American Vanguard (NYSE: AVD) posts larger loss as debt and interest costs rise
American Vanguard reported weaker results for the quarter ended June 30, 2026. Net sales fell 10% to $116.8 million, driven by lower U.S. crop and international sales, partly offset by 11% growth in U.S. Specialty. Gross profit declined 14% to $34.7 million and gross margin slipped to 30% from 31%.
Operating performance deteriorated from $4.4 million income to a small $0.3 million loss, and higher leverage pushed net interest expense to $9.1 million from $4.5 million. The quarter’s net loss widened to $9.9 million, or $0.34 per share, versus a $0.8 million loss a year earlier. For the first six months, sales were down 2% to $240.3 million, but gross margin improved to 30% from 29%; net loss increased to $14.0 million.
Cash from operations was a use of $60.5 million for the first half, reflecting higher receivables, lower customer prepayments and program payouts, and transformation and plant reorganization costs linked to shifting production from the Los Angeles facility to the Axis site. This was funded by new term loans; total net indebtedness rose to $267.6 million, with a weighted-average interest rate of 12.0%, and cash increased to $43.9 million. The new First and Second Lien Term Loans include leverage and minimum cash covenants and restrict dividends and stock repurchases. Management states it is in covenant compliance and expects existing cash and operating cash flow to cover liquidity needs over the next twelve months.
Positive
- U.S. Specialty net sales grew 11% in Q2 and 10% year-to-date, reflecting stronger demand in turf, ornamental and other specialty markets and early benefits from a more focused go-to-market strategy.
- Gross margin for the first six months improved to 30% from 29%, as higher-margin domestic products and factory efficiency offset softer international demand.
Negative
- Quarterly net loss increased to $9.9 million from $0.8 million, with loss per share widening to $0.34 as lower sales and higher interest costs weighed on results.
- Operating cash outflow worsened to $60.5 million for the first half, compared with $39.8 million a year earlier, driven by working-capital build and program payments.
- Net debt rose to $267.6 million from $171.0 million, and the new term-loan structure carries a higher effective interest rate of 12.0%, increasing interest burden and limiting dividends and buybacks.
- International net sales declined 18% in Q2 and 13% year-to-date, pressured by adverse weather, higher raw material costs, and softer demand in key markets such as Brazil and Central America.
Filing Explained
Secured loans now impose variable-rate costs, restrict dividends and repurchases, and require rising minimum cash balances through 2028.
As a Form 10-Q, this unaudited quarterly report updates interim financial statements, risks and liquidity through
The First Lien Term Loan has aggregate principal of
The loans use variable benchmark-linked rates: the First Lien initially adds 8.25% to SOFR, or 7.25% to a base rate, while the Second Lien adds 2.00% with a 3.00% SOFR floor.
Minimum unrestricted cash is
The EPA Region IX proceeding was concluded on
In the Chavez & Marquinez cases, a court granted summary judgment for AMVAC in
The filing identifies additional risks involving Middle East shipping disruption, agentic-AI cybersecurity threats, and dependence on competitor-provided shared services at the Hannibal and Axis manufacturing sites.
The Los Angeles plant reorganization, including the transfer of production to Axis, is expected to be completed by
Key Figures
Key Terms
First Lien Term Loan financial
Second Lien Term Loan financial
Foreign Purchaser Acknowledgement Statement regulatory
Accumulated other comprehensive loss financial
agentic AI technical
valuation allowance financial
Earnings Snapshot
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did American Vanguard (AVD) perform financially in Q2 2026?
What were American Vanguard’s (AVD) segment sales trends in the first half of 2026?
How has American Vanguard’s (AVD) debt and interest expense changed in 2026?
What is driving American Vanguard’s (AVD) cash flow and liquidity position?
What major operational changes is American Vanguard (AVD) undertaking?
Are there any notable legal or regulatory developments for American Vanguard (AVD)?
What new risks did American Vanguard (AVD) highlight in this 10-Q?
n
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
FOR THE TRANSITION PERIOD FROM TO
Commission file number
(State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification Number) |
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(Address of principal executive offices) |
(Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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 |
☐ |
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☒ |
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Non-Accelerated Filer |
☐ |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $0.10 Par Value—
AMERICAN VANGUARD CORPORATION
INDEX
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Page Number |
PART I—FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (unaudited) |
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Condensed Consolidated Statements of Operations |
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3 |
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Condensed Consolidated Statements of Comprehensive (Loss) Income |
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4 |
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Condensed Consolidated Balance Sheets |
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5 |
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Condensed Consolidated Statements of Stockholders’ Equity |
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6 |
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Condensed Consolidated Statements of Cash Flows |
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8 |
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Notes to Condensed Consolidated Financial Statements |
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9 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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19 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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28 |
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Item 4. |
Controls and Procedures |
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28 |
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PART II—OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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29 |
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Item 1A. |
Risk Factors |
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29 |
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Item 2. |
Purchases of Equity Securities by the Issuer |
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29 |
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Item 6. |
Exhibits |
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30 |
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SIGNATURES |
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31 |
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2
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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( |
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( |
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( |
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( |
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Gross profit |
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Operating expenses |
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Selling, general and administrative |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Research, product development and regulatory |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Product liability claims |
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( |
) |
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( |
) |
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Transformation |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Asset impairments |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Operating (loss) income |
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( |
) |
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Change in fair value of an equity investment |
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( |
) |
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( |
) |
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Interest expense, net |
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|
( |
) |
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( |
) |
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( |
) |
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( |
) |
Loss before provision for income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Income tax expense |
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( |
) |
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( |
) |
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( |
) |
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|
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per common share—basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per common share—assuming dilution |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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$ |
( |
) |
Weighted average shares outstanding—basic |
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Weighted average shares outstanding—assuming dilution |
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||||
See notes to the condensed consolidated financial statements.
3
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
|
|
For the Three Months Ended June 30, |
|
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For the Six Months Ended June 30, |
|
||||||||||
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2026 |
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2025 |
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2026 |
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2025 |
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||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income: |
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||||
Foreign currency translation adjustment, net of tax effects |
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||||
Comprehensive (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
See notes to the condensed consolidated financial statements.
