procedures adopted by the Company.
The Company also has an Anti-Hedging Policy that prohibits both directors and Section 16 officers from both hedging and other non-monetized
transactions, such as zero-cost collars, forward sales contracts or other similar instruments, which allow a person to lock in much of the value of his or her stock
holdings, generally in exchange for all or part of the potential for upside appreciation in the stock. The Company believes that such instruments place the subject
shares at risk of unexpected disposition (as, in the case of a call or foreclosure) and change the essential nature of the investment in common stock, thus serving
to misalign the holder’s interests from those of the Company’s stockholders.
MEETINGS OF THE BOARD
The Board met 17 times during the year ended December 31, 2024. All directors attended 100% of the aggregate of the number of regular meetings of
the Board and at least 75% of the total number of special meetings of the Board and meetings held by all committees of the Board for which they served. The
non-management directors of the Company meet at regularly scheduled executive sessions without any member of the Company’s management present. The
individual who presides at these executive sessions is the lead director, Scott Baskin. Interested parties who wish to communicate with the lead director or with
non-management directors may do so by email to directors@amvac.com.
The Board does not mandate that its members attend the Annual Meeting of Stockholders. All directors attended the 2024 Annual Meeting of
Stockholders, which was held virtually.
AMERICAN VANGUARD CORPORATION
79
COMMITTEES OF THE BOARD
Below is a table indicating the current committee assignment of director nominees:
Audit Committee
Compensation
Committee
Finance Committee
Nominating and
Corporate
Committee
Risk Committee
Lead
BoD
Chair
Angelini
●
C
●
Baskin
●
●
C
●
Bassett
C
●
Gottschalk
●
●
●
Gunter
●
C
●
Macicek
C
●
●
Rosenbloom
●
●
●
Tiu de Mino
●
●
●
Wintemute
●
(C) Committee Chair
(●) Committee Member
Audit Committee
The Audit Committee is currently composed of Steven Macicek (Chairperson), Marisol Angelini, Scott Baskin, Patrick Gottschalk and Carmen de Tiu,
all of whom are non-employee directors and financially literate. The Board has determined that all members of the Audit Committee are independent directors
under the applicable rules and regulations currently prescribed by the SEC and the applicable rules and listing standards currently prescribed by the New York
Stock Exchange. In addition, the board has found that Mr. Macicek is an “audit committee financial expert” within the meaning of applicable SEC rules and
regulations. The Audit Committee held five regular meetings during the year ended December 31, 2024.
The responsibilities of the Audit Committee are set forth in the current Audit Committee Charter, which is available on the Company’s website
(www.american-vanguard.com), and include:
•
Providing oversight on the accounting policies, financial reporting process and the adequacy of the Company’s internal controls.
•
Engaging the services of an independent registered public accounting firm to audit the Company’s consolidated financial statements and internal
controls for financial reporting.
•
Pre-approving all services performed by the independent registered public accounting firm.
•
Reviewing the scope of the audit activities of the independent registered public accounting firm and appraising audit efforts.
•
Reviewing services provided by the independent registered public accounting firm and other disclosed relationships, as they bear on the
independence of that firm.
•
Overseeing the performance of the Company’s internal audit function.
•
Establishing procedures for the receipt, retention and treatment of complaints, if any, regarding accounting, internal controls or auditing matters.
Compensation Committee
The Compensation Committee is currently composed of Marisol Angelini (Chairperson), Patrick Gottschalk, Steven Macicek and Keith Rosenbloom, all
of whom are independent directors under the applicable rules and listing standards currently prescribed by the New York Stock Exchange. Further, the Board
has found that each of the members of the
AMERICAN VANGUARD CORPORATION
80
Compensation Committee, who administers the Company’s compensation plans, is a “non-employee director” under Rule 16b-3 of the Exchange Act. The
Compensation Committee held five regular meetings during the year ended December 31, 2024.
The responsibilities of the Compensation Committee are set forth in the current Compensation Committee Charter, which is available on the Company’s
website (www.american-vanguard.com), and include:
•
Establishing executive compensation policy consistent with corporate objectives and stockholders’ interests.
•
Overseeing the process for evaluating CEO performance in comparison with Board-approved goals and objectives.
•
Setting CEO compensation with the other independent members of the Board.
•
Administering grants and options in Company stock under the Company’s compensation plans.
•
Evaluating the independence of compensation professionals.
Role of Outside Advisors
Pursuant to the charter of the Compensation Committee, the Compensation Committee has the authority to engage independent counsel, accountants,
consultants and other advisers as it deems necessary or appropriate to carry out its duties and responsibilities. As discussed in these proxy materials under the
heading “Compensation Discussion and Analysis,” in 2024, the Compensation Committee engaged Exequity, LLP to provide analysis related to the
competitiveness of our executive and director compensation programs, compensation structure for our new chief executive officer, periodic reviews of our
compensation peer group, and other mandates as directed by the Compensation Committee.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently composed of Emer Gunter (Chairperson), Scott Baskin, Steven Macicek and Keith
Rosenbloom. The Board has determined that all members of the Nominating and Corporate Governance Committee are independent directors under the
applicable rules and listing standards currently prescribed by the New York Stock Exchange. The Nominating and Corporate Governance Committee held four
regular meetings during the year ended December 31, 2024. In addition, Emer Gunter serves as ESG Liaison between the N&CG Committee and senior
management.
The responsibilities of the Nominating and Corporate Governance Committee are set forth in the current Nominating and Corporate Governance
Committee Charter, which is available on the Company’s website (www.american-vanguard.com), and include:
•
Recommending nominees, including from stockholders, for election and re-election to the Board of Directors.
•
Reviewing certain of the Company’s governing documents, corporate policies and charters, and considering certain corporate governance
matters.
•
Overseeing evaluation of the Board and its effectiveness.
•
Recommending committee assignments and lead director/chair nominees to the Board.
•
Reviewing succession planning for executive officers.
•
The N&CG Committee will also consider nominees submitted by stockholders based on the criteria set forth in the Company’s Corporate
Governance Guidelines and policies.
AMERICAN VANGUARD CORPORATION
81
Stockholder Recommendations
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders in the same manner it considers
other candidates, but it has no obligation to recommend such candidates. A stockholder that wants to recommend a candidate for election to the Board of
Directors should send a recommendation in writing to American Vanguard Corporation, c/o Corporate Secretary, 4695 MacArthur Court, Newport Beach,
California 92660. Such recommendation should describe the candidate’s qualifications and other relevant biographical information and provide confirmation of
the candidate’s consent to serve as director.
Stockholders may also nominate directors at the Annual Meeting by adhering to the advance notice procedure described elsewhere in this Proxy
Statement.
Finance Committee
The Finance Committee is currently composed of Mark Bassett (Chairperson), Marisol Angelini, Emer Gunter, Keith Rosenbloom and Carmen Tiu de
Mino. The Finance Committee held one meeting during the year ended December 31, 2024.
The responsibilities of the Finance Committee are set forth in the current Finance Committee Charter, which is available on the Company’s website
(www.american-vanguard.com) and involves, among other things:
•
Working with senior management to evaluate, investigate and recommend changes in the area of corporate finance.
•
Reviewing making recommendations to the board regarding acquisitions, divestitures and restructuring activity.
•
Reviewing short-term and long-term financing plans.
Risk Committee
The Risk Committee is currently composed of Scott Baskin (Chairperson), Mark Bassett, Patrick Gottschalk, Emer Gunter and Carmen Tiu de Mino.
The Risk Committee held four meetings during the year ended December 31, 2024. All members of the Board are invited to, and typically attend, Risk
Committee meetings. The primary responsibility of the Risk Committee is to oversee risk management at the Company and to ensure that the Company
continuously monitors material risks, identifies mitigation measures for those risks, and takes commercially practicable measures to minimize those risks to the
fullest extent possible. The committee works with the Company’s Risk Manager and senior management to conduct (or cause to be conducted) periodic
assessments of the Company’s risk profile and to ensure the following:
•
That adequate resources are made available to address and mitigate risks, where possible,
•
That risk owners are identified and made accountable for addressing these risks, and
•
That the practice of monitoring and addressing these risks remains a part of the Company’s culture.
•
See, also, “Risk Oversight” for additional information.
Family Relationships
There is no family relationship among any of our directors or executive officers.
AMERICAN VANGUARD CORPORATION
82
EXECUTIVE OFFICERS OF THE COMPANY
The following persons are the current executive officers, all of whom are also named executive officers (the “NEOs”) of the Company:
Name of Director/Officer
Age
Capacity
Douglas A. Kaye III
56
Chief Executive Officer
David T. Johnson
68
Vice President, Chief Financial Officer and Treasurer
Timothy J. Donnelly
65
Chief Administrative Officer, General Counsel & Secretary
Shirin Khosravi
56
Chief Human Resources Officer
Peter E. Eilers
61
Managing Director, Amvac Netherlands BV
Douglas A. Kaye III joined the Company as Chief Executive Officer in December, 2024. For the past 13 years, he has served in a variety of senior
leadership roles at Albaugh, LLC, a top ten global crop protection company. He most recently held the role of President, North America, which is the largest
region in the Company. Previously, he was Group Chief Commercial Officer, where he oversaw the commercial activities, which included North America,
Europe, Brazil, Argentina, and Latin America regions. Mr. Kaye also served as President of the European region for seven years. Prior to his work at Albaugh,
Dak was the CFO and a Director at a non-crop subsidiary of the crop protection company, Adama, and previously held the role of Co-CEO at an international
automotive logistics organization. Mr. Kaye began his career at Arthur Andersen LLP. He has a Masters of Accountancy and a Bachelor of Science in Business
Administration, both from Auburn University. Mr. Kaye was recently elected to the Executive Board of the industry group CropLife America (CLA).
David T. Johnson has served as Vice President, Chief Financial Officer, and Treasurer of the Company since March, 2008. Mr. Johnson served as
Finance Director for Amcor Flexibles UK Ltd., a $500 million manufacturer of decorative packaging and a subsidiary of Amcor, a multibillion dollar
corporation based in Australia, from June 2003 through March 2008. Prior to that he served as Vice President of Finance for Sterer Engineering, a subsidiary of
Eaton Aerospace, an $8 billion Cleveland based multinational Company from April 2001 through June 2003.
Timothy J. Donnelly has served as Chief Information Officer, General Counsel and Secretary of the Company since June 2024 and had been Chief
Administration Officer from June 2010 prior to that time. He began his service with the Company in October 2005 as Vice President, General Counsel and
Assistant Secretary, was appointed Secretary in June 2007 and assumed responsibility for Human Resources and Risk Management in 2009. Prior to his service
with the Company, from September 2000 through October 2005, Mr. Donnelly served as Vice President, General Counsel and Secretary for DDi Corp. (Nasdaq
—DDIC), a manufacturer of quick-turn, high-technology printed circuit boards.
Shirin Khosravi has served as Chief Human Resources Officer since December 2024 and was Vice President of Human Respources from Februray 2024
until that time. Prior to her service with the Company, Ms. Khosravi worked as an HR professional for over 25 years in positions of increasing responsibility,
including at CR Laurence (an architectural hardware and glazing supplies company), Dover Corporation (a diversified global manufacturer of innovative
equipment and components) and Holcim (a global construction materials provider). She has an MBA from the University of Western Ontario, and a BA in
Business from Edith Cowan University in Perth, West Australia.
Peter E. Eilers has served as Managing Director of AMVAC Netherlands BV since June, 2018. Prior to that time, he served as Vice President,
Business Development and Marketing, to which he was appointed in January 2017. Mr. Eilers joined the Company in August 2015 as Global Director of
Business Development and Marketing. Prior to that time, Mr. Eilers had over 25 years’ experience with Bayer CropScience (and its predecessors) where he
served as Marketing Director for EMEA, Executive Head of Bayer CropScience Merger & Acquisitions/Business Development, and Country Head in various
regions, including Poland, the Baltics, Iberia and Indochina, among other position
ITEM 11 EXECUTIVE COMPENSATION
The information set forth under the captions “Compensation of Executive Officers” and “Information about the Board of Directors and Committees of
the Board—Compensation of Directors” is set forth below.
COMPENSATION DISCUSSION AND ANALYSIS
AMERICAN VANGUARD CORPORATION
83
In this Compensation Discussion and Analysis, we address our philosophy, programs and processes related to the compensation paid or awarded in 2024
to our named executive officers (“NEOs”) listed below and in the Summary Compensation Table for 2024 that follows this discussion.
The following individuals were our NEOs for 2024:
•
Douglas A. Kaye III, who serves as our Chief Executive Officer
•
Eric G. Wintemute, who serves as our Chairman and served as our Chief Executive Officer until his retirement on July 12, 2024
•
David T. Johnson, who serves as our Vice President, Chief Financial Officer and Treasurer
•
Timothy J. Donnelly, who serves as our Chief Information Officer, General Counsel, & Secretary
•
Shirin Khosravi, who serves as our Chief Human Resources Officer
•
Peter E. Eilers, who serves as our Managing Director, Amvac Netherlands BV
•
Ulrich G. Trogele, who served as our Executive Vice President, Chief Operating Officer until his retirement on May 31, 2024
•
Anthony S. Hendrix, who served as our Vice President of Sales, US and Canada until his departure on May 3, 2024
Executive Summary
The year 2024 was one of extraordinary transformation for the Company, during which, teaming with a nationally-known business consultant, it began
two transformation initiatives – both business and digital – to improve operating efficiency, implement an organization having greater accountability and
upgrade the entire ERP platform to centralize its global footprint and improve the quality and timeliness of critical data. Further, in mid-2024, the then current
CEO left the Company, a provisional group was formed to continue the work of the Chief Executive Officer, Chief Operating Officer and Chief Transformation
Officer pending the hiring of a new CEO, and a new CEO was successfully recruited and hired by year end.
In the midst of these changes, the Company’s performance in 2024 declined as compared to the prior year. While adjusted EBITDA was within the
targeted range, and net sales were marginally lower than the prior year, due largely to persistently low commodity prices, the Company recorded a significant
net loss arising from significant nonrecurring charges (including with respect to transformation expenses, inventory reserves, impaired assets and goodwill,
among others). That said, the Company believes that it is poised to move into the future with an improved balance sheet and a focus to “simplify, execute and
deliver” as per the mantra of its new CEO.
In light of 2024 performance, neither the incumbent CEO nor any of the other NEOs received any cash bonus for 2024 performance. Thus, the cash
bonus and total direct compensation for the CEO were below the 25thpercentile of the CEOs of the Company’s Proxy Peers (as defined below). The CEO’s
equity award was at about the median of the Proxy Peers and was made with an eye toward incentivizing future value creation, including options that carried
additional TSR triggers at $20 and $25 per share that must be achieved before vested options can be exercised. With respect to the cash bonus, total direct
compensation and equity award, the other NEOs were below the 25th percentile of the Company’s proxy peers. The Company’s one-year, three-year and five-
year total shareholder return (“TSR”) was below the 25th percentile of its Proxy Peers. The Company believes that, overall, executive compensation for 2024
was consistent with the rubric of pay-for-performance.
Compensation Objectives
Our executive compensation program has three primary objectives to:
•
Align management’s interests with the long-term interests of stockholders;
•
Provide compensation on the basis of performance that supports key financial and strategic business outcomes; and
AMERICAN VANGUARD CORPORATION
84
•
Attract, motivate and retain top talent to lead our business.