4
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS |
|
June 30, 2026 |
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December 31, 2025 |
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||
Current assets: |
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|
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Cash |
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$ |
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$ |
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||
Receivables: |
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||
Trade, net of allowance for credit losses of $ |
|
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||
Other |
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Total receivables, net |
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Inventories |
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Prepaid expenses |
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Income taxes receivable |
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||
Total current assets |
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Property, plant and equipment, net |
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||
Operating lease right-of-use assets, net |
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||
Intangible assets, net |
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||
Deferred income tax assets |
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||
Other assets |
|
|
|
|
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||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and Stockholders’ Equity |
|
|
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|
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|
||
Current liabilities: |
|
|
|
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|
||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
Accounts payable |
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||
Customer prepayments |
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||
Accrued program costs |
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||
Accrued expenses and other payables |
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||
Operating lease liabilities, current |
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||
Income taxes payable |
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||
Total current liabilities |
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||
Long-term debt, net of current portion |
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||
Operating lease liabilities, long-term |
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||
Deferred income tax liabilities |
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||
Other liabilities |
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||
Total liabilities |
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||
Commitments and contingent liabilities (Note 13) |
|
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||
Stockholders’ equity: |
|
|
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||
Preferred stock, $ |
|
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||
Common stock, $ |
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||
Additional paid-in capital |
|
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||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Retained earnings |
|
|
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|
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||
|
|
|
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|
|
||
Less treasury stock at cost, |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
See notes to the condensed consolidated financial statements.
5
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Six Months Ended June 30, 2026
(In thousands, except share data)
(Unaudited)
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Other |
|
|
|
|
|
Treasury Stock |
|
|
|
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Retained |
|
|
Shares |
|
|
Amount |
|
|
Total |
|
||||||||
Balance, January 1, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
Stocks issued under ESPP |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Foreign currency translation adjustment, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock options exercised; grants, |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Balance, March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
Foreign currency translation adjustment, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock options exercised; grants, |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to the condensed consolidated financial statements.
6
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Six Months Ended June 30, 2025
(In thousands, except share data)
(Unaudited)
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Other |
|
|
|
|
|
Treasury Stock |
|
|
|
|
||||||||||||||
|
|
Shares |
|
|
Amount |
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|
Paid-in |
|
|
Comprehensive |
|
|
Retained |
|
|
Shares |
|
|
Amount |
|
|
Total |
|
||||||||
Balance, January 1, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
Stocks issued under ESPP |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Foreign currency translation adjustment, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock options exercised; grants, |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
Foreign currency translation adjustment, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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|
||
Stock options exercised; grants, |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
See notes to the condensed consolidated financial statements.
7
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization of property, plant and equipment and intangible assets |
|
|
|
|
|
|
||
Amortization of other long-term assets |
|
|
|
|
|
|
||
Loss (gain) on disposal of property, plant and equipment |
|
|
|
|
|
( |
) |
|
Provision for estimated credit losses |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Change in liabilities for uncertain tax positions or unrecognized tax benefits |
|
|
( |
) |
|
|
( |
) |
Change in equity investment fair value |
|
|
|
|
|
|
||
Impairment of assets |
|
|
|
|
|
|
||
Payment-in-kind debt leverage fee |
|
|
|
|
|
|
||
Amortization of deferred loan fees |
|
|
|
|
|
|
||
Lease obligations and non-cash lease expense, net |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency transaction losses (gains) |
|
|
|
|
|
( |
) |
|
Changes in assets and liabilities associated with operations: |
|
|
|
|
|
|
||
Increase in net receivables |
|
|
( |
) |
|
|
( |
) |
Increase in inventories |
|
|
( |
) |
|
|
( |
) |
Increase in prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Change in income tax receivable and payable, net |
|
|
|
|
|
( |
) |
|
(Decrease) increase in accounts payable |
|
|
( |
) |
|
|
|
|
Decrease in customer prepayments |
|
|
( |
) |
|
|
( |
) |
(Decrease) increase in accrued program costs |
|
|
( |
) |
|
|
|
|
Decrease in other payables and accrued expenses |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from disposal of property, plant and equipment |
|
|
|
|
|
|
||
Intangible assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Payments under line of credit agreement |
|
|
( |
) |
|
|
( |
) |
Borrowings under line of credit agreement |
|
|
|
|
|
|
||
Borrowings under term loans |
|
|
|
|
|
|
||
Repayments of term loans |
|
|
( |
) |
|
|
|
|
Payment of deferred loan fees |
|
|
( |
) |
|
|
( |
) |
Net receipt from the issuance of common stock under ESPP |
|
|
|
|
|
|
||
Net payment from common stock purchased for tax withholding |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase in cash |
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash at beginning of period |
|
|
|
|
|
|
||
Cash at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See notes to the condensed consolidated financial statements.
8
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
(In thousands, except share data)
(Unaudited)
1. Summary of Significant Accounting Policies — The accompanying unaudited condensed consolidated financial statements of American Vanguard Corporation and Subsidiaries (“AVD” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of consolidating adjustments, eliminations, and normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The condensed consolidated financial statements and related notes do not include all information and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2025.
Transformation — Transformation expenses on the condensed consolidated statements of operations relate to the Company’s digital and structural transformation project and activities associated with manufacturing optimization. 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, products and services and identifying process and structural improvements, as well as pricing and go-to-market strategies. The manufacturing optimization is focused on the Company’s US based manufacturing footprint. It includes reduction of activities at the Company's Los Angeles facility, including the discontinuation of synthesis processes on that site and building upon the strengths and capabilities of the Axis manufacturing site. Transformation expenses primarily include costs for consulting services, costs in connection with the staffing and execution of the Company’s transformation initiatives, and costs associated with the reduction in force of certain personnel and other costs related to discontinuing certain activities at the Los Angeles plant. The Los Angeles plant reorganization is expected to be completed by December 31, 2026. For the three and six months ended June 30, 2026, the plant reorganization expenses amounted to $
Recent Adopted Accounting Guidance—In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments - Credit Losses,” which simplifies the application of the current expected credit loss model by providing a practical expedient and accounting policy election permitting entities to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when measuring credit losses on current accounts receivable and current contract assets. The Company's adoption of this standard on January 1, 2026, had no impact on its disclosures and no material impact on its results of operations, cash flows and financial condition.
Recent Issued Accounting Guidance—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 consolidated financial statements.
The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable to, or not expected to have a significant impact upon, its condensed consolidated financial statements.
Reclassification — Certain amounts in the accompanying condensed consolidated statements of operations and cash flows have been reclassified to conform to the current period financial statements. These reclassifications have not changed the results of operations or cash flows of the prior period.
9
2. Revenue Recognition —The Company recognizes revenue from the sale of its products, which include crop and Specialty products. The Company sells its products to customers, which include distributors, retailers, and growers. Substantially all revenue is recognized at a point in time. The Company has one reportable segment.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Specialty |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales are reported within the country or region in which the ultimate sale is made to the customer. As of October 1, 2025, the Company implemented a new organizational structure, as part of its business transformation actions, and now sells and recognizes direct business-to-business sales to certain foreign customers in its US Crop business. The associated sales are reported as U.S. Crop net sales for the three and six months ended June 30, 2026. For the three and six months ended June 30, 2025, these sales were included in International net sales and amounted to $
The Company sometimes receives payments from its customers in advance of goods and services being provided in return for early cash incentive programs. These payments are included in customer prepayments on the condensed consolidated balance sheets. Revenue recognized for the three and six months ended June 30, 2026, that was included in customer prepayments at the beginning of 2026, was $
The Company has contract assets that relate to royalties earned on certain functional licenses granted for the use of the Company’s intellectual property. At June 30, 2026 and December 31, 2025, the contract assets amounted to $
3. 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 Specialty 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 management 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, management 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.
10
4. Stock-Based Compensation — Under the Company’s Equity Incentive Plan of 1993, as amended (“the Plan”), all employees are eligible to receive non-assignable and non-transferable restricted stock (RSUs), options to purchase common stock, and other forms of equity. During the three months ended June 30, 2026 and 2025, the Company's stock-based compensation expense amounted to $
RSUs
A summary of nonvested RSUs outstanding is presented below:
|
|
Six Months Ended June 30, 2026 |
|
|||||
|
|
Number |
|
|
Weighted |
|
||
Nonvested shares at January 1, 2026 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Nonvested shares at June 30, 2026 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
As of June 30, 2026, the total unrecognized stock-based compensation expense related to RSUs outstanding was $
Stock Options
Incentive Stock Option Plans -
|
|
Options Outstanding |
|
|
Weighted Average Exercise Price Per Share |
|
|
Weighted Average Remaining Contractual Life (Years) |
|
|
Aggregate Intrinsic Value |
|
||||
Balance as of January 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
Granted |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
|
$ |
— |
|
||
Balance as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
Options vested and exercisable as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
11
5. Income Taxes — Income tax expense was $
6. Earnings Per Share —
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding-basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Due to net losses for the three and six months ended June 30, 2026 and 2025, stock options and other grants were excluded from the computation of diluted net loss per share, as they would be antidilutive.
7. Comprehensive (Loss) Income — Total comprehensive (loss) income includes, in addition to net losses, changes in equity that are excluded from the condensed consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the condensed consolidated balance sheets. For the three and six months ended June 30, 2026 and 2025, total comprehensive (loss) income consisted of net losses and foreign currency translation adjustments.
8. Inventories — Inventory is stated at the lower of cost or net realizable value.
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Finished products |
|
$ |
|
|
$ |
|
||
Raw materials |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Finished products consist of products that are sold to customers in their current form as well as intermediate products that require further formulation to be saleable to customers.
12
9. Property, Plant and Equipment —
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Office furniture, fixtures and equipment |
|
|
|
|
|
|
||
Automotive equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The Company recognized depreciation expenses related to property and equipment of $
Substantially all of the Company’s assets are pledged as collateral with its lender banks.
10. Leases — The Company has operating leases for certain of its warehouses, manufacturing facilities, offices, cars, railcars and certain equipment. The lease term under such leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not terminate) that the Company is reasonably certain to exercise. The Company has leases with a lease term ranging from
The operating lease expense for the three months ended June 30, 2026 and 2025 was $
Other information related to operating leases were as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cash paid for amounts included in the measurement of lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Right-of-use assets obtained in exchange for new liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted-average remaining lease term (in years) |
|
|
|
|
Weighted-average discount rate |
|
|
% |
13
Future minimum lease payments under non-cancellable operating leases as of June 30, 2026, were as follows:
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
$ |
|
|
Less: imputed interest |
|
|
( |
) |
Total |
|
$ |
|
|
Amounts recognized in the condensed consolidated balance sheet: |
|
|
|
|
Operating lease liabilities, current |
|
$ |
|
|
Operating lease liabilities, long term |
|
$ |
|
|
11. Intangibles — The following schedule represents the gross carrying amount and accumulated amortization of intangible assets as of June 30, 2026, and December 31, 2025. Product rights and trademarks are amortized over the lesser of the useful life ranging from
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
||||||
Product rights and patents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Trademarks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer lists |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangibles assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Domestic intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
International intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangibles assets - domestic and international |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The following schedule represents intangible assets activity for the six months ended June 30, 2026:
|
|
Amount |
|
|
Intangible assets at January 1, 2026 |
|
$ |
|
|
Additions during Q1 2026 |
|
|
|
|
Impact of movement in exchange rates |
|
|
|
|
Amortization expense |
|
|
( |
) |
Intangible assets at March 31, 2026 |
|
$ |
|
|
Additions during Q2 2026 |
|
|
|
|
Impact of movement in exchange rates |
|
|
|
|
Amortization expense |
|
|
( |
) |
Intangible assets at June 30, 2026 |
|
$ |
|
|
|
|
|
|
|
14
The following schedule represents future amortization charges related to intangible assets:
Year ending December 31, |
|
Amount |
|
|
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
|
During the three months ended June 30, 2026 and 2025, amortization expense was $
12. Debt — The Company had two term loans at June 30, 2026. At December 31, 2025, the Company had a revolving line of credit.
Long-term indebtedness ($000's) |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
Long-term debt, net of current portion |
|
|
|
|
|
|
||
Unamortized debt discount and debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Total indebtedness, net of unamortized debt discount and debt issuance costs |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
At June 30, 2026, long-term debt is related to the two term loans that were put in place on March 13, 2026, and the balance is presented net of unamortized debt discount and debt issuance costs on the condensed consolidated balance sheets. At December 31, 2025, the Company had a revolving line of credit and the related unamortized debt issuance costs are included in prepaid expenses on the condensed consolidated balance sheets.
On March 13, 2026, AMVAC Chemical Corporation (“AMVAC”), a subsidiary of American Vanguard Corporation (the “Company”), as borrower, and certain affiliates of the Company (including the Company), as guarantors, entered into (i) a Credit and Guaranty Agreement (the “First Lien Term Loan”) with a group of commercial lenders led by Centerbridge Partners, L.P., and Wilmington Trust, National Association as administrative agent; (ii) a Credit and Guaranty Agreement (the “Second Lien Term Loan” and, together with the First Lien Term Loan, the “Term Loans”) with a group of commercial lenders led by BMO Bank N.A., as sole lead arranger and book runner, and BMO Bank N.A. as administrative agent; and (iii) an Intercreditor Agreement (the “Intercreditor Agreement”) by and among Wilmington Trust, National Association, as first lien agent (in such capacity, the “First Lien Agent”), BMO Bank N.A., as second lien agent (in such capacity, the “Second Lien Agent”), and the secured creditors from time to time party thereto. The proceeds of the Term Loans, were used, among other things, to refinance in full and retire existing indebtedness under the Third Amended and Restated Credit Agreement, dated as of August 5, 2021 (the “Prior Credit Agreement”), to pay related fees and expenses, and will also be used for other general corporate and working capital purposes permitted under the Term Loans.
First Lien Term Loan
The First Lien Term Loan is a senior secured term loan facility with a five year term for an aggregate principal amount of $
15
The Company is also required to maintain a minimum consolidated leverage ratio of the First Lien Term Loan Principal to consolidated EBITDA for the trailing twelve months of
Second Lien Term Loan
The Second Lien Term Loan is a secured term loan facility with a five-year term for an aggregate principal amount of $
Pursuant to the terms of the First Lien Term Loan and Second Lien Term Loan, the Company is prevented from paying cash dividends to shareholders.