Our first objective is accomplished by ensuring that our executives are stockholders. We do this through the regular awards of equity, whether in the
form of restricted stock, options or performance-based shares/options, and the adoption of executive stock ownership guidelines. We make these equity awards
through our 2022 stock incentive plan (the "2022 Plan"), which was most recently approved in its current form by our stockholders at the 2022 Annual Meeting.
Our second objective means that we want our executives to seek optimal results in both the short and long term. One of the primary means of rewarding
performance is through cash incentive compensation. Another means is through performance-based equity, which, during 2024 took the form of options that
included TSR triggers. Our third objective is accomplished through ensuring that our compensation is competitive (for example, through benchmarking the
compensation practices of similarly-situated companies) and to promote the retention of key talent through awards of stock (either restricted stock units or stock
options) that vest over three years.
What We Reward
We expect our executives to operate at a high level and to be involved in setting and executing our business plan. Accordingly, our executives are
directly involved in defining the Company’s strategy (its roadmap to success), its budget (the short term business plan), and the associated short term objectives
which are established as necessary to achieve the budget. During 2024 and prior, SMART goals (Specific, Measurable, Achievable, Realistic and Time-Based)
were the primary measure by which each executive was held accountable. They varied from position to position and included both company-wide goals (as, for
example, net sales and net income for the CEO) and individual goals (for example, factory efficiency targets for the Vice President of Manufacturing). The
specific plan for short term incentive compensation in 2024 is illustrated in the table below.
For 2025, the Company will be following a formula-driven approach toward incentive compensation that is built upon five companywide key
performance indicators (KPIs) – three are financial (net sales, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and net trade
working capital) and two operational (transformation execution and manufacturing/opex). We have established a graded scale of targets for each KPI and placed
the majority of emphasis on the financial KPIs, while setting target incentive compensation for the CEO at 100% of base wage and for the other NEOs at 60%.
See “Elements of 2025 Compensation and Why We Pay Them” for a more detailed discussion on KPIs and our approach toward 2025.
AMERICAN VANGUARD CORPORATION
85
Compensation Program Best Practices
The Compensation Committee continues to implement and maintain sound practices in our executive compensation program and related areas. Our
current compensation program includes features that we believe drive performance and excludes features we do not believe serve our stockholders’ long-term
interests. The table below highlights the “Sound Practices” features that our compensation program includes and “Poor Pay Practices,” which are excluded.
Certain of these features are described in greater detail after the table.
Included Features (“Sound Practices”)
Excluded Features (“Poor Practices”)
➣ Performance-based Equity – Half of the equity awards made to executives
vest based upon metrics as compared to a peer group, specifically, net sales,
EBIT(earnings before interest and taxes) and TSR which over a performance
period, typically three years’ in length.
➣ Caps on Individual Bonuses – Our executives’ incentive compensation is
effectively capped at 1.8 times salary for the CEO and 90 percent of salary for
other officers.
➣ Clawback Policy – Our executives are subject to having incentive
compensation recouped by the Company in the event of material fraud or
misconduct resulting in a restatement of financial statements.
➣ Stock Ownership Guidelines— We have adopted share ownership
requirements for both our executive officers (4X base wage for CEO and 2X
base wage for CEO reports) and our directors (four years’ worth of stock
awards).
➣ Consultant Independence – The Compensation Committee retains an
independent compensation consultant. Our consultant is evaluated annually
for independence to ensure objectivity.
➣ Market Benchmarking – Compensation decisions are made in the context
of relevant market comparators.
➣ Risk Management – Our executive officers’ compensation program has
been designed and is reviewed to ensure that it does not encourage
inappropriate risk-taking.
➣ “Double Trigger” severance – Our change in control agreements require
both a change in control and termination during a two year period before
equity is accelerated and monetary benefits become due. (Please see page 100
of this Form 10-K).
➣ No income or excise tax gross-ups.
➣ No “single trigger” severance payments in case of change of
control.
➣ No guaranteed base salary increases, minimum bonuses or equity
awards.
➣ No resetting of strike price on underwater options.
➣ No replacement or “make whole” awards of equity.
➣ No Hedging–Our executive officers and directors are prohibited from
all hedging activities (as, for example, with zero-cost collars and
forward sales contracts) and holding Company securities in margin
accounts.
AMERICAN VANGUARD CORPORATION
86
1.
High Percentage of Performance/TSR
In the several year period prior to 2024, the Company had awarded performance shares that were based upon financial metrics achieved by the Company
as compared to peers that had been identified in the proxy (at time of award). However, in 2024, the Company turned toward total shareholder return as a
performance metric, splitting equity awards between time-based restricted stock (having a three-year, cliff-vesting period) and options which, for the then
current NEOs also included an additional trigger to the effect that half of the options would be exercisable only if the fair market value (FMV) Company’s
common stock equaled or exceeded $20 per share for 30 continuous trading days and the other half when the FMV equaled or exceeded $25 per share for same
length of time.
Since the Company began the process of granting awards of performance shares, we have experienced mixed vesting performance. Because there had
been multiple factors used to determine vesting (EBIT, sales and TSR versus two different comparator groups), it was typical for one or more metrics to vest at
or above target, while another vests below target (resulting in a partial forfeiture). Based upon this experience, then, we can say that the performance metrics are
neither too lax, nor overly restrictive.
2.
Effective Cap on Individual Bonuses
By employing a formula-driven incentive compensation policy (starting in 2025), the Company continues to follow a policy of effectively capping an
individual’s annual incentive cash compensation. As more fully explained below (please see Incentive Compensation at p. 28), if all KPIs are exceeded to the
maximum extent, the CEO would receive 1.8 times his annual salary, while the other NEOs would receive 90% of their salary. The Compensation Committee
has put these effective caps in place both to eliminate the possibility that any one individual will receive an excessive share of the bonus pool and to prevent
windfall payments in the event that unforeseen circumstances result in goals being drastically exceeded. Further, as was the case in 2024, to the extent that a
threshold level of profitability is not met, no incentive compensation is conferred.
3.
Clawback Policy
The Company continues to follow a clawback policy that provides, among other things:
“In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material
noncompliance with any financial reporting requirement under the securities laws, the Board will require reimbursement or forfeiture of
any excess incentive compensation received by a Covered Executive during the three completed fiscal years immediately preceding the
date on which the Company is required to prepare an accounting restatement.”
4.
Stock Ownership Guidelines
Under the Company’s stock ownership and stock retention policy, the CEO is required to obtain and maintain four times his base wage in stock, and
Section 16 officers other than the CEO are required to obtain and maintain two times their base wage in Company common stock. This is to be accomplished, in
part, through periodic grants of equity by the Board. Similarly, as more fully described in page 107 under “Director Compensation,” non-management directors
are required to accumulate and maintain shares equal in amount to the number of shares granted to them during the first four full years of service on the Board.
Through these policies, the interests of both executive officers and directors are better aligned with those of our stockholders.
5.
Anti-Hedging Policy
The Company’s Anti-Hedging Policy prohibits both directors and Section 16 officers from both hedging and other non-monetized transactions, such as
zero-cost collars, forward sales contracts or other similar instruments, which allow a person to lock in much of the value of his or her stock holdings, generally
in exchange for all or part of the potential for upside appreciation in the stock. The Company believes that such instruments place the subject shares at risk of
unexpected disposition (as, in the case of a call or foreclosure) and change the essential nature of the investment in common stock, thus serving to misalign the
holder’s interests from those of the Company’s stockholders.
6.
Equity Award Granting Policy
Equity compensation awards made to our executive officers must be approved by the Compensation Committee. The Compensation Committee
approves and grants annual equity awards, which include RSUs and PSUs and in the past have included stock options, at approximately the same time every
year. Outside of the annual grant cycle, the Compensation
AMERICAN VANGUARD CORPORATION
87
Committee may, from time to time, grant off-cycle equity awards, such as in connection with a new hire, promotion or retention award. All off-cycle equity
awards are issued on a pre-determined date following approval by the Compensation Committee. The Compensation Committee does not take material non-
public information into account when determining the timing of the grant of equity awards, including stock options, and the timing of the release of material
non-public information is not based on affecting the value of executive compensation.
7.
Accounting And Tax Considerations
The Compensation Committee may consider various accounting and tax implications of equity-based and other forms of compensation. When
determining the amounts of equity-based awards to be granted, the Compensation Committee considers the accounting cost associated with the grants. Under
Financial Accounting Standard Board Accounting Standards Codification (“ASC”) Topic 718, or ASC 718, grants of stock options, restricted stock units, and
performance stock units result in an accounting charge for the Company equal to the fair value of the award issued.
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a federal income tax deduction for compensation paid by publicly
held companies to certain of their executive officers that is in excess of $1,000,000 per year. Although the Compensation Committee will continue to consider
tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and
retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive
compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the
Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially
intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
Compensation Consultant Independence
As per New York Stock Exchange ("NYSE") Listing Standard 303A.05(c)(iv), the charter of the Compensation Committee requires that committee to
evaluate the independence of its compensation consultants. Accordingly, that committee evaluated its compensation consultant, Exequity LLP, in 2023 and
determined that there is no conflict of interest with that firm and that with respect to the six factors set forth in the listing rules, Exequity was independent, as
indicated by the following:
Independence Factor
Consultant Compliance
➣ Provision of other services to the Company by the consultant.
➣ Amount of fees received from the Company as a percentage of consultant’s
total revenues.
➣ Policies and procedures of committee with regard to its consultant are
designed to prevent conflicts of interest such as:
➣ Providing unrelated services.
➣ Trading in the stock of its clients.
➣ Any business or personal relationship with a member of the Compensation
Committee.
➣ Any stock of the Company owned by consultant.
➣ Any business or personal relationship with an executive officer of the
Company.
➣ Consultant does not provide other services to the Company.
➣ Fees received by consultant during FY 2023 are less than 1% of the
consulting firm’s revenues for that year.
➣ Consultant has implemented principles to ensure independence:
➣ Does not provide unrelated services.
➣ Does not trade in the stock of its clients.
➣ There is no relationship with a member of the Compensation
Committee.
➣ Consultant owns no shares of the Company.
➣ There is no relationship with an executive officer.
AMERICAN VANGUARD CORPORATION
88
We believe that, by ensuring the independence and objectivity of our compensation consultant, we provide an additional assurance that the consultant
will not be influenced by improper motives, such as personal gain, that could compromise its ability to recommend a fair and transparent plan of compensation
for Company executives.
Consideration of “Say on Pay” Advisory Vote and Shareholder Input for Past Three Years
At each of the last three Annual Meetings of Stockholders, we have held an advisory stockholder vote on executive compensation. At the meetings held
in 2024, 2023, and 2022, approximately 93%, 91% and 83% (in a contested proxy), respectively, of the shares that voted approved our executive compensation
described in the subject proxy statement. During that period, the Company’s compensation policies and practices have not changed markedly. Thus, both the
Compensation Committee and the Company viewed these voting results as a strong indication that the Company’s stockholders support our compensation
policies and practices. Further, the Company maintains a plan of regular outreach to, and interaction with, investors, potential investors and analysts through
personal meetings, telephone conversations and attendance at investment conferences. In 2024, the Company had direct contact with over half of the active
institutional investors in its common stock. Through these efforts, the Company continually elicited issues of concern from these stakeholders. Stockholders did
not express concern with compensation but, rather, with strategic direction, nonrecurring charges, the benefit of transformation initiatives, capital allocation,
working capital supply chain, market conditions, and operating expenses.
Elements of 2024 and 2025 Compensation
Salaries— With a decline in financial performance during 2023, salaries for the Company’s NEOs were not increased at the start of 2024. When the
financial performance for the immediately preceding year is strong, the salaries for NEOs are typically adjusted upward within a range that is identified by the
Compensation Committee’s independent compensation consultant. It should also be noted that the Company has historically raised salaries in excess of a
modest adjustment when an officer takes on additional, meaningful responsibilities. Base salary as a percent of total cash compensation among NEOs as a group
was 43% in 2024, 68 % in 2023 and 69% in 2022.
Base salaries for our NEOs in 2024 were:
Name
Base Salary
Douglas A. Kaye III
650,000
Eric G. Wintemute
757,013
David T. Johnson
429,048
Timothy J. Donnelly
362,866
Shirin Khosravi
276,360
Peter E. Eilers
290,963
Ulrich G. Trogele
450,448
Anthony S. Hendrix
348,578
Short Term Incentive Compensation
With respect to 2024, in light of poor financial performance, none of the NEOs received any incentive compensation for 2024 performance. This is
consistent with the Company’s commitment to paying for performance.
Looking into 2025, the Company has established a KPI-driven approach toward Short-Term Incentive compensation ("STI") for its NEOs. We have
depicted the elements of the formula in the table below. Proceeding from the general to the specific, we have identified three financial KPIs – net sales, adjusted
EBITDA and net trade working capital, to which we give a weighting of 20%, 50% and 20%, respectively. We cover the balance with two corporate KPIs,
namely, transformation results and manufacturing/opex, to which we give a weighting of 5% each.
AMERICAN VANGUARD CORPORATION
89
The target short term incentive compensation for the CEO is set at 100% of base salary, while the non-CEO NEOs have a target of 60% of base salary.
In addition, as per the matrix below, we have established grades of success (Levels 1 through 6) for each KPI. At year end, actual performance for each KPI is
checked against Levels 1 through 6, and a factor (the “Level Factor” from the table below) is identified. To arrive at the NEO’s incentive compensation, we take
the product of x) his or her target bonus, y) the weighting of such KPI as per the above chart and z) the Level Factor from the table below. We make this
calculation for each KPI and add together the subtotals to arrive at total short term incentive compensation payout. The result could vary from zero (if all KPIs
were at or below Level 1) to 180% of target bonus (if all KPIs were at or above Level 6).
Reasons for KPI Selection – In designing the short term incentive
compensation plan, the Board and Compensation Committee selected
the KPIs and assigned them their relative weightings for the following
reasons. First, the factor of highest emphasis (at 50%), adjusted
EBITDA, has become the factor of greatest importance in our overall
financial performance among investors. In addition, over the course of
the past several years, while maintaining resiliency at the net sales
level, the Company has experienced erosion of its operating leverage.
Adjusted EBITDA is a useful measure for assessing operating leverage
as well as for holding management accountable toward the goal of
improving that leverage.
Second, at 20%, net sales receives a medium emphasis among the KPIs. While it is important to maximize operating leverage, management must also be
committed to growing the business. It is important to continue launching new products, gaining market share of existing products and expanding our portfolio –
these are the hallmarks of successful businesses within our industry. Similarly, net trade working capital receives the same medium emphasis (20%) in light of
the fact that, over the past several quarters, the Company’s working capital has grown beyond optimal size. It is essential to reduce inventory, to build to
demand and to manage our factories in an optimal way.
Third, the last two KPIs, manufacturing/opex and transformation execution, at weighted at 5% each. These are included in the NEOs’ initiatives in order
to encourage continued discipline in holding down expenses, maximizing manufacturing cost absorption and following through on the many transformation
initiatives that were launched in 2024.