The weighted average interest rate for the three and six months ended June 30, 2026 was
As of June 30, 2026, the Company is in compliance with its financial covenants.
13. Legal Proceedings — The Company records a liability on its condensed 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. Except as otherwise described below, there have been no material changes in previously reported litigation matters since the filing of the Company's Form 10-K for the period ended December 31, 2025, or the filing of the Company's Form 10-Q for the period ended March 31, 2026:
Chavez & Marquinez. Two cases were filed independently in 2012 in Louisiana and Delaware involving claims on behalf of banana workers for personal injury allegedly arising from exposure to DBCP in the late 1970’s. Through several years of law and motion practice, the number of plaintiffs in the actions has been reduced from about
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
14. Accumulated Other Comprehensive Loss —
16
|
|
Total |
|
|
Balance, January 1, 2026 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, March 31, 2026 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, June 30, 2026 |
|
$ |
( |
) |
|
|
|
|
|
Balance, January 1, 2025 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, March 31, 2025 |
|
$ |
( |
) |
Foreign currency translation adjustment, net of tax effects of ($ |
|
|
|
|
Balance, June 30, 2025 |
|
$ |
( |
) |
|
|
|
|
|
15. 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 establishes 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:
16.
|
|
For the Six Months Ended June 30, |
|
|||||
Cash paid during the period: |
|
2026 |
|
|
2025 |
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes, net of refunds |
|
$ |
( |
) |
|
$ |
|
|
Non-cash transaction: |
|
|
|
|
|
|
||
Debt refinancing |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
As of June 30, |
|
|||||
Reconciliation of unrestricted cash and restricted cash reported in the condensed consolidated balance sheets |
|
2026 |
|
|
2025 |
|
||
Unrestricted cash |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash |
|
$ |
|
|
$ |
|
||
17
The Company maintains cash balances that exceed federally insured limits with a number of financial institutions. Cash includes legally restricted deposits held as compensating balances against the credit limit of one of the Company's credit cards.
17. Segment Reporting — 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 Chief Operating Decision Maker ("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.
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Material and other costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Warehousing, handling, and outbound freight |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total cost of sales |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Research, product development and regulatory |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Product liability claims |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Transformation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Asset impairments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Operating (loss) income |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of an equity investment |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss before provision for income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
18
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers in thousands)
FORWARD-LOOKING STATEMENTS/RISK FACTORS:
The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. 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; military activity and other geopolitical activity; 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; 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. Securities 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-Q in the context of the risks and uncertainties disclosed in Part II, Item 1A of this Form 10-Q under the heading "Risk Factors," in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in Item 3 "Quantitative and Qualitative Disclosures About Market Risk."
The forward-looking statements included in this Form 10-Q 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.
Three Months Ended June 30, 2026 and 2025:
Overview of the Company’s Performance
With prolonged pressure on the farm economy from higher fuel and fertilizer costs during the second quarter of 2026, distributors, retailers and growers continued to follow conservative procurement practices, buying goods closer to time-of-need and minimizing carrying costs which, in some cases (as with the Company's cotton products) deferring purchases until the third quarter. At the same time, domestic demand for our Specialty products was strong. However, in light of adverse weather and increased raw material costs, International markets have softened. As a consequence, on a consolidated basis, the Company’s financial performance declined with respect to both net sales and profitability in the period.
Overall net sales during the quarter declined by 10% over the comparable period last year. This performance included decreases in net sales of both US Crop (down 9%, largely from a shift in sales of cotton products to the third quarter) and International business (down 18%, largely due to weather and higher prices occasioned by increased raw material costs), partially offset by increased net sales in our Specialty business (up 11%). With lower sales, gross profit decreased 14% quarter-over-quarter. Further, with increased freight costs (largely due to fuel prices) and higher net factory costs, gross margin percentages ended at 30% for the second quarter of 2026, as compared to 31% in the same quarter of the prior year.
While declining by 3% on an absolute basis quarter-over-quarter, operating expenses as a percentage of net sales increased to 30% from 28% in the same quarter of the prior year. Compared to the same period of the prior year, research, product development and regulatory expenses increased by 12%, selling expenses declined by 5%, and general and administrative expenses declined by 9%. Expenses in the three months ended June 30, 2026, related to continued transformation efforts, primarily focused on transferring manufacturing activities from our LA facility to Axis, amounted to $1,506.
Interest expense, net increased by $4,680 due to increased borrowing under the new debt structure (consisting of the First Lien Term Loan and Second Lien Term Loan), that was put into place on March 13, 2026, and the comparatively higher effective interest rate thereunder.
The Company recorded an income tax expense of $383 compared to $765 in the same period of last year. The decrease in income tax expense compared to the same period last year is primarily attributed to a reduction in the estimated effective tax rate for the full year for primarily the profitable entities with no established valuation allowance. The Company generated a net loss of $9,868 or $(0.34) per share compared to a net loss of $849 or $(0.03) per share in the same quarter of the prior year.
19
RESULTS OF OPERATIONS
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
48,033 |
|
|
$ |
52,674 |
|
|
$ |
(4,641 |
) |
|
|
-9 |
% |
U.S. Specialty |
|
|
21,804 |
|
|
|
19,585 |
|
|
|
2,219 |
|
|
|
11 |
% |
Total U.S. |
|
|
69,837 |
|
|
|
72,259 |
|
|
|
(2,422 |
) |
|
|
-3 |
% |
International |
|
|
46,917 |
|
|
|
57,054 |
|
|
|
(10,137 |
) |
|
|
-18 |
% |
Total net sales |
|
$ |
116,754 |
|
|
$ |
129,313 |
|
|
$ |
(12,559 |
) |
|
|
-10 |
% |
Total cost of sales |
|
$ |
(82,041 |
) |
|
$ |
(88,766 |
) |
|
$ |
6,725 |
|
|
|
-8 |
% |
Total gross profit |
|
$ |
34,713 |
|
|
$ |
40,547 |
|
|
$ |
(5,834 |
) |
|
|
-14 |
% |
Total gross margin |
|
|
30 |
% |
|
|
31 |
% |
|
|
|
|
|
|
||
Our domestic crop business recorded net sales during the second quarter of 2026 that were 9% lower than those of the second quarter of 2025. The decrease was driven largely by timing of product sales within the cotton portfolio, specifically Bidrin® cotton insecticide and Folex® cotton defoliant, which carried over into the third quarter (in the case of Folex, closer to time of use as a harvest aid). In addition, granular soil insecticide sales declined quarter over quarter, reflecting softer demand for products such as Aztec®, and Thimet® amid variable pest pressure and more cautious grower spending across key corn and row crop markets. The decreases were partially offset by direct business-to-business sales from the US Crop business to certain foreign customers (as part of our organization restructuring) and strong performance in the herbicide and fungicide portfolios, led by continued momentum from Impact® and Envoke®. Soil fumigant sales also rose during the period, supported by steady demand for proven nematode and disease management solutions in high-value crop markets.
Our domestic Specialty business posted a 11% increase in net sales over the second quarter with improved sales across the portfolio. Among the drivers were increased sales of turf products (Turfcide® fungicide and Dylox® insecticide), herbicide products (particularly Bromacil and Imazaquin).
Net sales of our international businesses decreased by 18% during the period. Within Central America, demand for various products, including Mocap®, Thimet®, and various third-party products, was reduced on account of El Niño weather, which brought drier than normal conditions and either delayed or suspended crop planting. This effect was felt primarily in rice in Panamá and Nicaragua, peanuts in Nicaragua and vegetables in Guatemala. In addition, certain direct business-to-business sales are now managed by the US crop business as part of our drive for improved operational efficiency. Further, product sales to certain banana plantations were paused in light of labor union activity. In addition, in Mexico, Bromacil herbicide sales were down due to reduced demand from the agave market, while sales of soil fumigants declined due to shipping issues. These decreases were partially offset by stronger sales of Counter, K Salt and Gesapax Combi in Mexico. In Brazil, demand for the two main products (Redshield and Argenfrut) declined due, in part, to higher prices occasioned by raw material cost increases.
On a consolidated basis, gross profit for the second quarter of 2026 decreased by 14% as compared to the second quarter of 2025, due largely to decreased sales volume. With increased freight costs and higher net factory costs, the Company recorded a gross margin percentage of 30% for the quarter, as compared to 31% for the same period of the prior year.
20
The change in operating expenses by department is as follows:
|
|
For the Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling |
|
$ |
11,102 |
|
|
$ |
11,633 |
|
|
$ |
(531 |
) |
|
|
-5 |
% |
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
12,394 |
|
|
|
13,791 |
|
|
|
(1,397 |
) |
|
|
-10 |
% |
Amortization |
|
|
3,034 |
|
|
|
3,049 |
|
|
|
(15 |
) |
|
|
0 |
% |
Legal reserves |
|
|
92 |
|
|
|
150 |
|
|
|
(58 |
) |
|
|
-39 |
% |
Research, product development and regulatory |
|
|
6,484 |
|
|
|
5,803 |
|
|
|
681 |
|
|
|
12 |
% |
Product liability claims |
|
|
119 |
|
|
|
— |
|
|
|
119 |
|
|
|
100 |
% |
Asset impairments |
|
|
284 |
|
|
|
134 |
|
|
|
150 |
|
|
|
112 |
% |
Transformation |
|
|
1,506 |
|
|
|
1,621 |
|
|
|
(115 |
) |
|
|
-7 |
% |
Total |
|
$ |
35,015 |
|
|
$ |
36,181 |
|
|
$ |
(1,166 |
) |
|
|
-3 |
% |
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Consulting and strategic advisory services |
|
$ |
— |
|
|
$ |
28 |
|
Other termination and retention costs |
|
|
661 |
|
|
|
642 |
|
Transformation related employee costs |
|
|
— |
|
|
|
— |
|
IT implementations |
|
|
3 |
|
|
|
240 |
|
Plant reorganization costs |
|
|
682 |
|
|
|
— |
|
Legal and regulatory expense |
|
|
— |
|
|
|
711 |
|
Other |
|
|
160 |
|
|
|
— |
|
Total |
|
$ |
1,506 |
|
|
$ |
1,621 |
|
|
|
|
|
|
|
|
||
Transformation costs related to the Company’s digital and structural transformation project and manufacturing footprint optimization decreased for the three months ended June 30, 2026, as compared to the same period of the prior year. The Company expects that these costs will continue to decrease. The decrease was partially offset by an increase in plant reorganization costs focused primarily on activity in support of the project to transfer production activity from the Los Angeles site to the Axis site. The Los Angeles plant reorganization is expected to be completed by December 31, 2026 and is part of the
21
Company's optimization efforts of its manufacturing footprint, which involves reconfiguring the Los Angeles site by ending synthesis operations on that site and building upon strengths and capabilities at its Axis manufacturing site. The plant reorganization costs incurred relates to a reduction in force of certain personnel, material waste disposal and other related expenses. No such costs were incurred during the three months ended June 30, 2025.
Operating expenses excluding the expenses associated with transformation and product liability claims, a non-GAAP measure, which reflects the business focus on managing underlying ongoing expenses, ended at $33,106 or 28% of net sales. In comparison, operating expenses for the same period of the prior year were $34,426 or 27% of net sales.
Average Indebtedness and Interest expense
Interest costs are summarized in the following table:
|
|
For the Three Months Ended June 30, 2026 |
|
|
For the Three Months Ended June 30, 2025 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
|
Interest |
|
||||||
Average indebtedness |
|
$ |
285,097 |
|
|
$ |
8,244 |
|
|
|
11.6 |
% |
|
$ |
196,703 |
|
|
$ |
4,110 |
|
|
|
8.4 |
% |
Amortization of deferred loan fees |
|
|
— |
|
|
|
1,085 |
|
|
|
— |
|
|
|
— |
|
|
|
335 |
|
|
|
— |
|
Other interest income |
|
|
— |
|
|
|
(152 |
) |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
— |
|
Subtotal |
|
$ |
285,097 |
|
|
$ |
9,177 |
|
|
|
12.9 |
% |
|
$ |
196,703 |
|
|
$ |
4,461 |
|
|
|
9.1 |
% |
Capitalized interest |
|
|
— |
|
|
|
(47 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
— |
|
Total |
|
$ |
285,097 |
|
|
$ |
9,130 |
|
|
|
12.8 |
% |
|
$ |
196,703 |
|
|
$ |
4,450 |
|
|
|
9.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The Company's borrowings in the three months ended June 30, 2026, were higher compared to the same period of the prior year, mainly as a result of the new debt structure put into place on March 13, 2026. The Company refinanced its revolving credit line with a term loan structure that increased debt and placed additional cash on the Company’s balance sheet. The new debt structure resulted in an increase in the effective interest rate.
Income tax expense was $383 for the three months ended June 30, 2026, as compared to $765 for the three months ended June 30, 2025. The effective income tax rate for the three months ended June 30, 2026, was computed based on the estimated effective tax rate for the full year which is approximately 19%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company continues to maintain valuation allowances established against the net deferred tax assets of the U.S. and certain international entities, primarily in Brazil, for the three months ended June 30, 2026. During the three months ended June 30, 2026, several of the Company’s international businesses outside of Brazil were profitable resulting in an income tax expense.
Our overall net loss for the three months ended June 30, 2026 was $9,868 or ($0.34) per basic and diluted share, as compared to net loss of $849 or ($0.03) per basic and diluted share in the same quarter of 2025.