AMERICAN VANGUARD CORPORATION
90
Equity—We believe that in providing equity to senior executives and requiring that shares equal in value to a multiple of base salary be accumulated by
such executives over time, the interests of our executives will be more fully aligned with those of our stockholders. The Company has adopted a policy to
prohibit short sales or hedging transactions by executives and members of the Board. Through these awards and these policies, the Company believes that
executives will take a longer term view of the Company and will seek to enhance stockholder value several years into the future. Equity awards also serve as a
means of encouraging future performance and of retaining key employees over the long term. In addition, it is highly prevalent among peer companies to award
equity to executives regularly. In the Company’s case, these awards are typically made early in the fiscal year. We believe that it would be difficult to attract,
motivate, and retain executives without offering them a share in the Company’s long-term prospects. In 2024, in an effort to encourage greater shareholder
value, the Board has elected to award options to the NEOs that will vest and be exercisable only if the Company’s common stock equals or exceeds $20 per
share (for one-third of the shares) or $25 per share (for two-thirds of the shares) for 30 consecutive trading days. In addition, the Board awarded restricted stock
units to NEOs that vest on the third anniversary of the award and are subject to forfeiture if, for any reason, the recipient is not continuously employed by the
Company through the vesting date.
In making equity award decisions, the Compensation Committee and Board also take into account the fair market value of the Company’s shares and the
potentially dilutive effect of making awards. For example, in 2025, in light of a low share price and a lender-imposed moratorium on repurchasing shares, the
Compensation Committee suspended the annual equity award for existing employees (including incumbent NEOs) pending a return to a higher share price.
As more fully described below in “Benchmarking and the Compensation Consultant”, the Compensation Committee periodically conducts a
benchmarking study to take into account, among other things, the prevalence (by amount and type) of equity awarded to executive officers of similarly situated
companies. These studies typically include information on prevalent rates at which available shares are consumed under equity plans of peers. In awarding
equity, the Compensation Committee considers not only these studies, but also the compensation history of the Company, retention issues, and the expensing of
equity awards in connection with its recommendation to the Board. In 2024, the Board followed its standard practice of awarding shares to executives, including
both time-based restricted shares and TSR-based options.
Other Cash Compensation – With the departure of the CEO, the COO and the CTO in mid-2024, the Company formed an office of CEO (OCEO)
consisting of Mr. Johnson, Mr. Donnelly and Ms. Khosravi with consulting from director, Mark Bassett. In addition to carrying out its other responsibilities, the
members of the OCEO effectively managed the business on a day-to-day basis for the second half of 2024, including with respect to expediting the
transformation initiatives that the Company had begun earlier in that year. In consideration for carrying the additional burden of the recently-vacated positions,
each member of the OCEO received a nonrecurring transformation benefit of $125K for each of the third and fourth quarters of 2024. Upon the hiring of Dak
Kaye to the position of CEO in late December 2024, the OCEO was dissolved, and Mr. Kaye assumed the position on a full-time, dedicated basis.
Other Benefits— In 2024, the Company continued its practice of offering a comprehensive suite of other benefits to its executives, including group
health (medical, dental and vision) and life insurance to all of our employees. Our medical plan took the form of PPO programs which are largely self-funded.
However, the Company limited its claims exposure by maintaining stop loss coverage on an individual basis and appointed Collective Health as its third-party
administrator. Collective Health offers not only claims processing service, but also a user-friendly, phone-based application as its claims interface. Health
benefits premiums were highly subsidized by the Company and offered extremely competitive terms (e.g., low co-payments and office visit charges). As a
corollary to the group health plan, the Company continued to promote wellness through a voluntary program, through which the Company gave financial
incentives for fitness, participation in group events (e.g., virtual 5K, on-line fitness challenge), health and diet coaching, among other things. These programs
are a powerful tool in retention, recruiting, morale-building, and maintaining the health of the workforce. Our executives also received life insurance and long-
term disability insurance coverage. In addition, certain executives received an automobile allowance.
Finally, in 2024, our executives (and all full-time employees) continued to have the option to participate in the Company’s 401K retirement savings plan,
under which the Company matches up to 5% of the participant’s salary (subject to an annual cap) and the Employee Stock Purchase Plan, which permits the
purchase of Company shares at a discount through payroll deduction.
AMERICAN VANGUARD CORPORATION
91
Benchmarking and the Compensation Consultant
During 2024 the Compensation Committee’s independent compensation consultant, Exequity, revisited the group of comparator companies for purposes
of benchmarking executive compensation, which analysis it completed in November 2024. In connection with those efforts, Exequity defined a group of
comparators, focusing on product lines, GICS numbers, and a proxy review to determine whether and to what extent peer companies identified the Company (or
others in the Company’s peer group) as comparators. The comparator group (“Proxy Peers”) identified by Exequity consisted of 14 publicly traded specialty
chemical companies, namely: AdvanSix Inc. (ASIX), Arcadium Lithium plc (ALTM), Aspen Aerogels, Inc. (ASPN),Balchem Corporation (BCPC), Core
Molding Technologies, Inc. (CMT), CVR Partners LP (UAN), Ecovyst Inc. (ECVT), Hawkins, Inc. (HWKN), Haynes International, Inc. (HAYN), Innospec
Inc. (IOSP), Intrepid Potash, Inc. (IPI), LSB Industries, Inc. (LXU), Quaker Chemical Corporation (KWR) and Tredegar Corporation (TG). Proxy Peers had
median revenues of $706 million per annum, median market capitalization $926 million and median enterprise value of $1,305 million. To our knowledge
American Vanguard is the only publicly traded crop protection Company of its size, and no Proxy Peers operate at all in the crop protection sector.
According to Exequity’s analysis, 2024 compensation for the Company’s new CEO (on an annualized basis) yielded the following comparative results,
which are also depicted in the table below:
•
The CEO base salary was below the 25th of the Proxy Peers.
•
The bonus amount (of $0) for the CEO was below the 25th percentile for target bonus of the Proxy Peers.
•
Annualized total cash for the CEO was below the 25th percentile for target total cash of the Proxy Peers.
•
Equity granted in 2024 to the CEO was between the 25th percentile and the median of the Proxy Peers.
•
Annualized total direct compensation for the Company’s CEO was below the 25thpercentile of the Proxy Peers.
On average, according to the Exequity study, compensation for other NEOs was as follows: salary was at approximately the 25th percentile for salaries of
Proxy Peers, while incentive cash, total cash (excluding the nonrecurring transformation benefit for the CFO, CIO and CHRO), equity and total direct
compensation were below the 25th percentile for the Proxy Peers.
Closing Comments
The Company believes that its executive compensation meets its primary objectives. In the midst of a transformative year, during which net sales were
marginally down due to persistently low commodity prices and adjusted EBITDA was within the targeted range, the Company incurred significant nonrecurring
charges that generated a net loss. While these necessary measures will lead to an improved balance sheet, the impact on overall financial performance was such
that none of the NEOs received an incentive bonus. Consequently, while continuing to receive base wages that are at or above the median of Proxy Peers (on
average), the NEOs received total direct compensation that was below the 25thpercentile of its Proxy Peers. In sum, we believe that the Company paid NEOs in
a manner consistent with overall company performance.
AMERICAN VANGUARD CORPORATION
92
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402 (b) of Regulation S-K with
management and, based on the review and discussions referred to in that Item, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC.
Marisol Angelini, Chair
Patrick Gottschalk
Steven Macicek
Keith Rosenbloom
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash and other compensation for services rendered for the three calendar years 2024, 2023 and 2022, paid or
awarded by the Company and its subsidiaries to the CEO, CFO, the four most highly compensated executive officers other than the CEO and CFO, and the
CEO who departed from the Company during the subject year and two additional highly compensated executive officers (the “NEOs”). As mentioned in the
discussion below, due to lower-than-expected performance during both 2023 and 2024, none of the NEOs received incentive compensation.
AMERICAN VANGUARD CORPORATION
93
SUMMARY COMPENSATION TABLE
Name and Principal Position
(a)
Year
(b)
Salary
($)
(c)
Bonus
($)
(d)
Stock
Awards
($)
(e)
(2)
Option
Awards
($)
(f)
Non-
Equity
Incentive
Plan
Compensa
tion
($)
(g)
Change
in
Pension
Value
and
Non-
Qualifie
d
Deferred
Compen
sation
Earnings
($)
(h)
All
Other
Compen-
sation
($)
(i)
Total
($)
(j)
Douglas A. Kaye III, Chief Executive
Officer
2024
39,583 (1)
300,000
1,335,577
—
—
—
—
1,675,160
Eric G. Wintemute, Chairman and
Former Chief Executive Officer
2024
418,784 (2)
—
402,534
822,256
—
—
3,024,374
4,667,948
2023
755,655
—
1,688,426
—
—
—
65,692
2,509,773
2022
723,465
656,250
1,407,292
—
—
—
65,867
2,852,874
David T. Johnson, Chief Financial
Officer
2024
429,048
—
43,073
204,354
—
—
286,795 (9)
963,270
2023
428,278
—
180,680
—
—
—
79,793
688,751
2022
410,033
186,250
199,634
—
—
—
53,767
849,684
Timothy J. Donnelly, Chief Information
Officer, General Counsel & Secretary
2024
362,866
—
36,432
172,844
—
—
286,795 (9)
858,937
2023
362,214
—
152,820
—
—
—
36,030
551,064
2022
346,785
167,500
168,841
—
—
—
34,780
717,906
Shirin Khosravi, Chief Human
Resources Officer
2024
276,318
—
—
16,103
—
—
277,369 (9)
569,790
Peter E. Eilers, Managing Director,
Amvac Netherlands B.V.
2024
290,963 (3)
—
20,755
98,472
—
—
116,991
527,181
2023
290,868 (3)
—
87,067
—
—
—
—
377,936
2022
292,867 (3)
142,500
102,043
—
—
—
—
537,410
Ulrich G. Trogele, Former Executive
Vice President, Chief Operating Officer
2024
192,306 (4)
—
—
—
—
—
9,045
201,351
2023
449,702
—
189,679
—
—
—
36,030
675,411
2022
430,529
195,000
209,582
—
—
—
34,780
869,891
Anthony S. Hendrix, Former Vice
President of Sales, U.S. and Canada
2024
127,365 (5)
—
23,819
113,002
—
—
17,492
281,678
2023
348,001
—
99,899
—
—
—
44,401
492,301
2022
333,163
150,000
108,108
—
—
—
44,173
635,444
(1)
Salary for 2024 reflects salary payments to Mr. Kaye from start date of December 9, 2024 through December 31, 2024.
(2)
Salary for 2024 reflects salary payments through July 12, 2024, the last day of Mr. Wintemute's employment. On an annualized basis, excluding
severance compensations, his salary would have been $796,125. Further, his annualized total compensation would have been the sum of salary
($796,125) plus other benefits not including severance ($157,341) plus stock award value ($402,534) plus option value ($822,256) which equals
$2,178,256.
(3)
Salary for 2024, 2023 and 2022 reflects the effect of euro to dollar currency exchange.
(4)
Mr. Trogele would have been one of the top five most highly compensated officers but for the fact that he left the company before the end of 2024.
Salary for 2024 reflects salary payments through May 31, 2024, the last day of Mr. Trogele's employment. On an annualized basis, his salary would have
been $415,799.
AMERICAN VANGUARD CORPORATION
94
(5)
Mr. Hendrix would have been one of the top five most highly compensated officers but for the fact that he left the company before the end of 2024.
Salary for 2024 reflects salary payments through May 3, 2024, the last day of Mr. Hendrix's employment. On an annualized basis, his salary would have
been $384,200.
(6)
The amounts in this column reflect the aggregate grant date fair value of restricted stock and restricted stock unit awards computed in accordance with
the ASC 718. All assumptions made in the valuations are contained and described in the Company’s consolidated financial statements included in the
Annual Report on Form 10-K for the year ended December 31, 2024.
(7)
The amounts in this column reflect the aggregate grant date fair value of stock options computed in accordance with the ASC 718. All assumptions made
in the valuations are contained and described in the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the
year ended December 31, 2024.
(8)
Reflects a sign on bonus of $300,000 to be paid as follows: $200,000 at the end of the first quarter of 2025, and $100,000 at the end of the fourth quarter
of 2025.
(9)
This includes compensation of $250,000 for service in office of the CEO during Q3 and Q4 of 2024.
AMERICAN VANGUARD CORPORATION
95
ALL OTHER COMPENSATION
Perquisites
($)
Tax
Reimbursements
($)
Insurance
Premiums
($)
Company
Contributions
to Defined
Contribution
Plans
($)(3)
Vacation/Severance
Payments /
Accruals
($)
Change in
Control
Payments /
Accruals
($)
Eric G. Wintemute
2024
28,950 (1)
—
1,530
10,396 (4)
2,983,498 (6)
—
2023
56,525 (1)
—
1,530
7,637 (4)
—
—
2022
56,700 (1)
—
1,530
7,637 (4)
—
—
David T. Johnson
2024
18,000 (2)
—
1,545
47,750 (5)
—
—
2023
18,000 (2)
—
1,530
60,263 (5)
—
—
2022
18,000 (2)
—
1,530
34,237 (5)
—
—
Timothy J. Donnelly
2024
18,000 (2)
—
1,545
17,250
—
—
2023
18,000 (2)
—
1,530
16,500
—
—
2022
18,000 (2)
—
1,530
15,250
—
—
Shirin Khosravi
2024
12,000 (2)
—
1,545
13,824
—
—
Ulrich G. Trogele
2024
7,500 (2)
—
831
11,329
—
—
2023
18,000 (2)
—
1,530
16,500
—
—
2022
18,000 (2)
—
1,530
15,250
—
—
Anthony S. Hendrix
2024
4,618 (2)
—
831
11,329
—
—
2023
27,085 (2)
—
816
16,500
—
—
2022
28,107 (2)
—
816
15,250
—
—
Peter E Eilers
2024
15,578 (2)
—
67,880
33,533
—
—
2023
19,338 (2)
—
—
33,523
—
—
2022
18,841 (2)
—
—
20,347
—
—
(1)
Automobile allowance of $10,800 for the year ended December 31, 2024 and $21,600 for each of the years ended December 31, 2023 and 2022; and
expense reimbursements of $18,150, $34,925 and $35,100 relating to country club membership fees and assessments in the years ended December 31,
2024, 2023, and 2022, respectively.
(2)
Automobile allowance.
(3)
Effective January 1, 2005, the Company matches employee contributions to its 401(k) savings plan dollar for dollar up to 5% of base salary.
(4)
This reflects the Company’s total contribution to employee’s 401(k) account in 2024, 2023, and 2022 and is the sum of a $10,396, $7,637 and $7,637 to
match to employee’s salary deferral plus $0, $0 and $51,000, respectively, in additional contribution in conjunction with a proportionate contribution
being concurrently made to a group of non-highly compensated employees.
(5)
This reflects the Company’s total contribution to employee’s 401(k) account in 2024, 2023, and 2022 and is the sum of a $16,500, $16,250 and $10,237
to match to employee’s salary deferral plus $30,500, $43,763 and $24,000, respectively, in additional contribution in conjunction with a proportionate
contribution being concurrently made to a group of non-highly compensated employees.
AMERICAN VANGUARD CORPORATION
96
(6)
This reflects severance compensation arising from Mr. Wintemute's departure on July 12, 2024, which consists of $2,298,461 paid in the form of a lump
sum payment of $191,538 plus 21 semi-monthly payments of $47,885 plus eleven monthly payments for consulting work in the amount of $14,394 per
month.
GRANTS OF PLAN-BASED AWARDS
The following table sets forth the grant of plan-based awards for the year ended December 31, 2024, to the NEOs.
Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards
Estimated Future
Payouts Under
Equity
Incentive Plan
Awards
All Other
Stock
Awards:
Number
of Shares
of Stock or
All Other
Option
Awards:
Number
of Securities
Underlying
Exercise or
Base
Price of
Full Grant
Date Fair
Name
(a)
Grant
Date
(b)
Threshol
d
(#)
(c)
Target
(#)
(d)
Maximu
m
(#)
(e)
Threshol
d
(#)
(f)
Target
(#)
(g)
Maximu
m
(#)
(h)
Units
(#)
(i)
Options
(#)
(j)
Option
Awards
($/Share)
(k)
Value of
Stock
($) (1)
(l)
Douglas A. Kaye III
12/9/2024
—
—
—
—
59,003 (2)
—
—
—
4.17
245,770
Douglas A. Kaye III
12/9/2024
—
—
—
— 118,007 (3)
—
—
—
1.11
130,974
Douglas A. Kaye III
12/9/2024
—
—
—
—
59,003 (4)
—
—
—
5.72
337,497
Douglas A. Kaye III
12/9/2024
—
—
—
—
52,448 (5)
—
—
—
5.72
300,003
Eric G. Wintemute
1/22/2024
—
—
39,157
—
—
—
402,534
Eric G. Wintemute
1/22/2024
—
—
—
—
196,712
10.28
822,256
David T. Johnson
1/22/2024
—
—
—
4,190
4,190 (6)
4,190
—
—
—
43,073
David T. Johnson
1/22/2024
—
—
—
—
—
—
—
48,888 (7)
10.28
204,354
Timothy J. Donnelly
1/22/2024
—
—
—
3,544
3,544 (6)
3,544
—
—
—
36,432
Timothy J. Donnelly
1/22/2024
—
—
—
—
—
—
—
41,350 (7)
10.28
172,844
Shirin Khosravi
1/22/2024
—
—
—
—
4,087
10.28
16,103
Anthony S. Hendrix
1/22/2024
—
—
—
2,317
2,317 (6)
2,317
—
—
—
23,819
Anthony S. Hendrix
1/22/2024
—
—
—
—
—
—
—
27,034 (7)
10.28
113,002
Peter E. Eilers
1/22/2024
—
—
—
2,019
2,019 (6)
2,019
—
—
—
20,755
Peter E. Eilers
1/22/2024
—
—
—
—
—
—
—
23,558 (7)
4.18
98,472
(1)
This column shows the full grant date fair value of restricted stock grants made based on the closing price of the Company’s stock as of the date of award, with the exception of options
(whether solely time-based or time- and TSR-based), which was determined by using the Monte Carlo valuation method. The full grant date fair value of each award is the number of shares
multiplied by the grant date fair value per share. These amounts were not paid to any named executive officer. The recognized compensation expenses for 2024 awards are shown in the
“Stock Awards” column in the “Summary Compensation Table”.
AMERICAN VANGUARD CORPORATION
97
(2)
These comprise an award of performance-based restricted stock that vests upon the attainment of both (i) continuous employment through his first, third, and fifth anniversary of his
employment, and (ii) the relative growth of the issuer's total shareholder return as compared with the Russell 2000 as follows: a) 50% of target (i.e., one-third of total award) if the TSR is >=
the 25th percentile but < the 50th percentile, b) 100% of the target if the TSR is >= 50th percentile but < the 75th percentile and c) 200% of the target if the TSR is >= the 75th percentile. Each
award is valued at $4.17 using the Monte Carlo method.
(3)
These comprise an award of performance-based restricted stock that vests at any time during the five year term in a two step process as follows: x) step one - one-sixth of the total number of
shares awarded will vest on each of the dates upon which the fair market value of the issuer's common stock exceeds a) 2X, b) 3X and c) 4X the FMV on the date of the award (i.e.,
$5.72/share), in each case, for at least 20 consecutive days, and y) step two - one-sixth of the total number of shares awarded will vest twelve months after the occurrence of either clause a), b)
or c) above, provided the reporting person remains employed by issuer on such date. These shares are valued at $1.11 per share.
(4)
These comprise an award of time-based restricted stock that vests on equal tranches on each of the first, second, third, fourth, and fifth anniversary of the award date and are subject to
forfeiture in the event that reporting person is not continuously employed through each such vesting date for any reason.
(5)
These shares constitute time-based restricted shares that vest in even tranches on the first, second, third, fourth and fifth anniversary of the award and are subject to vesting and acceleration in
the event of the termination of employee’s employment for any reason.
(6)
The shares constitute time-based restricted shares that vest in even tranches on the first, second and third anniversary of the award and are valued at $10.28 per share, which is the fair market
value of the Company’s common stock as of the award date. Vesting requires the employee’s continuous employment through the vesting date, and unvested shares are forfeited if service is
interrupted prior to such vesting date for any reason.
(7)
These are options to purchase shares of the Company’s common stock. They vest on the third anniversary of the award date and exercisability is further subject to a TSR condition – namely,
one-third of the options will be deemed to be exercisable when the fair market value of the common stock equals or exceeds $20 per share for 20 consecutive trading days, and two-thirds of
the options become exercisable when the fair market value of the common stock exceeds $25 per share for 20 consecutive trading days. The Monte Carlo valuation for such options is $4.18
per share.
(8)
These are options to purchase shares of the Company’s common stock with a strike price of $10.28 per share. They vest on the third anniversary of the award date. The Monte Carlo valuation
for such options is $3.94 per share.
NARRATIVE DISCUSSION TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
The Company and Mr. Wintemute entered into an employment agreement, dated as of April 1, 2022, pursuant to which Mr. Wintemute served as the
Company’s Chairman and CEO. Mr. Wintemute’s annual base compensation for the year ended December 31, 2024 was $757,000, with increases to be made
by the Board in their sole discretion. Mr. Wintemute was eligible to receive a bonus, in an amount as determined by the Board, based on his performance
against reasonable qualitative and quantitative benchmarks. The agreement also provided Mr. Wintemute with certain additional benefits, including a car
allowance of $1,800 per month and reimbursement for reasonable and customary business expenses. Mr. Wintemute’s agreement was of indefinite duration,
unless terminated by the Company. Under the terms of that agreement, if the Company were to terminate Mr. Wintemute’s employment without cause and not
due to disability or death, the Company would pay to Mr. Wintemute an amount equal to two times the average annual cash compensation received by him over
the course of the two immediately preceding calendar years (including his average annual bonus as measured over the three, previous full years) and his
unvested shares will be deemed to be vested as of the termination date. If Mr. Wintemute were to have died or become disabled during the term of the
agreement, the Company would pay him or his designated beneficiary, as applicable, any amounts (including salary) and continue any benefits due to Mr.
Wintemute under the agreement for 12 months after his death or disability. Provisions relating to change of control are set forth on page 100.
Effective as of July 3, 2024, the Company Mr. Wintemute, the Company’s then Chairman and CEO, entered into a Transition Agreement, which set
forth the terms and conditions of Mr. Wintemute’s retirement. The Transition Agreement provides that Mr. Wintemute would continue to serve in his role as
CEO until the earliest to occur of (i) the date that a new CEO commences employment, (ii) December 31, 2024, (iii) termination of his employment or (iv) his
death (the “Termination Date”). In addition, Mr. Wintemute would participate in the search for his successor, would continue to serve as Chairman of the Board
until the 2025 Annual Meeting of Stockholders and, post-termination, would serve as a consultant on a part-time basis.
AMERICAN VANGUARD CORPORATION
98
Effective July 12, 2024, Mr. Wintemute ceased being CEO at the Company, at which time the provisions of the Transition Agreement were triggered.
Under the terms of the Transition Agreement, in addition to accrued vacation, Mr. Wintemute would receive cash in the amount of two times the sum of his
annual base salary plus his average bonus as measured over the past three years, which total sum is $2,298,461, to be paid over two years. He would also be
entitled to receive incentive cash compensation, if any, for service in 2024 based upon the Company’s actual performance during fiscal year 2024 to be paid at
the time such bonuses are otherwise paid to other active employees. He would also be entitled to receive the benefit of the Company’s group health insurance
coverage for up to 24 months post-termination with the Company paying the COBRA premium costs.
Further, for the period commencing upon the Termination Date through the 2025 Annual Meeting of Stockholders, Mr. Wintemute would continue to
serve as Chairman and voting member of the Company’s board of directors (for which he will be entitled to receive non-employee director compensation) and
will provide advisory consulting services (up to 30 hours per month) for a flat monthly fee of $12,594. Upon the Termination Date, Mr. Wintemute’s unvested
equity awards (i.e., those made in 2022, 2023 and 2024) would be deemed to be accelerated and vested in an amount pro-rated to reflect the correspondence
between the vesting schedule of such shares and the Termination Date. In the case of performance-based shares, the number of shares to be pro-rated will be
the target amount of each applicable grant. In addition, certain of Mr. Wintemute’s incentive equity awards received in lieu of cash incentive compensation
would become fully vested. All of Mr. Wintemute’s vested and unexercised options would be deemed to be exercisable for the duration of their applicable
exercise period.
In connection with his appointment to the position of CEO, Mr. Kaye and the Company entered into an Executive Employment Agreement dated as of
December 9, 2024 having the following material terms: base wage of $650,000; target cash incentive compensation of 100% of base salary with maximum
payout potential of 180%; initial bonus of $300,000 (to be paid in part in Q1 2025 and in part in Q4 2025); term life insurance policy having limits of $1.5
million; performance share units having face value of $337,500 vesting in equal tranches on each anniversary over a five year period based upon the total
shareholder return of the Russell 2000; performance share units having a face value of $675,000 which will vest in equal tranches when the fair market value of
Registrant’s common stock equals or exceeds two-times, three-times and four-times the fair market value on date of award; time based restricted stock having a
face value of $337,500 vesting equally on each anniversary over a five year term; time-based restricted stock having a face value of $300,000 vesting equally on
each anniversary over a five year term (subject to acceleration in the event of termination without cause during the first 12 months of employment); for
termination without cause or resignation for good reason other than due to death or disability during the first 12 months of employment, executive receives
accrued base wage, pro-rated bonus and one-year’s worth of both base wage and bonus; for termination without cause or resignation after that period, accrued
compensation plus two-times the sum of base wage plus average bonus (measured over three years) and acceleration and vesting of equity awards pro-rated to
correspond with the vesting schedule.
AMERICAN VANGUARD CORPORATION
99
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows, with respect to the NEOs, the number of shares covered by both exercisable and non-exercisable stock options and, in
addition, grants of restricted stock units that had not yet vested as of December 31, 2024, with respect to options to purchase common stock of the Company.
The closing price of the common stock on December 31, 2024, the last trading day of the Company’s fiscal year, was $10.97 per share.
Option Awards
Name
(a)
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
Option
Exercise
Price
($)
(e)
Option
Expiration
Date
(f)
Eric G. Wintemute
196,712
—
— $
10.28
1/22/2027
David T. Johnson
—
48,888
— $
10.28
1/22/2027
Timothy J. Donnelly
—
41,350
— $
10.28
1/22/2027
Shirin Khosravi
—
4,087
— $
10.28
1/22/2027
Anthony S. Hendrix
27,034
$
10.28
1/22/2027
Peter E. Eilers
—
23,558
— $
10.28
1/22/2027
Stock Awards
Name
(a)
Number of Shares
or Units of Stock
That
Have Not Vested
(#)
(g)
Market Value of
Shares
or Units of Stock
That
Have Not Vested
($)
(h)
Equity Incentive
Plan
Awards: Number of
Unearned Shares,
Units or Other
Rights
That Have Not
Vested
(#)
(i)
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not
Vested
($)
(j)
Douglas A. Kaye III
288,461
1,335,574
—
—
David T. Johnson
21,010
97,276
—
—
Timothy J. Donnelly
17,770
82,275
—
—
Shirin Khosravi
6,666
30,864
Peter E. Eilers
14,646
48,018
—
—
AMERICAN VANGUARD CORPORATION
100
OPTION EXERCISES AND STOCK VESTED
The following table shows, with respect to the NEOs, the number of shares acquired on the exercise of stock options and on vesting of stock awards and
their respective value realized (market price less exercise price) for the year ended December 31, 2024.
Option Awards
Stock Awards
Name
(a)
Number of Shares
Acquired on
Exercise
(#)
(b)
Value Realized on
Exercise
($)
(c)
Number of Shares
Acquired on
Vesting
(#)
(d)
Value Realized on
Vesting
($)
(e) (1)
Douglas A. Kaye III
—
—
—
—
Eric G. Wintemute
—
—
50,283
835,703
Ulrich G. Trogele
—
—
9,892
164,405
David T. Johnson
—
—
5,482
91,111
Timothy J. Donnelly
—
—
5,806
96,496
Anthony S. Hendrix
—
—
6,358
105,670
Shirin Khosravi
—
—
6,358
105,670
Peter E. Eilers
—
—
8,271
137,464
(1)
Value realized on vesting is value of shares, excluding shares forfeited for U.S. payroll tax purposes, if applicable, at time of vesting.
Pension Benefits and Non-qualified Deferred Compensation
The Company provided no pension benefits and no non-qualified deferred compensation to the NEOs during the year ended December 31, 2024.
Potential Payments upon Termination or Change of Control
The current CEO is party to an employment agreement dated as of December 9, 2024, under the terms of which for termination without cause or
resignation for good reason other than due to death or disability during the first 12 months of employment, executive receives accrued base wage, pro-rated
bonus and one-year’s worth of both base wage and bonus; for termination without cause or resignation after that period, accrued compensation plus two-times
the sum of base wage plus average bonus (measured over three years) and acceleration and vesting of equity awards pro-rated to correspond with the vesting
schedule.
Each of the other NEOs is party to a change of control severance agreement, under the terms of which the employee is entitled to receive certain
payments in the event that there is both a change of control during the term of agreement and such employee is either terminated (for reasons other than cause)
or resigns for good reason within 24 months of such change of control. As with the CEO, there is a double trigger before benefits are earned under this
arrangement. Provided both conditions for payment are met and the Company receives a release of all claims from the employee, the employee is entitled to
receive a lump sum amount equal to two years’ base salary, two-times the employee’s average cash incentive compensation (measured over the past three full-
years), 24 months’ worth of COBRA coverage for medical insurance, executive level outplacement costs, and immediate acceleration and vesting of unvested
options (or other securities to which employee may have a right).
AMERICAN VANGUARD CORPORATION
101
For purposes of the CEO, “change in control” is defined to be identical with that set forth in the 2022 Plan. For NEOs other than the CEO, “change in
control” is defined to mean, in effect, either (i) a merger or consolidation of the Company in which those who were stockholders immediately before the
effective time of the merger or consolidation have less than 50% of the voting power of the new corporation or entity; (ii) a sale or disposition of all or
substantially all of the Company’s assets; (iii) when any person (as defined in Sections 13(d) and 14(d) of the Exchange Act) directly or indirectly owns more
than 50% of the Common Stock of the Company or (iv) in the event over a 24 month period a majority of the board of directors is replaced by new members.
Further, as a condition to payment (whether to the CEO or any of the other NEOs), the employee must execute and deliver a written release of claims against
the Company.
The following table summarizes the estimated amounts that NEOs who were employed by the Company as of December 31, 2024, would be entitled to
receive whether in the form of cash or securities in the event of a termination without cause or voluntary resignation for good reason after a change in control
assuming, for illustration purposes, that such change in control had occurred on December 31, 2024.
Salary
($)
Average Bonus
($)
COBRA
Insurance
Premiums
($)
Outplacement
Services
($)
Accelerated
Options
and Grants
Vesting
($)(1)
Total Change in
Control
Payments
($)(2)
Douglas A. Kaye III
1,299,984
251,432
64,650
10,000
1,335,574
2,961,640
David T. Johnson
858,096
87,760
64,650
10,000
97,276
1,117,782
Timothy J. Donnelly
725,732
83,719
90,629
10,000
82,275
992,355
Anthony S. Hendrix
254,730
67,688
55,297
10,000
—
387,715
Shirin Khosravi
552,636
—
90,629
10,000
30,864
684,129
Peter E. Eilers
581,926
64,117
67,880
10,000
48,018
771,941
(1)
Upon change in control, the agreement allows for the accelerated vesting of options and grants. Assuming the change in control had happened as of
December 31, 2023, there would be unvested awards of 313,326 shares of restricted stocks and no shares of incentive stock options. If the change
in control occurred on December 31, 2023, these awards would have vested and the Company would have recognized additional compensation
expense based on grant date fair value in the amount of $2,933,665 for restricted stocks, and the officers would have recognized the value of vested
grants as income based on fair market value in the amount of $3,437,187 (which is the sum of this column).
(2)
There are no tax excise gross-ups relating to change-in-control payments for NEOs.
With respect to severance compensation received or earned by NEOs not resulting from a change of control,
CEO Pay Ratio Disclosure
As per Item 402(u) of Regulation S-K, we are providing the following information about the annualized total compensation for the PEO who was employed at
the Company as of the date on which this pay ratio was calculated (namely, December 31, 2024) as compared with the median of annual total compensation of
all employees of the Company (excluding the CEO). The annualized compensation consisted of the PEO’s salary (over a three week period) expressed on an
annual basis plus his one-time signing bonus plus the value of equity received by him during fiscal year 2024. For fiscal year 2024, we report as follows:
•
The annual total compensation of the CEO on an annualized basis, as per the Summary Compensation table on page 93 hereof was $2,003,827;
and
•
The median of the annual total compensation of all employees of the Company (excluding the CEO) was $56,430.
AMERICAN VANGUARD CORPORATION
102
Based upon this information, we reasonably estimate that the ratio for the CEO’s annual total compensation to the annual total compensation of our
median employee was approximately 36.
Our pay ratio was calculated as per Item 402(u) as follows. In order to identify the median employee, using the criteria set forth in Item 402(c) of
Regulation S-K for populating data within the Summary Compensation Table, we gathered information from payroll, stock award and incentive compensation
on all employees as of December 31, 2024, which was within three months of the closing of the Company’s last fiscal year.
In measuring the wages of non-exempt employees, we took the actual wages, including regular time and overtime, paid to such employees. Where
employees were paid in foreign currencies, we converted that currency into U.S. dollars as of the date of measurement. In establishing total compensation, we
considered not only wages and bonuses, but also the fair value of equity awards, if any. After arriving at total compensation for the employee population (not
including the CEO), we listed them in descending order of compensation and identified the median employee.
Pay Versus Performance
As per item 402(v) of Regulation S-K, we are providing the following information about the relationship between Compensation Actually Paid (CAP) as
defined in Item 402(v) and performance. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company
aligns executive compensation with its performance, refer to the “Compensation Discussion and Analysis”.
Year
Summary
compensation
table total for
PEO
Compensation
actually paid to
PEO
Average
summary
compensation
table total for
non-PEO named
executive officers
Average
compensation
actually paid to
non-PEO named
executive officers
Value of initial
fixed $100
investment based
on Total
shareholder
return
Value of initial
fixed $100
investment based
on Global
Agribusiness
TSR
Net income
$000s
Net sales $000s
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
2024
$
1,675,160 $
339,583 $
680,441 $
616,596 $
24 $
113 $
(124,855) $
549,520
2023
$
2,509,773 $
(471,651) $
567,665 $
201,287 $
72 $
105 $
7,519 $
579,371
2022
$
2,852,874 $
3,432,747 $
729,905 $
817,252 $
141 $
115 $
27,404 $
609,615
2021
$
2,463,689 $
3,089,570 $
708,595 $
802,105 $
106 $
125 $
18,587 $
557,676
2020
$
2,181,538 $
1,925,191 $
645,118 $
610,063 $
100 $
100 $
15,242 $
458,704
Footnotes to Table 1:
1. Our principal executive officer (“PEO”) for fiscal year 2024 is Douglas A. Kaye, who joined the Company on December 9, 2024. Our PEO for the
fiscal years 2023, 2022, 2021, and 2020 is Eric G. Wintemute who left that position on July 12, 2024. The dollar amounts reported in column (b) are the
amounts of total compensation reported for the PEO for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to
“Executive Compensation – Executive Compensation Tables – Summary Compensation Table.”
AMERICAN VANGUARD CORPORATION
103
2. The dollar amounts reported in column (e) represent the amount of “compensation actually paid” or “CAP” to the PEO, as computed in accordance
with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to the PEO during the applicable year. The following
adjustments were made to the PEO’s total compensation for each applicable year to determine the compensation actually paid in accordance with SEC rules:
Year
Reported Summary
Compensation Table
Total for PEO
Reported Value of
Equity Awards
Equity Award
Adjustments
Reported
Change in the
Actuarial Value
of Pension
Benefits
Pension Benefit
Adjustments
Compensation Actually
Paid to PEO
(a)
(b)
(c)
(d)
2024
$
1,675,160
$
1,335,577
$
(842,658)
$
—
$
—
$
339,583
2023
$
2,509,773
$
(1,688,426)
$
(1,292,998)
$
—
$
—
$
(471,652)
2022
$
2,852,874
$
(1,407,292)
$
1,987,165
$
—
$
—
$
3,432,747
2021
$
2,463,689
$
(1,392,708)
$
1,931,968
$
—
$
—
$
3,089,570
2020
$
2,181,538
$
(1,392,708)
$
1,136,361
$
—
$
—
$
1,925,191
a)
The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards”, column (e) and “Option Awards” in
column (f) of the Summary Compensation Table for the applicable year.
The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following:
3. (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the
amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are
outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting
date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal
year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a
deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or
option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component
of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time
of grant.
The amounts deducted or added in calculating the equity award adjustments for the PEO are as follows:
Year
Year End Fair Value
of Equity Awards
Year over Year
Change in Fair
Value of
Outstanding and
Unvested Equity
Awards
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
Year over Year
Change in Fair
Value of Equity
Awards
Granted in
Prior Years that
Vested in the
Year
Fair Value at the
End of the Prior
Year of Equity
Awards that
Failed to Meet
Vesting
Conditions in the
Year
Value of Dividends
etc not Otherwise
Reflected in Fair
Value or Total
Compensation
Total Equity
Award
Adjustments
2024
$
1,335,577
$
—
$
—
$
—
$
— $
—
$
1,335,577
2023
$
860,289
$
(1,333,715)
$
(361,161)
$
104,508
$
(562,919) $
—
$
(1,292,998)
2022
$
1,289,835
$
859,999
$
161,607
$
—
$
(324,276) $
—
$
1,987,165
2021
$
1,061,580
$
144,499
$
290,744
$
487,478
$
(52,333) $
—
$
1,931,968
2020
$
1,503,640
$
(505,018)
$
(183,806)
$
390,800
$
(69,255) $
—
$
1,136,361
AMERICAN VANGUARD CORPORATION
104
3. The dollar amounts reported in column (d) of Table 1 represent the average of the amounts reported for the Company’s named executive officers
(NEOs) as a group (excluding the PEO) in the “Total” column of the Summary Compensation Table in each applicable year. The NEOs for the years 2024,
2023, 2022, 2021, and 2020 were Ulrich G. Trogele, David T. Johnson, Timothy J. Donnelly, Anthony S. Hendrix, Peter E. Eilers, and Shirin Khosravi.
4. The dollar amounts reported in column (e) of Table 1 represent the average amount of “compensation actually paid” (also, "CAP") to the NEOs as a
group (excluding the PEO) as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of
compensation earned by or paid to the NEOs as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the
following adjustments were made to average total compensation for the NEOs as a group for each year to determine the compensation actually paid, using the
same methodology described above in Note 2:
Year
Average Reported
Summary
Compensation Table
Total for Non-PEO
NEOs
Average Reported
Value of Equity
Awards
Average Equity Award
Adjustments
Reported Change
in the Actuarial
Value of Pension
Benefits
Pension Benefit
Adjustments
Average
Compensation
Actually Paid to
Non-PEO NEOs
(a)
(b)
2024
$
680,441
$
30,051 $
(93,896)
$
—
$
—
$
616,596
2023
$
567,665
$
(142,029) $
(224,349)
$
—
$
—
$
201,287
2022
$
729,905
$
(157,642) $
244,989
$
—
$
—
$
817,252
2021
$
708,595
$
(179,315) $
272,825
$
—
$
—
$
802,105
2020
$
645,118
$
(211,566) $
176,511
$
—
$
—
$
610,063
The amounts deducted or added in calculating the total average equity award adjustments for NEOs other than the PEO are as follows:
Year
Year End Fair
Value of Equity
Awards
Year over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity Awards
Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
Year over Year
Change in Fair
Value of Equity
Awards
Granted in
Prior Years that
Vested in the
Year
Fair Value at the
End of the Prior
Year of Equity
Awards that
Failed to Meet
Vesting
Conditions in the
Year
Value of Dividends
etc. not Otherwise
Reflected in Fair
Value or Total
Compensation
Total Equity
Award
Adjustments
2024
$
30,051
$
(48,674)
$
(3,836)
$
—
$
(71,437)
$
—
$
(93,896)
2023
$
72,367
$
(166,981)
$
(54,861)
$
10,650
$
(85,524)
$
—
$
(224,349)
2022
$
144,484
$
125,605
$
24,945
$
—
$
(50,045)
$
—
$
244,989
2021
$
145,746
$
22,097
$
42,051
$
70,498
$
(7,567)
$
—
$
272,825
2020
$
228,417
$
(75,693)
$
(30,040)
$
63,445
$
(9,618)
$
—
$
176,511
There are no amounts deducted or added in calculating total pension benefit adjustments, as the Company does not sponsor any privately-sponsored
pension plan or defined benefit plan. On behalf of Mr. Eilers, the Company contributes toward a pension plan sponsored by a third party with respect to which
the Company is not privy to funding or other metrics that would be used in establishing actuarial values.
5. Cumulative TSR in column (f) of Table 1 is calculated by dividing the sum of the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the
Company’s share price at the beginning of the measurement period.
6. Column (g) of Table 1 represents the TSR of the Global Agribusiness Index.
AMERICAN VANGUARD CORPORATION
105
7. The dollar amounts reported in column (h) of Table 1 represent the amount of net income reflected in the Company’s audited financial statements for
the applicable year.
8. The dollar amounts reported in column (i) of Table 1 represent the amount of net sales reflected in the Company’s audited consolidated financial
statements for the applicable year.
As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program
reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our incentive awards are selected based on an objective of
incentivizing our named executive officers to increase the value of our enterprise for our shareholders. The most important metrics used by the Company to link
executive compensation actually paid to the Company’s named executive officers, for the most recently completed fiscal year, to the Company’s performance
are as follows:
•
Net Sales
•
Adjusted EBITDA*
•
Earnings Per Share
* Adjusted EBITDA is calculated by taking the sum of net income plus transformation expense, stock compensation expense, depreciation and
amortization, proxy costs, interest expenses (net) and the provision for income taxes.
Below are graphical depictions of various metrics disclosed above, specifically: cumulative TSR of the Company versus the TSR of the Global
Agribusiness Index and three graphs showing the compensation actually paid for the PEO and Non-PEO NEOs versus cumulative TSR of the Company, net
income and net sales, respectively, for the years 2020, 2021, 2022, 2023, and 2024. Alphabetical references in the data legends on these charts refer to columns
in Table 1 above.
Cumulative TSR of the Company and Cumulative TSR of the Global Agribusiness Index
AMERICAN VANGUARD CORPORATION
106
Compensation Actually Paid and Company TSR
Compensation Actually Paid and Net Income
AMERICAN VANGUARD CORPORATION
107
Compensation Actually Paid and Net Sales
Director Compensation
The following table summarizes compensation paid to the non-management members of the Board for the year ended December 31, 2024.
Name
(a)
Fees Earned
or Paid in
Cash
($)
(b)
Stock
Awards
($)
(c)
(1)
Option
Awards
($)
(d)
Non-Equity
Incentive Plan
Compensation
($)
(e)
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
(f)
All Other
Compen-
sation
($)
(g)
Total
($)
(h)
Marisol Angelini
95,000
80,000
—
—
—
—
175,000
Scott D. Baskin
150,000
40,000
—
—
—
—
190,000
Mark R. Bassett
84,625
80,000
—
—
—
442,700 (2)
607,325
Debra F. Edwards
122,250
40,000
—
—
—
—
162,250
Steve Macicek
68,125
100,000
—
—
—
—
168,125
Patrick E. Gottschalk
82,500
80,000
—
—
—
—
162,500
Émer Gunter
125,000
40,000
—
—
—
—
165,000
Keith M. Rosenbloom
86,875
80,000
—
—
—
—
166,875
(1)
Amounts for Eric Wintmute, former chief executive officer, and Douglas Kaye III, current chief executive officer, are included in the section
entitled "Summary Compensation Table."
AMERICAN VANGUARD CORPORATION
108
(2)
Represents a grant of 4,398 shares of common stock to each of the directors who received $80,000 worth of shares, and a grant of 2,199 shares of
common stock to those who received $40,000 worth of shares. Under the non-management director compensation plan, directors who have
accumulated five years' worth of stock grants may elect to receive one-half cash and one-half equity (i.e., $40,000 plus stock worth $40,000) in lieu
of an equity award of $80,000. Further, Mr. Macicek received a partial grant ($20,000) of shares for service during the quarter immediately
preceding the annual stockholders meeting of 2024. Grant date values were all calculated in accordance with FASB ASC Topic 718, and all
amounts shown in this column exclude the effect of estimated forfeitures related to service-based vesting conditions. The grant date fair value was
calculated based on the closing price of the Common Stock on the date of issuance.
(3)
This amount was for consulting services provided by Mr. Bassett as more fully described on page 109.
During 2024, compensation for non-management board members has been made as per the table set forth below:
Board Compensation
American Vanguard Board Pay
Board Pay
Cash retainer
$60,000
Annual equity
$80,000
Per-meeting fee
$0
Executive sessions
$0
Committee Pay
Incremental Committee chair premium retainer:
➣ Audit
$10,000
➣ Finance Committee
$8,000
➣ Compensation
$7,000
➣ Nominating/Governance and Risk Committee
$5,000
Committee member retainer:
➣ Audit
$10,000
➣ Finance Committee
$10,000
➣ Compensation
$7,500
➣ Nominating/Governance and Risk Committee
$5,000
Per-meeting fee:
➣ Audit/Compensation/Finance
$0
➣ Nominating/Governance/Risk
$0
Lead Director
Lead Director
$25,000
Special Assignments
Per diem fee for special assignments
$2,000
Conditional meeting fee (>2 scheduled meetings)
$1,500
AMERICAN VANGUARD CORPORATION
109
Annual Stock Awards for Non-management Directors:
In accordance with the terms and conditions of the 2022 Plan, each non-employee director of the Board is entitled to receive awards of the Company’s
Common Stock, par value $.10 (“Common Stock”), as follows. In connection with each non-employee director’s election or re-election to the Board, during
2023 such director was entitled to receive an award that equals $80,000 (the “Stock Award”). Further, it is the policy of the Company that each director must
accumulate and hold Company stock equal to the number of shares received by him or her over the course of his or her first four full years of service on the
Board, after which such director may elect to receive up to half of the value of any subsequent Stock Award in the form of a cash payment. If a person is
appointed to the Board for any partial year (for example, due to a vacancy on the Board), such director will receive a pro rata portion of the Stock Award as
determined by the Compensation Committee or the Board.