Six Months Ended June 30, 2026 and 2025:
Overview of the Company’s Performance
The domestic crop protection market for the first half of 2026 was stable; channel inventories were low, and demand was generally consistent with seasonal need. With the farm economy continuing to feel the effects of high cost of capital coupled and higher costs of fuel and fertilizer (largely due to military activity in the Middle East), the distribution channel persisted in following conservative procurement practices, buying goods closer to time-of-need and minimizing carrying costs. The domestic Specialty market was strong during the six-month period with stable sales performance across multiple segments (ornamental, pest control, turf and landscape). However, in the face of adverse weather and increased raw materials prices, the International markets were not as strong. Thus, on a consolidated basis, the Company’s net sales performance for the first half of 2026 was flat to slightly down, operating profit was up, and, with substantially higher interest expense, net income declined.
The Company’s consolidated net sales for the first half of 2026 were slightly less (2%) than those of the prior year period. This performance included US Crop sales that were up 5%, Specialty net sales up 10%, and International net sales down 13%. Gross profit improved by 3%, and, despite a slightly weaker overall factory performance, the gross margin percentage ended at 30% for the first half of 2026, as compared to 29% to the prior year period.
22
Operating expenses increased by approximately 1% and, when expressed as a percentage of net sales, increased to 30% compared to 29% during the same period a year ago. Within operating expenses, selling expenses were down 3%, general and administrative expenses decreased by approximately 1%, and research, product development and regulatory expenses were up 2%.
Interest expense, net increased by about $6,705 due to increased borrowing, driven by the two term loans, put in place on March 13, 2026, and increased effective interest rates compared to the revolving line of credit that was refinanced.
The Company recorded an income tax expense of $507 as compared to $1,152 in the same period of last year. The decrease in the income tax expense compared to the same period last year primarily arises from a reduction in the estimated effective tax rate for the full year for profitable entities with no established valuation allowance. The Company generated a net loss of $14,014 or ($0.49) per share compared to a net loss of $9,311 or ($0.33) per share in the same period a year ago.
RESULTS OF OPERATIONS
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. crop |
|
$ |
115,193 |
|
|
$ |
110,201 |
|
|
$ |
4,992 |
|
|
|
5 |
% |
U.S. Specialty |
|
|
38,174 |
|
|
|
34,834 |
|
|
|
3,340 |
|
|
|
10 |
% |
Total U.S. |
|
|
153,367 |
|
|
|
145,035 |
|
|
|
8,332 |
|
|
|
6 |
% |
International |
|
|
86,955 |
|
|
|
100,078 |
|
|
|
(13,123 |
) |
|
|
-13 |
% |
Total net sales |
|
$ |
240,322 |
|
|
$ |
245,113 |
|
|
$ |
(4,791 |
) |
|
|
-2 |
% |
Total cost of sales |
|
$ |
(167,192 |
) |
|
$ |
(174,375 |
) |
|
$ |
7,183 |
|
|
|
-4 |
% |
Total gross profit |
|
$ |
73,130 |
|
|
$ |
70,738 |
|
|
$ |
2,392 |
|
|
|
3 |
% |
Total gross margin |
|
|
30 |
% |
|
|
29 |
% |
|
|
|
|
|
|
||
Our domestic crop business recorded net sales during the first half of 2026 that were 5% higher than those of the first half of 2025, due to improved industry demand for the Company’s Impact herbicide, Counter nematicide, Smartchoice granular soil insecticide and soil fumigants. The performance included direct business-to-business sales from the US Crop business to certain foreign customers (as part of our organization restructuring). These increases were partially offset by lower sales of cotton defoliant, Folex, and cotton insecticide, Bidrin, due to a seasonal shift in orders. All in all, performance across the US Crop portfolio saw strong improvements, as compared to the same period of 2025.
Our domestic Specialty business posted a 10% increase in net sales in the first half of 2026 compared to the first half of 2025, with improvement over multiple market segments, as the Company began to see the effects of a more focused go-to-market strategy within the context of just-in-time procurement practices. Specifically, the Company recorded strong sales of OHP’s ornamental products, as a result of increased demand for its biological product solutions (namely, its hallmark Botanigard® biological brand). While cooler weather in key areas of the country delayed the traditional start of the pest control business, the turf business performed better than forecasted, driven primarily by a significant increase in demand for our Turfcide® fungicide, our Bromacil herbicide, our Basamid® soil fumigant product (which supports the construction of new golf courses across the US) and our Dylox insecticide. These gains were partially offset by reduced sales of our mosquito adulticide.
Net sales of our international businesses decreased by 13% during the first half of 2026 compared to the first half of 2025. The business experienced lower sales in Brazil relative to the same period of the prior year, primarily due to the delayed delivery of goods from the final quarter of 2024 into the first quarter of 2025 (which delay did not repeat in 2026). Further, certain direct business-to-business sales are now managed by the US crop business as part of our drive for improved operational efficiency. In addition, our Agrinos business in India experienced lower sales. Drier weather in Central America slowed sales (for example, Counter, Aztec and Impact as well as various third-party products) late in the six-month period, which was partially offset by improved sales in Ecuador, arising from the Company’s launch of Mocap for use on bananas, as well as in Mexico, by higher sales of non-crop vegetation control products and more normalized channel inventories.
On a consolidated basis, gross profit for the first six months of 2026 improved by 3%, as compared to the same period of the prior year. Increased sales volume of higher-margin domestic products contributed to the increase. This performance, along with a continued strong factory efficiency, resulted in gross margin for the first half of 2026 of 30%, as compared to 29% during the same period of the prior year.
23
24
The change in operating expenses by department is as follows:
|
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|
% Change |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling |
|
$ |
21,685 |
|
|
$ |
22,356 |
|
|
$ |
(671 |
) |
|
|
-3 |
% |
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
26,496 |
|
|
|
26,630 |
|
|
|
(134 |
) |
|
|
-1 |
% |
Amortization |
|
|
6,062 |
|
|
|
6,115 |
|
|
|
(53 |
) |
|
|
-1 |
% |
Legal reserves |
|
|
92 |
|
|
|
150 |
|
|
|
(58 |
) |
|
|
-39 |
% |
Research, product development and regulatory |
|
|
11,755 |
|
|
|
11,485 |
|
|
|
270 |
|
|
|
2 |
% |
Product liability claims |
|
|
201 |
|
|
|
— |
|
|
|
201 |
|
|
|
100 |
% |
Asset impairments |
|
|
943 |
|
|
|
134 |
|
|
|
809 |
|
|
|
604 |
% |
Transformation |
|
|
4,310 |
|
|
|
3,812 |
|
|
|
498 |
|
|
|
13 |
% |
Total |
|
$ |
71,544 |
|
|
$ |
70,682 |
|
|
$ |
862 |
|
|
|
1 |
% |
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Consulting and strategic advisory services |
|
$ |
87 |
|
|
$ |
1,149 |
|
Other termination and retention costs |
|
|
877 |
|
|
|
1,167 |
|
Transformation related employee costs |
|
|
63 |
|
|
|
— |
|
IT implementations |
|
|
8 |
|
|
|
693 |
|
Plant reorganization costs |
|
|
3,115 |
|
|
|
— |
|
Legal and regulatory expense |
|
|
— |
|
|
|
711 |
|
Other |
|
|
160 |
|
|
|
92 |
|
Total |
|
$ |
4,310 |
|
|
$ |
3,812 |
|
Transformation costs related to the Company’s digital and structural transformation project and manufacturing footprint optimization increased during the six months ended June 30, 2026, as compared to the same period of the prior year. The Company expects that these costs will decrease. The increase in plant reorganization costs focused primarily on activity in support of the project to transfer production activity from the Los Angeles site to the Axis site. The Los Angeles plant reorganization is expected to be completed by December 31, 2026 and is part of the Company's optimization efforts of its
25
manufacturing footprint, reconfiguring the Los Angeles site by ending synthesis operations on that site and building upon strengths and capabilities at its Axis manufacturing site. The plant reorganization costs incurred relate to a reduction in force of certain personnel, material waste disposal and other related expenses. No such costs were incurred during the six months ended June 30, 2025.