•
Each Stock Award will be calculated based on the closing price of the Common Stock on the date of issuance, as reported on the New York
Stock Exchange or other national exchange on which the Common Stock is traded. No fractional share of any Stock Award will be issued, and
the value of such fractional share will be paid in cash.
•
Each Stock Award will vest immediately in full upon grant.
The Company has entered into written indemnification agreements with each of its directors, effective as of the first day of such person’s service as a
director. The agreement provides for contractual indemnification obligations by the Company to the extent permitted by applicable law and the advancement of
expenses in connection therewith. The agreement also provides that any legal action brought by the Company against a director must be brought within two
years from the date of the facts giving rise to the action or such shorter period as provided by law.
Review and Approval of Related Person Transactions
The Nominating and Corporate Governance Committee (“the N&CG Committee”) has the responsibility for the review and approval or ratification of all
related persons and conflict of interest transactions involving any director, executive officer, nominee for director, any holder of 5% or more of any class of the
Company’s voting securities or any non-executive officer (or any member of the immediate family of any of the foregoing persons), if any such transaction
involves more than $10,000, in each case using appropriate counsel and other advisers, as the Committee may deem necessary.
In the course of its review of proposed related person transactions, the N&CG Committee considers all relevant facts and circumstances, including: (i)
the benefits of the transaction to the Company; (ii) the impact of the transaction on a director’s independence; (iii) the availability of other sources for
comparable products or services; (iv) the terms of the transaction; (v) the terms available to unrelated third parties or to employees generally; and (vi) other facts
and circumstances that may bear on the materiality of the transaction under applicable law and listing standards. The N&CG Committee may seek bids, quotes
or independent valuations from third parties in connection with assessing any proposed related person transaction.
The Committee approves only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its
stockholders, as the N&CG Committee determines in good faith. To the extent that a proposed related person transaction involves any member of the N&CG
Committee (or an immediate family member of any member of the N&CG Committee), such member would not participate in the deliberations or vote
respecting the approval or ratification of the proposed transaction.
Related Person Transactions
During 2024, Company director Mark Bassett entered into a consulting arrangement pursuant to which he received approximately $95,200 on a time-
and-materials basis over a ten-week period ended in March 2024 during which he provided services related to operational and business analytics. At the
conclusion of his consultancy, Mr. Bassett provided the Company with recommendations for improving operating leverage and digital capabilities.
Commencing in July 2024, Mr. Bassett resumed his consultancy in support of the OCEO, during which he was paid a flat rate of $29,200 per month and, like
other members of the OCEO, received a transformation benefit in the amount of $125,000 for each of the third and fourth quarters of 2024. There were no other
related party transactions during fiscal year 2024, nor are any such transactions in existence or currently proposed for 2025.
Compensation Committee Interlocks and Insider Participation
AMERICAN VANGUARD CORPORATION
110
The Compensation Committee of the Board for the year ended December 31, 2024, consisted of Marisol Angelini, Patrick Gottschalk, Steven Macicek
and Keith Rosenbloom. During 2024 (and through the date of filing hereof), no member of the Compensation Committee served on the board of directors of any
other public company, where any officer or director of such entity also served on the Company’s Board.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The disclosure contained in Part II, Item 5 under “Equity Compensation Plan Information” and information regarding security ownership of certain
beneficial owners and management is set forth below under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy
Statement.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Company, the ownership of the Company’s outstanding Common Stock as of March 31, 2025, by persons who are beneficial
owners of 5% or more of the outstanding Common Stock is set forth below.
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership (*)
Percent of
Class
Blackrock Fund Advisors
1,737,129
6.03%
400 Howard Street
San Francisco, CA 94105-2228
The Vanguard Group
1,542,599
5.36%
100 Vanguard Blvd.
Malvern, PA 19355
Wellington Management Company, LLP
1,541,255
5.35%
280 Congress Street
Boston, MA 02110
Dimensional Fund Advisors LP
1,447,896
5.03%
6300 Bee Cave Road, Building One
Austin, TX 78746
(*) Based on information reported to the SEC by, or on behalf of, such beneficial owner.
AMERICAN VANGUARD CORPORATION
111
To the knowledge of the Company, the ownership of the Company’s outstanding Common Stock, as of April 5, 2025, by persons who are directors and
nominees for directors, the named executive officers of the Company named in the Summary Compensation Table, and by all directors and executive officers as
a group is set forth below. Unless otherwise indicated the Company believes that each of the persons set forth below has the sole power to vote and to dispose of
the shares listed opposite his or her name. The address for all persons in the below table is 4695 MacArthur Court, 12thFloor, Newport Beach, CA 92660.
Office (if any)
Name and Address Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent
of Class
Director
Eric G. Wintemute
1,093,979 (1)
3.8%
Director
Debra F. Edwards
33,140
(2)
Director
Steven Macicek
19,218
(2)
Director
Scott D. Baskin
33,187
(2)
Director
Émer Gunter
24,913
(2)
Director
Marisol Angelini
19,269
(2)
Director
Patrick E. Gottschalk
61,803
(2)
Director
Keith M. Rosenbloom
669,582
2.4%
Director
Mark R. Bassett
16,790
(2)
Director
Carmen Tiu De Mino
6,786
(2)
Chief Financial Officer
David T. Johnson
74,335
(2)
Chief Administrative Officer
Timothy J. Donnelly
88,676
(2)
Chief Human Resources Officer
Shirin Khosravi
14,377
(2)
Managing Director
(AMVAC Netherlands BV)
Peter E. Eilers
47,905
(2)
Directors and Officers as a Group
2,203,960
7.6%
(1)
This figure includes 196,712 shares of Common Stock Mr. Wintemute is entitled to acquire pursuant to stock options exercisable within 60 days of this
Report.
(2)
Under 1% of class.
The table below shows the plan issuances and remaining available securities for future issuance:
Plan Category
Number of securities to be issued upon
exercise of outstanding options, warrants
and rights
Weighted-average exercise price of
outstanding options, warrants and
rights
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column (a)
(a)
(b)
(c)
Equity compensation plans approved by
security holders
1,107,365
$
12.54
1,141,745
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the captions “Transactions with Management and Others” and “Information about the Board of Directors and
Committees of the Board” is set forth below.
Review and Approval of Related Person Transactions
The Nominating and Corporate Governance Committee (“the N&CG Committee”) has the responsibility for the review and approval or ratification of all
related persons and conflict of interest transactions involving any director, executive officer, nominee for director, any holder of 5% or more of any class of the
Company’s voting securities or any non-executive officer (or any member of the immediate family of any of the foregoing persons), if any such transaction
involves more than $10,000, in each case using appropriate counsel and other advisers, as the Committee may deem necessary.
In the course of its review of proposed related person transactions, the N&CG Committee considers all relevant facts and circumstances, including: (i)
the benefits of the transaction to the Company; (ii) the impact of the transaction on a
AMERICAN VANGUARD CORPORATION
112
director’s independence; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; (v) the terms available to
unrelated third parties or to employees generally; and (vi) other facts and circumstances that may bear on the materiality of the transaction under applicable law
and listing standards. The N&CG Committee may seek bids, quotes or independent valuations from third parties in connection with assessing any proposed
related person transaction.
The Committee approves only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its
stockholders, as the N&CG Committee determines in good faith. To the extent that a proposed related person transaction involves any member of the N&CG
Committee (or an immediate family member of any member of the N&CG Committee), such member would not participate in the deliberations or vote
respecting the approval or ratification of the proposed transaction.
Related Person Transactions
During 2024, Company director Mark Bassett entered into a consulting arrangement pursuant to which he received approximately $95,200 on a time-
and-materials basis over a ten-week period ended in March 2024 during which he provided services related to operational and business analytics. At the
conclusion of his consultancy, Mr. Bassett provided the Company with recommendations for improving operating leverage and digital capabilities.
Commencing in July 2024, Mr. Bassett resumed his consultancy in support of the OCEO, during which he was paid a flat rate of $29,200 per month and, like
other members of the OCEO, received a transformation benefit in the amount of $125,000 for each of the third and fourth quarters of 2024. There were no other
related party transactions during fiscal year 2024, nor are any such transactions in existence or currently proposed for 2025.
THE INDEPENDENCE OF DIRECTORS
It is the expectation and practice of the Board that, in their roles as members of the Board, all members will exercise their independent judgment
diligently, in good faith, and in the best interests of the Company and its stockholders as a whole, notwithstanding any member’s other activities or affiliations.
With respect to board nominees, the Board has determined that seven of the nine nominees, that is, all except Dak Kaye III (our CEO) and Mark Bassett (who,
while director, performed consulting services, including in respect of the Office of CEO during 2024), are “independent” in accordance with the applicable rules
and listing standards currently prescribed by the New York Stock Exchange for general service on the Board. The Board’s determination concerning
independence was based on information provided by the Company’s directors and discussions among the Company’s directors. The Board examines the
independence of each of its members at least once per year, and more frequently if there is any change in a member’s material relationship with the Company
that could potentially interfere with the member’s exercise of independent judgment. Below is a table indicating the committee memberships of the Company’s
directors
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information regarding principal accountant fees and services is set forth below under the caption “Ratification of the Selection of Independent Registered
Public Accounting Firm—Relationship of the Company with Independent Registered Public Accounting Firm”.
AMERICAN VANGUARD CORPORATION
113
Ratification of Appointment of Independent Registered Public Accounting Firm
Effective March 31, 2024, the Company’s Audit Committee appointed (and the Board ratified the appointment of) Deloitte & Touche LLP (“Deloitte”),
to serve as the Company’s independent public registered accounting firm for the year ended December 31, 2024. The Audit Committee and Board have
subsequently appointed Deloitte to serve as the Company’s independent public registered accounting firm for the year ending December 31, 2025. During the
fiscal year ended December 31, 2024, neither the Company nor anyone on its behalf has consulted with Deloitte regarding: (i) the application of accounting
principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and
neither a written report nor oral advice was provided to the Company that Deloitte concluded was an important factor considered by the Company in reaching a
decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)
(iv) of Regulation S-K and the related instructions; or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. A representative of
Deloitte will attend the Company’s 2024 Annual Meeting to make a statement if he or she so desires.
Aggregate fees for professional services rendered to the Company by Deloitte for the year ended December 31, 2024 and 2023, were (in thousands):
2024
2023
Audit Fees
$
2,370 $
1,604
Tax Services
228
272
$
2,598 $
1,876
Audit fees for 2024 and 2023 were for professional services rendered for the audits of the consolidated financial statements of the Company and the audit
of internal controls under Section 404 of the Sarbanes-Oxley Act, reviews of quarterly condensed consolidated financial statements, consents, and assistance
with review of documents filed with the SEC.
Tax fees for 2024 and 2023 were for services related to tax compliance, including tax advice.
All of the services rendered by Deloitte during 2024 were pre-approved by the Audit Committee in accordance with the pre-approval policy.
AMERICAN VANGUARD CORPORATION
114
PART IV
ITEM 15 FINANCIAL STATEMENTS, SCHEDULES, AND EXHIBITS
1.
Financial Statements. The consolidated financial statements as set forth under Item 8 of this Annual Report on Form 10-K are incorporated
herein.
2.
Financial Statement Schedules: Schedule II-A
3.
Exhibit Index
AMERICAN VANGUARD CORPORATION
115
Schedule II-A—Valuation and Qualifying Accounts
Allowance for Current Expected Credit Losses (in thousands)
Balance at
Foreign
Balance at
Fiscal Year Ended
Beginning of
Period
Additions
exchange
impact
End of
Period
December 31, 2024
$
7,107
2,248
(185) $
9,170
December 31, 2023
$
5,136
1,935
36 $
7,107
December 31, 2022
$
3,938
1,171
27 $
5,136
Deferred Tax Assets Valuation Allowance (in thousands)
Balance at
Additions
Charged to
Balance at
Fiscal Year Ended
Beginning of
Period
Net Income (Loss)
Other
Comprehensive
(Gain) Loss
End of
Period
December 31, 2024
$
3,317 $
29,730 $
808 $
33,855
December 31, 2023
$
3,853 $
1,376 $
(1,912) $
3,317
December 31, 2022
$
4,262 $
379 $
(788) $
3,853
See accompanying report of independent registered public accounting firms on page 33 and 36 of this annual report.
AMERICAN VANGUARD CORPORATION
116
EXHIBIT INDEX
Exhibit
Number
Description of Exhibit
3.1
Amended and Restated Certificate of Incorporation of American Vanguard Corporation (incorporated by reference to Exhibit 3.1 to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities Exchange Commission on March 30,
2004).
3.2
Certificate of Amendment of Amended and Restated Certificate of Incorporation of American Vanguard Corporation (incorporated by reference
to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q/A for the period ended June 30, 2004, filed with the Securities Exchange
Commission on February 23, 2005).
3.3
Amended and Restated Bylaws of American Vanguard Corporation dated as of December 5, 2019 (incorporated by reference to Exhibit 99.3 to
the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on December 10, 2019).
4.1
Form of Indenture (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-3 (File No. 333-122981) filed
with the Securities and Exchange Commission on February 25, 2005).
4.2
Description of Registrant's Capital Stock as of December 31, 2024*
10.1†
American Vanguard Corporation Employee Stock Purchase Plan (incorporated by reference to Exhibit A to the Company’s Proxy Statement
filed with the Securities and Exchange Commission on April 23, 2018).
10.2†
American Vanguard Corporation Amended and Restated Stock Incentive Plan as of June 8, 2016 (incorporated by reference to Exhibit A to the
Company’s Proxy Statement filed with the Securities and Exchange Commission on April 25, 2016).
10.3†
Form of Incentive Stock Option Agreement under the American Vanguard Corporation Fourth Amended and Restated Stock Incentive Plan,
(incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed with the
Securities and Exchange Commission on March 16, 2005).
10.4†
Form of Non-Qualified Stock Option Agreement under the American Vanguard Corporation Fourth Amended and Restated Stock Incentive
Plan, (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed
with the Securities and Exchange Commission on March 16, 2005.
10.5†
Employment Agreement between American Vanguard Corporation and Eric G. Wintemute dated April 1, 2022 (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on April 7, 2022).
10.6†
Form of Change of Control Severance Agreement, dated effective as of January 1, 2004, between American Vanguard Corporation and its
executive and senior officers (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended
March 31, 2004, filed with the Securities Exchange Commission on May 17, 2004).
10.8†
Second Amendment to the Change of Control Severance Agreement, dated effective as of July 11, 2008, between American Vanguard
Corporation and named executive officers and senior officers (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on
Form 8-K, filed with the Securities and Exchange Commission on July 11, 2008).
10.9†
Form of Indemnification Agreement between American Vanguard Corporation and its Directors (incorporated by reference to Exhibit 10.7 to
the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission on
March 16, 2005).
10.10†
Description of Compensatory Arrangements Applicable to Non-Employee Directors (as set forth on page 41 of the Company’s Proxy Statement
which was filed with the Securities and Exchange Commission on April 25, 2024, and incorporated herein by reference).
AMERICAN VANGUARD CORPORATION
117
Exhibit
Number
Description of Exhibit
10.11†
Form of Restricted Stock Agreement between American Vanguard Corporation and named executive officers dated as of November 13, 2020
(incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with
the Securities and Exchange Commission on March 31, 2021).
10.12†
Form of Performance-Based Restricted Stock Units Award Agreement between American Vanguard Corporation and named executive officer
dated as of November 13, 2020 (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020, filed with the Securities and Exchange Commission on March 31, 2021).
10.13†
Form of American Vanguard Corporation Amended and Restated Stock Incentive Plan TSR-Based Restricted Stock Units Award Agreement
dated June 6, 2013 (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December
31, 2013, filed with the Securities Exchange Commission on February 28, 2014).
10.14†
Form of American Vanguard Corporation Amended and Restated Stock Incentive Plan Performance-Based Restricted Stock Units Award
Agreement dated June 6, 2013 (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013, filed with the Securities Exchange Commission on February 28, 2014).
10.15
Third Amended and Restated Loan and Security Agreement dated as of August 5, 2021, among AMVAC and certain affiliates, on the one hand,
and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 10, 2021).
10.17
Amendment Number Six to the Third Amended Loan and Security Agreement dated as of November 7, 2023, among AMVAC and certain
affiliates, on the one hand, and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 9, 2023).
10.18
Amendment Number Seven to the Third Amended Loan and Security Agreement dated as of August 8, 2023, among AMVAC and certain
affiliates, on the one hand, and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand (incorporated by reference to
Exhibit 10.1 to the Company's Form 10-Q for the quarterly period ended June 30, 2024 filed with the Securities and Exchange Commission on
August 9, 2024).
10.19
Amendment Number Eight to the Third Amended Loan and Security Agreement dated as of March 12, 2025, among AMVAC and certain
affiliates on the one hand, and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities Exchange Commission on March 14, 2025).
10.20
Amendment Number Nine to the Third Amended Loan and Security Agreement dated as of March 31, 2025, among AMVAC and certain
affiliates on the one hand, and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities Exchange Commission on April 4, 2025).
10.21†
2022 Stock Incentive Plan, Incentive Stock Option agreement dated as of January 22, 2024 (incorporated by reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March
28, 2024).
10.22†
2022 Stock Incentive Plan, Incentive Stock Option FMV Agreement dated as of January 22, 2024 (incorporated by reference to Exhibit 10.22 to
the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on
March 28, 2024).
10.23†
Transition Agreement, dated as of July 3, 2024, by and between American Vanguard Corporation and Eric G. Wintemute (incorporated by
reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 9, 2024).
10.24†
Executive Employment Agreement dated as of December 9, 2024, by and between American Vanguard Corporation and Douglas A. Kaye III
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission
on December 6, 2024).
AMERICAN VANGUARD CORPORATION
118
Exhibit
Number
Description of Exhibit
10.25
Cooperation Agreement dated as of April 15, 2025, by and between American Vanguard Corporation and Eric G. Wintemute (incorporated by
reference to Exhibit 10.1 to the Company's current Report on Form 8-K, filed with the Securities and Exchange Commission on April 21, 2025).
10.26
Amendment Number Eleventh to the Third Amended Loan and Security Agreement dated as of May 27, 2025, among AMVAC and certain
affiliates on the one hand, and a group of commercial lenders led by BMO Harris Bank, N.A., on the other hand.*
21
List of Subsidiaries of the Company.*
23.1
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm*
23.2
Consent of BDO USA, P.C., Independent Registered Public Accounting Firm.*
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certifications Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
97
American Vanguard Corporation Clawback Policy dated as of September 6, 2023 (incorporated by reference to Exhibit 10.21 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 28, 2024).
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within
the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
† Indicates a management contract or compensatory plan.
(c)
Valuation and Qualifying Accounts
ITEM 16 FORM 10-K SUMMARY
None.
AMERICAN VANGUARD CORPORATION
119
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, American Vanguard Corporation has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN VANGUARD CORPORATION
(Registrant)
By:
/s/ DOUGLAS A. KAYE III
By:
/s/ DAVID T. JOHNSON
Douglas A. Kaye III
Chief Executive Officer
David T. Johnson
Chief Financial Officer
and Principal Accounting Officer
May 28, 2025
May 28, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.
By:
/s/ DOUGLAS A. KAYE III
By:
/s/ DAVID T. JOHNSON
Douglas A. Kaye III
Principal Executive Officer
David T. Johnson
Principal Financial Officer
and Principal Accounting Officer
May 28, 2025
May 28, 2025
By:
/s/ CARMEN TIU DE MINO
By:
/s/ STEVEN D. MACICEK
Carmen Tiu De Mino
Director
Steven D. Macicek
Director
May 28, 2025
May 28, 2025
By:
/s/ MARISOL ANGELINI
By:
/s/ SCOTT D. BASKIN
Marisol Angelini
Director
Scott D. Baskin
Director
May 28, 2025
May 28, 2025
By:
/s/ ÉMER GUNTER
By:
/s/ PATRICK E. GOTTSCHALK
Émer Gunter
Director
Patrick E. Gottschalk
Director
May 28, 2025
May 28, 2025
By:
/s/ MARK R. BASSETT
By:
/s/ KEITH M. ROSENBLOOM
Mark R. Bassett
Director
Keith M. Rosenbloom
Director
May 28, 2025
May 28, 2025
By:
/s/ ERIC G. WINTEMUTE
Eric G. Wintemute
Director
May 28, 2025
Exhibit 4.2
Description of Registrant’s Securities
The Amended and Restated Certificate of Incorporation, as amended (the “Certificate”), of American Vanguard Corporation, a Delaware corporation
(the “Registrant”) provides that the Registrant may issue up to 40,400,000 shares of Common Stock, par value $0.10 per share. As of December 31, 2024, there
are 34,794,548 shares of Common Stock issued (which includes 5,915,182 shares of Common Stock held in treasury). All outstanding shares of Common Stock
are fully paid and nonassessable.
The Certificate also authorizes the Registrant to issue up to 400,000 shares of preferred stock, par value $0.10 per share. There are no shares of preferred
stock issued or outstanding as of the date hereof.
Holders of Common Stock are entitled to one vote per share held of record on all matters to be voted upon by the Registrant’s stockholders and may not
cumulate votes for the election of directors.
Holders of Common Stock are entitled to receive ratably dividends as may be declared from time to time by the Registrant’s Board of Directors out of
funds legally available for dividend payments. In the event of the Registrant’s liquidation, dissolution or winding up, after full payment of all liabilities, holders
of Common Stock are entitled to share ratably in all remaining assets.
The Common Stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable
to the Common Stock.
The Common Stock is currently listed on the New York Stock Exchange under the symbol “AVD.”
Anti-Takeover Provisions
The Registrant is subject to Section 203 of the Delaware General Corporation Law. In general, the statute prohibits a publicly held Delaware corporation from
engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested
stockholder unless:
•
prior to that date, the Registrant’s Board of Directors approved either the business combination or the transaction that resulted in the stockholder
becoming an interested stockholder;
•
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the Registrant outstanding at the time the transaction commenced, excluding those shares owned by persons who
are directors and also officers and issued under employee stock plans under which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
•
on or subsequent to that date, the business combination is approved by the Registrant’s Board of Directors and is authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock not
owned by the interested stockholder.
Section 203 defines business combination to include:
•
any merger or consolidation involving the corporation and the interested stockholder;
•
any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
•
subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested
stockholder;
•
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the
corporation beneficially owned by the interested stockholder; and
•
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or controlled by the entity or person.
Certificate of Incorporation and Bylaws Provisions
Certain provisions of the Registrant’s Certificate of Incorporation and Bylaws may delay or discourage transactions involving an actual or potential change in
control or change in the Registrant’s management, including transactions in which stockholders might otherwise receive a premium for their shares, or
transactions that the Registrant’s stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of
the Registrant’s common stock. Among other things, the Registrant’s Certificate of Incorporation and Bylaws:
•
permit the Registrant’s Board of Directors to issue up to 400,000 shares of preferred stock, with any rights, preferences and privileges as they
may designate;
•
provide that the authorized number of directors may be changed only by resolution of the Board of Directors within a fixed maximum and
minimum;
•
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a
majority of directors then in office, even if less than a quorum, or by the sole remaining director;
•
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a
meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a
stockholder’s notice; and
•
do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any
election of directors to elect all of the directors standing for election, if they should so choose).
Exhibit 10.26
AMENDMENT NUMBER ELEVEN TO
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND WAIVER
This AMENDMENT NUMBER ELEVEN TO THIRD AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT AND WAIVER (this “Amendment”) is dated as of May 27, 2025, and is entered into by and among AMERICAN
VANGUARD CORPORATION, a Delaware corporation (“Holdco”), AMVAC CHEMICAL CORPORATION, a California
corporation (the “Borrower Agent”), AMVAC NETHERLANDS B.V., a besloten vennootschap met beperkte aansprakelijkheid,
organized under the law of the Netherlands (“AMVAC B.V.”, and together with the Borrower Agent, each a “Borrower” and,
collectively, “Borrowers”), the direct and indirect subsidiaries of Holdco party to this Amendment as guarantors (collectively, the
“Guarantors”), the financial institutions party to this Amendment as lenders (collectively, “Lenders”), BMO BANK, N.A., as
successor in interest to BANK OF THE WEST (“BMO”), as administrative agent for the Lenders (in such capacity, together with
its successors and assigns in such capacity, “Agent”).
RECITALS
WHEREAS, Holdco, Borrowers, Lenders, and Agent are parties to that certain Third Amended and Restated Loan and
Security Agreement, dated as of August 5, 2021 (as amended, modified, or restated from time to time, the “Loan Agreement”).
WHEREAS, Events of Default has occurred under Section 10.3.1 and Section 10.3.2 of the Loan Agreement (the “Existing
Events of Default”) as a result of the failure of Borrowers to be in compliance with the Total Leverage Ratio covenant and Fixed
Charge Coverage Ratio covenant as of March 31, 2025.
WHEREAS, Holdco and Borrowers have requested that the Required Lenders agree to (i) suspend testing of the Total
Leverage Ratio covenant for the periods ending June 30, 2025, September 30, 2025 and December 31, 2025, and amend the Total
Leverage Ratio covenant for the periods on and after March 31, 2026, (ii) suspend testing of the Fixed Charge Coverage Ratio
covenant for the period ending June 30, 2025, and amend the Fixed Charge Coverage Ratio covenant for the periods ending on and
after September 30, 2025, and (iii) waive the Existing Events of Default
WHEREAS, Agent and the Required Lenders have agreed to Holdco and Borrowers’ requests subject to the additional
amendments to the Loan Agreement and covenants set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the
parties agree as follows:
1. DEFINITIONS. All terms which are defined in the Loan Agreement shall have the same definition when used herein
unless a different definition is ascribed to such term under this Amendment, in which case, the definition contained herein shall
govern.
2. AMENDMENTS. The Loan Agreement is amended in the following respects:
2.1.
Add Definition of “Amendment No. 11”, “Amendment No. 11 Closing Date” and “Liquidity”. The
following new defined terms are hereby added, in the appropriate alphabetical, to Section 1.1 as follows:
“Amendment No. 11”: that certain Amendment Number Eleven to Third Amended and Restated
Loan and Security Agreement, dated March 12, 2025, by and among Holdco,
Borrowers, Lenders party thereto, Agent, Co-Documentation Agents and Lead Arranger and Book Runner.
“Amendment No. 11 Closing Date”: May 27, 2025.
“Liquidity”: the amount calculated as of the last day of each month equal to (i) Borrowers’ cash
held with the Agent as of the last day of the such month, plus (ii) 50% of cash held in accounts outside the
United States as of the last day of each month, plus (iii) the amount by which the Revolver Commitments
exceed the balance of Revolver Loans and stated amount of outstanding Letters of Credit, measured as of
the last day of such month, and reported by Borrower Agent to Agent in writing within three (3) Business
Days following the end of such month.
2.2.
Change in the Applicable Margin. Commencing on the Amendment No. 11 Closing Date and continuing at
all times thereafter, the Applicable Margins for SOFR, Adjusted Base Rate, Unused Line Fee Rate and Letter of Credit Fee shall be
the per annum margins set forth below:
Revolver Loans
Unused Line
Fee Rate
Letter of
Credit Fee
Applicable Period
SOFR
Adjusted
Base Rate
Amendment No. 11 Closing Date up to
and including September 30, 2025
3.75%
2.75%
0.35%
3.75%
Commencing on October 1, 2025, and
at all times thereafter
4.75%
3.75%
0.35%
4.75%
2.3.
Change in the Definition of Consolidated EBITDA. Clause (a)(iv) in the definition of Consolidated
EBITDA is hereby amended and restated in its entirety to read as follows:
(iv) (a)cash charges within the expense categories described below for such period subject to the reasonable and
satisfactory review of Agent, not to exceed (A) during the four consecutive Fiscal Quarters ended on June 30, 2024,
the lesser of (x) $12,500,000 and (y) the sum of (1) up to $5,000,000 related to one-time legal expenses and costs
related to the Eric Wintemute Transition Agreement (“EWTA”), plus (2) up to $8,500,000 in transformation costs
including consulting fees; (B) during the four consecutive Fiscal Quarters ending on September 30, 2024, the lesser
of (x) $45,000,000 and (y) the sum of (1) up to $6,000,000 related to one-time legal expenses and costs related to
the EWTA, plus (2) up to $13,000,000 in transformation costs including consulting fees, plus (3) up to $30,000,000
in write-down of inventory and fixed assets; (C) during the four consecutive Fiscal Quarters ending on December
31, 2024, the sum of (i) lesser of (x) $45,000,000 and (y) the sum of (1) up to $6,000,000 related to one-time legal
expenses and costs related to the EWTA, plus (2) up to $15,000,000 in transformation costs including consulting
fees, plus (3) up to $30,000,000 in write-down of inventory and fixed assets, plus (ii) the lesser of (x) $50,000,000
and (y) expenses for discontinued operations related to the SIMPAS business, plus the write-down of slow or non-
moving global inventory; (D) during the four consecutive Fiscal Quarters ending on March 31, 2025, the sum of (i)
the lesser of (x) $45,000,000 and (y) the sum of (1) up to $5,000,000 related to one-time legal expenses and costs
related to the EWTA, plus (2) up to $16,000,000 in transformation costs including consulting fees, plus (3) up to
$30,000,000 in write-down of inventory and fixed assets, plus (ii) the lesser of (x) $50,000,000 and (y) expenses for
discontinued operations related to the SIMPAS business, plus the write-down of slow or
non-moving global inventory; (E) during the four consecutive Fiscal Quarters ending on June 30, 2025, the sum of
(i) the lesser of (x) $42,500,000 and (y) the sum of (1) up to $1,500,000 related to one-time legal expenses and
costs related to the EWTA, plus (2) up to $14,000,000 in transformation costs including consulting fees, plus (3) up
to $30,000,000 in write-down of inventory and fixed assets, plus (ii) the lesser of (x) $50,000,000 and (y) expenses
for discontinued operations related to the SIMPAS business, plus the write-down of slow or non-moving global
inventory; (F) during the four consecutive Fiscal Quarters ending on September 30, 2025, the sum of (i) the lesser
of (x) $15,000,000 and (y) the sum of (1) up to $1,000,000 related to one-time legal expenses and costs related to
the EWTA, plus (2) up to $9,000,000 in transformation costs including consulting fees, plus (3) up to $8,000,000 in
write-down of inventory and fixed assets, plus (ii) the lesser of (x) $50,000,000 and (y) expenses for discontinued
operations related to the SIMPAS business, plus the write-down of slow or non-moving global inventory; (G)
during the four consecutive Fiscal Quarters ending on December 31, 2025, the lesser of (x) $7,500,000 and (y) the
sum of (1) up to $6,000,000 in transformation costs including consulting fees, plus (2) up to $2,500,000 in write-
down of inventory and fixed assets; and (H) up to $5,000,000 during the four consecutive Fiscal Quarters ending on
March 31, 2026 and on each Fiscal Quarter-end thereafter, and (b) non-recurring non-cash charges;
2.4.