Operating expenses excluding the expenses associated with transformation, asset impairments and product liability claims, a non-GAAP measure which reflects the business focus on managing underlying ongoing expenses, ended at $66,090 or 28% of net sales. In comparison, operating expenses for the same period of the prior year were $66,736 or 27% of net sales.
Average Indebtedness and Interest expense
Interest costs are summarized in the following table:
|
|
For the Six Months Ended June 30, 2026 |
|
|
For the Six Months Ended June 30, 2025 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
|
Interest |
|
||||||
Average indebtedness |
|
$ |
249,182 |
|
|
$ |
13,363 |
|
|
|
10.7 |
% |
|
$ |
179,710 |
|
|
$ |
7,659 |
|
|
|
8.5 |
% |
Amortization of deferred loan fees |
|
|
— |
|
|
|
1,798 |
|
|
|
— |
|
|
|
— |
|
|
|
570 |
|
|
|
— |
|
Other interest income |
|
|
— |
|
|
|
(154 |
) |
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
— |
|
Subtotal |
|
$ |
249,182 |
|
|
$ |
15,007 |
|
|
|
12.0 |
% |
|
$ |
179,710 |
|
|
$ |
8,244 |
|
|
|
9.2 |
% |
Capitalized interest |
|
|
— |
|
|
|
(87 |
) |
|
|
— |
|
|
|
— |
|
|
|
(29 |
) |
|
|
— |
|
Total |
|
$ |
249,182 |
|
|
$ |
14,920 |
|
|
|
12.0 |
% |
|
$ |
179,710 |
|
|
$ |
8,215 |
|
|
|
9.1 |
% |
The Company’s borrowings during the six months ended June 30, 2026 were higher when compared to the same period of the prior year, mainly as a result of the new debt structure put into place on March 13, 2026. That resulted in the refinancing of a previous revolving credit line with a term loan structure that increased debt and placed additional cash on the Company’s balance sheet. Our effective interest rate increased as a result of the change in debt structure.
Income tax expense was $507 for the six months ended June 30, 2026, as compared to $1,152 for the six months ended June 30, 2025. The effective income tax rate for the six months ended June 30, 2026 was computed based on the estimated effective tax rate for the full year which is approximately 19%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company continues to maintain valuation allowances established against the net deferred tax assets of the U.S. and certain international entities, primarily in Brazil, for the six months ended June 30, 2026. During the six months ended June 30, 2026, several of the Company’s international businesses outside of Brazil were profitable resulting in an income tax expense.
Our overall net loss for the six months ended June 30, 2026 was $14,014 or ($0.49) per basic and diluted share, as compared to net loss of $9,311 or ($0.33) per basic and diluted share in the six months ended June 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented:
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(60,460 |
) |
|
$ |
(39,836 |
) |
Net cash used in investing activities |
|
|
(2,419 |
) |
|
|
(1,057 |
) |
Net cash provided by financing activities |
|
|
94,371 |
|
|
|
41,479 |
|
Net increase in cash |
|
|
31,492 |
|
|
|
586 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(16 |
) |
|
|
1,382 |
|
Cash at beginning of period |
|
|
12,425 |
|
|
|
12,514 |
|
Cash at end of period |
|
$ |
43,901 |
|
|
$ |
14,482 |
|
|
|
|
|
|
|
|
||
26
The Company used cash of $60,460 in operating activities during the six months ended June 30, 2026, as compared to $39,836 during the six months ended June 30, 2025. Included in the $60,460 are net loss of $14,014, plus non-cash depreciation, amortization of intangibles and other assets in the amount of $9,026, provision for bad debts in the amount of $1,327, stock compensation in the amount of $574, amortization of deferred loan fees in the amount of $1,786 and leases in the amount of $140. Also included are a net change in deferred income taxes of $690, and change in liabilities for uncertain tax positions or unrecognized tax benefits of $50. These together resulted in a cash inflow of $268, as compared to an inflow of $2,575 for the same period of 2025.
During the six months ended June 30, 2026, the Company increased net working capital by $129,494, as compared to an increase of $21,381 during the same period of the prior year. The biggest driver of the increase was the restructuring of the Company’s debt which resulted in a cash inflow of $68,766 which is included in the change in working capital. In addition, accounts receivable increased by $16,225, as compared to an increase by $3,293 in the same period of 2025. This change resulted from receiving lower customer prepayments at the end of 2025. Inventories increased by $4,280, as compared to an increase of $9,785 during the same period of 2025. Customer prepayments decreased by $32,353, as compared to a decrease of $46,187 in the same period of 2025, driven by lower prepayments from customers during December 2025. Accrued program costs decreased by $3,967, as compared to an increase of $10,267 in the prior year, as a result of timing of customers purchases, program simplification, and the mix of sales. Our accounts payable balances decreased by $459, as compared to an increase of $24,547 in the same period of 2025. Prepaid expenses and other assets increased by $339, as compared to an increase of $1,863 in the same period of 2025. Income tax receivable/payable, net changed by $2,506 as compared to $1,024 in the prior year. Finally, other payables and accrued expenses decreased by $5,611, as compared to a decrease of $15,073 in the prior year.
With regard to our program accrual, the decrease (as noted above) primarily reflects our initiatives to simplify customer programs, and as a result of the level and mix of sales and customers in the first half of 2026, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30th of each year. During the first half of 2026, the Company made accruals for programs in the amount of $24,309 and made payments in the amount of $28,230. During the first half of the prior year, the Company made accruals in the amount of $41,451 and payments in the amount of $31,032.
Cash used for investing activities was $2,419 for the six months ended June 30, 2026, as compared to $1,057 for the six months ended June 30, 2025. The Company spent $2,322 on fixed assets purchases primarily focused on its manufacturing infrastructure.
During the six months ended June 30, 2026, financing activities provided $94,371, as compared to $41,479 during the same period of the prior year. Net borrowings under the Company's debt structure amounted to $110,437 in the first half of 2026, as compared to $42,169 in the same period of the prior year. As previously noted, this was driven by the retirement of the pre-existing revolving line of credit and replacement by two term loans. The Company made payments in the amount of $16,234 relating to loan fees. Lastly, in exchange for shares of common stock returned by employees, we paid $95 and $142 for tax withholdings on stock-based compensation awards during the six months ended June 30, 2026 and 2025, respectively.
As of June 30, 2026 our debt structure includes two term loans. As of December 31, 2025, our debt structure included a senior credit facility. The debt structure are summarized in the following table:
Long-term indebtedness |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Current portion of long-term debt |
|
$ |
2,250 |
|
|
$ |
— |
|
Long-term debt, net of current portion |
|
|
282,775 |
|
|
|
174,000 |
|
Unamortized debt discount and debt issuance costs |
|
|
(17,406 |
) |
|
|
(3,015 |
) |
Total indebtedness |
|
$ |
267,619 |
|
|
$ |
170,985 |
|
As of June 30, 2026, the Company was in compliance with its financial covenants.
We believe that anticipated cash flow from operations and existing cash balances will be sufficient to provide us with liquidity necessary to fund our working capital and cash requirements for the next twelve months.
27
RECENTLY ISSUED ACCOUNTING GUIDANCE
Please refer to Note 1 in the accompanying Notes to the Condensed Consolidated Financial Statements for recently issued and adopted accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company’s Form 10-K filed with the SEC for the year ended December 31, 2025, the Company provided a comprehensive statement of critical accounting policies. These policies have been reviewed in detail as part of the preparation work for this Form 10-Q. After our review of these matters, we have determined that, during the subject reporting period there has been no material change to the critical accounting policies that are listed in the Company’s Form 10-K for the year ended December 31, 2025.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is primarily exposed to changes in interest rates related to its borrowing activities. The Company’s indebtedness to its primary lenders is evidenced by two term loans with variable rates of interest, which fluctuate with changes in the lenders' reference rate (SOFR). An increase or decrease in interest rates by 25 bps would impact the Company’s net loss by approximately $712 based on the Company’s currently outstanding principal balance of $285,000.
The Company faces market risk to the extent that changes in foreign currency exchange rates affect our non-U.S. dollar functional currency as to foreign subsidiaries’ revenues, expenses, assets and liabilities. The Company currently does not engage in hedging activities with respect to such exchange rate risks.
Assets and liabilities outside the U.S. are located in regions where the Company has subsidiaries or joint ventures: Central America, South America, North America, Europe, Asia, and Australia. The Company’s investments in foreign subsidiaries and joint ventures with a functional currency other than the U.S. dollar are generally considered long-term. Accordingly, the Company does not hedge these net investments.
For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, 2025.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of June 30, 2026, the Company has a comprehensive set of disclosure controls and procedures designed to ensure that all information required to be disclosed in our filings under the Securities Exchange Act (1934) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of June 30, 2026, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective to provide reasonable assurance of the achievement of the objectives described above. There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
28
PART II. OTHER INFORMATION
The Company was not required to report any matters or changes for any items of Part II except as disclosed below.
Item 1. Legal Proceedings
Please refer to Note 13 in the accompanying Notes to the Condensed Consolidated Financial Statements for legal updates.
Item 1A. Risk Factors
The Company continually re-assesses the business risks, and as part of that process detailed a range of risk factors in the disclosures in American Vanguard’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed on March 16, 2026. There have been no material changes in our risk factors as of June 30, 2026, except as follows:
The war between the US and Iran coupled with instability among other nations within the Middle East may have an adverse effect upon the agricultural economy in general and the Company’s financial performance in particular. Military activity in and near Iran and the consequent blockade of the Strait of Hormuz are interfering with international shipping lanes for oil, fertilizer and other products which, in turn, are increasing grower costs. In addition, these activities could lead to counterterrorism and/or counterattacks that could put US persons and assets at risk. These factors are likely to further constrain grower liquidity and profitability, to affect growers’ procurement practices and lead to a reduction in demand for the Company’s products. There is no guarantee that the war will end any time soon or that the terms of its cessation will restore shipping lanes to pre-blockade status. In short, these factors could have a material adverse impact on the Company’s operations and/or financial performance.
The development of Agentic AI tools may overtake the efficacy of available cybersecurity defense tools and, as such, could put the Company’s computing systems at risk. Fueled by enormous investment and activity from competing global developers, agentic AI solutions are evolving at a rapid pace and becoming increasingly powerful. By contrast, cybersecurity defense tools are evolving at a slower rate and are largely configured to defend against traditional, pre-agentic AI threats. Thus, it is possible that the strength of existing defense tools will soon be exceeded by that of new, agentic AI tools. While the Company is taking extensive measures to ensure that its computing systems are well-defended, there is no guarantee that agentic AI tools, whether on their own or in the hands of threat actors, will not breach these systems, which, in turn, could have a material adverse effect upon the Company’s operations or financial performance.
The Company’s primary synthesis factories are dependent upon the continued provision of shared services from competitors. The Company’s manufacturing facilities in both Hannibal, Missouri and Axis, Alabama depend upon the provision of essential services (e.g., utilities, waste treatment) from competitors that are co-located with the Company on those sites. Further, while it owns the machinery and equipment at those sites, the Company is a tenant, and the competitors are landlords, as per the terms of ground leases. There is no guarantee that the landlords of either site will continue to be able to supply some or all shared services to the Company without interruption. Nor does the Company have any control over the disposition of the fee interest of the sites on which its operations are situated. Cessation of some or all shared services by the landlords without sufficient lead time could have a material adverse effect upon the Company’s ability to produce various high-margin products.
Item 2. Purchases of Equity Securities by the Issuer
Under the First Lien Term Loan, the Company is restricted in its ability to make stock repurchases.
29
Item 6. Exhibits
Exhibits required to be filed by Item 601 of Regulation S-K:
Exhibit No. |
|
Description |
|
|
|
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 |
|
Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002. |
|
|
|
101 |
|
The following materials from American Vanguard Corp’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. |
|
|
|
104 |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, has been formatted in Inline XBRL. |
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
american vanguard corporation |
|
|
|
|
Dated: August 10, 2026 |
By: |
/s/ DOUGLAS A. KAYE III |
|
|
Douglas A. Kaye III |
|
|
Chief Executive Officer |
|
|
|
Dated: August 10, 2026 |
By: |
/s/ david t. johnson |
|
|
David T. Johnson |
|
|
Chief Financial Officer and Principal Accounting Officer |
31