Reduce Revolver Commitments. The Total Revolver Commitments set forth in Schedule 1.1 are reduced
in accordance with the following stepdown schedule and the Pro Rata Share of each Lender’s Revolver Commitment will be reduced
based on such reduction schedule:
Time Period
Total Revolver
Commitments
Amendment No. 11 Closing Date up to and including November
29, 2025
$245,000,000
November 30, 2025, up to and including December 30, 2025
$225,000,000
December 31, 2025, up to the Revolver Commitment
Termination Date
$200,000,000
2.5.
Extension of Due Date for Audited FYE Financial Statements. Section 10.1.2(a) of the Loan Agreement
is hereby amended and restated in its entirety to read as follows:
(a) within one hundred fifty seven (157) days after the end of the Fiscal Year ended December
31, 2024, and within ninety (90) after the end of each Fiscal Year thereafter, a consolidated balance sheet
of Holdco and its Subsidiaries as at the end of such Fiscal Year, and the related consolidated statements of
income or operations, changes in shareholders’ equity and cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and
prepared in accordance with GAAP, and in the case of such consolidated statements, audited and
accompanied by a report and opinion of an independent certified public accountant of nationally
recognized standing acceptable to Agent, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit (other than a qualification or
exception for the Fiscal Year ending within twelve (12) months immediately preceding the scheduled
maturity of the Loans solely as a result of such scheduled maturity);
2.6.
Extension of Due Date for Quarterly Financial Statements. Section 10.1.2(b) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
(b) within sixty seven (67) days after the end of the Fiscal Quarter of Holdco ending March 31,
2025, and within forty-five (45) days after the end of each of the Fiscal Quarters of each Fiscal Year of
Holdco thereafter (except any Fiscal Quarter end that is also a Fiscal Year end), beginning with the Fiscal
Quarter ending September 30, 2021, a consolidated balance sheet of Holdco and its Subsidiaries as at the
end of such Fiscal Quarter, and the related consolidated statements of income or operations, changes in
shareholders’ equity and cash flows for such Fiscal Quarter and for the portion of Holdco’s Fiscal Year
then ended, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter
of the previous Fiscal Year and the corresponding portion of the previous Fiscal Year, all in reasonable
detail and in the case of such consolidated statements, certified by a Senior Officer of Holdco as fairly
presenting in all material respects the financial condition, results of operations, shareholders’ equity and
cash flows of Holdco and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;
2.7.
Addition of Monthly Reporting of Liquidity. Section 10.1.2(e) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
(e) not later than the third (3rd) Business Day following the end of each month commencing with
the month ending June 30, 2025, deliver to Lender a certificate in form and substance satisfactory to Agent
reporting on Borrowers’ Liquidity as of the last day of such month.
2.8.
Change in the Total Leverage Ratio Covenant. Section 10.3.1 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
10.3.1 Maximum Total Leverage Ratio
1.
. Commencing on the Fiscal Quarter ended March 31, 2026, maintain a Total Leverage Ratio, measured on a
Fiscal Quarter-end basis, of not greater than the applicable ratio set forth in the following table for the applicable
date set forth opposite thereto:
Fiscal Quarter Ending
Maximum Total
Leverage Ratio
March 31, 2026, and each Fiscal Quarter thereafter
4.00:1.00
2.9.
Change in the Fixed Charge Coverage Ratio Covenant. Section 10.3.2 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
10.3.2 Minimum Fixed Charge Coverage Ratio
. Commencing on the Fiscal Quarter ended September 30, 2025, maintain a Fixed Charge Coverage Ratio,
measured on a Fiscal Quarter-end basis, of not less than the applicable ratio set forth in the following table for the applicable date set
forth opposite thereto:
Fiscal Quarter Ending
Minimum Fixed Charge
Coverage Ratio
September 30, 2025
1.00:1.00
December 31, 2025, and each Fiscal Quarter thereafter
1.25:1.00
2.10. Addition of Minimum Liquidity Covenant. The following new Section 10.3.4 is hereby added to the Loan
Agreement immediately after the existing Section 10.3.3 of the Loan Agreement, in its entirety to read as follows:
10.3.4
Minimum Liquidity. Commencing on June 30, 2025, and continuing on the last day of each
month thereafter up to and including December 31, 2025, maintain Liquidity of not less than the following
amounts:
Month Ending
Minimum Liquidity
June 30, 2025
$30,000,000
July 31, 2025
$35,000,000
August 31, 2025
$4,041,600
September 30, 2025
$25,000,000
October 31, 2025
$3,000,000
November 30, 2025
$9,292,000
December 31, 2025
$20,000,000
3. AMENDMENT FEES. In connection with this Amendment, Holdco and Borrowers will pay fee (“Fees”) to the Agent
pursuant to that certain Fee Letter, of even date herewith, between Holdco and Borrowers, on the one hand, and Agent, on the other
hand (the “Fee Letter”).
4. WAIVER. Effective solely upon the satisfaction of each of the conditions precedent set forth in Section 5 below, Agent
and the Required Lenders signatory hereto hereby waive the Existing Events of Default. The waiver contained in this Section 4 is a
limited waiver and (i) shall only be relied upon and used for the specific purpose set forth herein, (ii) shall not constitute nor be
deemed to constitute a waiver, except as otherwise expressly set forth herein, of (a) any Default or Event of Default or (b) any term
or condition of the Loan Agreement and the other Loan Documents, (iii) shall not constitute nor be deemed to constitute a consent by
the Agent or any Lender to anything other than the specific purpose set forth herein and (iv) shall not constitute a custom or course of
dealing among the parties hereto.
5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT.
5.1.
This Amendment shall become effective only upon satisfaction in full of the following conditions precedent:
5.1.1.Agent shall have received fully executed counterparts of this Amendment and the Fee Letter.
5.1.2.Agent shall have received, in immediately available funds, the Fees and reimbursement of all costs
and expenses incurred by Agent in connection with this Amendment, including legal fees and expenses of Agent’s counsel.
6. REPRESENTATIONS AND WARRANTIES. Holdco and each of the Borrowers hereby affirm to Agent and the
Lenders:
6.1.
All of Holdco and Borrowers’ representations and warranties set forth in the Loan Agreement are true and
correct in all material respects (or all respects if already qualified by materiality) as of the date hereof (except for any representations
and warranties that expressly relate to an earlier date).
6.2.
Other than the Existing Events of Default, no event has occurred and is continuing or would result from the
consummation of the transactions contemplated hereby that would constitute a Default or an Event of Default.
7. MINIMUM YEAR TO DATE CONSOLIDATED EBITDA. Holdco and its Subsidiaries shall be required to achieve
year to date Consolidated EBITDA (for the avoidance of doubt, the add-backs in the calculation of Consolidated EBITDA, which is a
trailing twelve month calculation, shall be applicable to the covenant set forth in this Section 7 even though the covenant in this
Section 7 is a year to date calculation), as reflected in the financial statements delivered to Agent and Lenders pursuant to Section
10.1.2(b) of the Loan Agreement, of not less than the following amounts:
As of June 30, 2025
$4,500,000
As of September 30, 2025
$9,500,000
As of December 31, 2025
$35,000,000
The failure of Holdco and its Subsidiaries to achieve the required minimum Consolidated EBITDA shall constitute an Event
of Default.
8. LIMITED EFFECT. Except for the specific amendments contained in this Amendment, the Loan Agreement shall
remain unchanged and in full force and effect.
9. RELEASE BY HOLDCO, BORROWERS AND GUARANTOR. Holdco, Borrowers and Guarantors (collectively, the
“Obligors”), for themselves, and for their respective agents, servants, officers, directors, shareholders, members, employees, heirs,
executors, administrators, agents, successors and assigns forever release and discharge Agent and Lenders and their agents, servants,
employees, accountants, attorneys, shareholders, subsidiaries, officers, directors, heirs, executors, administrators, successors and
assigns from any and all claims, demands, liabilities, accounts, obligations, costs, expenses, liens, actions, causes of action, rights to
indemnity (legal or equitable), rights to subrogation, rights to contribution and remedies of any nature whatsoever, known or
unknown, which Obligors have, now have, or have acquired, individually or jointly, at any time prior to the date of the execution of
this Amendment, including specifically, but not exclusively, and without limiting the generality of the foregoing, any and all of the
claims, damages, demands and causes of action, known or unknown, suspected or unsuspected by Obligors which:
9.1.
Arise out of the Loan Documents;
9.2.
Arise by reason of any matter or thing alleged or referred to in, directly or indirectly, or in any way
connected with, the Loan Documents; or
9.3.
Arise out of or in any way are connected with any loss, damage, or injury, whatsoever, known or unknown,
suspected or unsuspected, resulting from any act or omission by or on the part of Agent or any Lender or any party acting on behalf
of Agent or any Lender committed or omitted prior to the date of this Amendment.
10.GOVERNING LAW. This Amendment shall be governed by the laws of the State of New York.
11.COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties on
separate counterparts, each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken
together, shall constitute but one and the same Amendment.
[Signatures are on the following pages]
IN WITNESS WHEREOF,this Amendment has been executed and delivered as of the date set forth above.
HOLDCO AND GUARANTOR:
AMERICAN VANGUARD CORPORATION, a Delaware corporation
By:
Name:
Title:
BORROWERS:
AMVAC CHEMICAL CORPORATION,
a California corporation
By:
Name: Timothy J. Donnelly
Title:
Director
AMVAC NETHERLANDS B.V.
a besloten vennootschap met beperkte aansprakelijkheid, organized under the
laws of the Netherlands
By:
Name: Peter Eilers
Title:
Managing Director
GUARANTORS:
GEMCHEM, INC.,
a California corporation
By:
Name: Timothy J. Donnelly
Title:
Vice President, General Counsel and Secretary
2110 DAVIE CORPORATION,
a California corporation
By:
Name: Timothy J. Donnelly
Title:
Vice President, CAO, General Counsel and Secretary
AGRINOS, INC.,
a Delaware corporation
By:
Name: Timothy J. Donnelly
Title:
CAO, General Counsel and Secretary
ENVANCE TECHNOLOGIES, LLC,
a Delaware limited liability company
By:
Name: Timothy J. Donnelly
Title:
CAO, General Counsel and Secretary
OHP, INC.,
a California corporation
By:
Name: Timothy J. Donnelly
Title:
CAO, General Counsel and Secretary
TYRATECH, INC.,
a Delaware corporation
By:
Name: Timothy J. Donnelly
Title:
CAO, General Counsel and Secretary
AGENT AND LENDERS:
BMO BANK, N.A., as successor in interest to BANK OF THE WEST,
as Agent (with the consent of the Required Lenders) and as a Revolver Loan
Lender and Issuing Bank
By:
Name: Joseph Podrabsky
Title:
Managing Director
AGCOUNTRY FARM CREDIT SERVICES, FLCA,
as a Lender
By:
Name:
Title:
Exhibit 21
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
LISTING OF SUBSIDIARIES
Subsidiaries of the Company and the jurisdiction in which each company was incorporated are listed below. Unless otherwise indicated
parenthetically, 100% of the voting securities of each subsidiary are owned by the Company. All companies indicated with an asterisk (*) are subsidiaries of
AMVAC. All of the following subsidiaries are included in the Company’s consolidated financial statements:
AMVAC Chemical Corporation
California
GemChem, Inc.
California
2110 Davie Corporation (formerly ABSCO Distributing)
California
AMVAC do Brasil Representácoes Ltda*
Brazil
Amvac Mexico S. De R.L. De C.V.*
Mexico
AMVAC de Costa Rica Srl
Costa Rica
AVD International LLC*
Delaware
AMVAC Netherlands BV*
Netherlands
OHP Inc.*
California
Amvac Colombia SAS
Columbia
AgriCenter S.A
Costa Rica
Tyratech, Inc.
Delaware
American Vanguard Australia PTY Ltd
Australia
AgNova Technologies Pty Ltd
Australia
AgNova New Zealand
New Zealand
AMVAC do Brazil 3p LTDA
Brazil
Amvac Canada ULC
Canada
Amvac Hong Kong Limited
Hong Kong
Agrinos Biotech (Shanghai) Co., LTD
China
Agrinos do Brazil Fertilizantes Biologicos LTDA
Brasil
Agrinos India Private Limited
India
Agrinos Ukraine LLC
Ukraine
Agrinos Iberia S.L.
Spain
Bioderpac SA de CV
Mexico
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
American Vanguard Corporation
Newport Beach, California
We consent to the incorporation by reference in Registration Statement Nos. 333-125813, 333-102381, 333-76218, and 333-64220 on Form S-8 of our reports
dated May 23, 2025, relating to the financial statements of American Vanguard Corporation (“the Company”) and the effectiveness of the Company’s internal
control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2024.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 28, 2024
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-125813, 333-102381, 333-76218, and 333-64220) of
American Vanguard Corporation (the Company) of our report dated March 16, 2023, relating to the consolidated financial statements and schedule for the year
ended December 31, 2022, which appear in this Form 10-K.
/s/ BDO USA, P.C.
Costa Mesa, California
May 28, 2025
Exhibit 31.1
AMERICAN VANGUARD CORPORATION
CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas A. Kaye III, certify that:
1.
I have reviewed this report on Form 10-K of American Vanguard Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the Company and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the Company’s disclosure controls and procedures, and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent
fiscal quarter (the Company’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting; and
5.
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Company’s auditors and the audit committee of the Company’s board of directors:
(a)
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control
over financial reporting.
Date: May 28, 2025
/s/ Douglas A. Kaye III
Douglas A. Kaye III
Chief Executive Officer and Chairman of the Board
Exhibit 31.2
AMERICAN VANGUARD CORPORATION
CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David T. Johnson, certify that:
1.
I have reviewed this report on Form 10-K of American Vanguard Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material
respects the consolidated financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the Company and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the Company’s disclosure controls and procedures, and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent
fiscal quarter (the Company’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting; and
5.
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Company’s auditors and the audit committee of the Company’s board of directors:
(a)
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control
over financial reporting.
Date: May 28, 2025
/s/ David T. Johnson
David T. Johnson
Chief Financial Officer and Principal Accounting Officer
Exhibit 32.1
AMERICAN VANGUARD CORPORATION
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of American Vanguard Corporation (the “Company”) on Form 10-K for the period ending December 31, 2024 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of
the Company hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge (1) the
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report
fairly represents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.
/s/ DOUGLAS A. KAYE III
Douglas A. Kaye, III
Chief Executive Officer and Chairman of the Board
/s/ DAVID T. JOHNSON
David T. Johnson
Chief Financial Officer and Principal Accounting Officer
May 28, 2025
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to American Vanguard
Corporation and will be retained by American Vanguard Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-K and shall not be considered
filed as part of the Form 10-K.