AMERICAN VANGUARD CORP
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
AVD$0.96+1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0000950170-24-094865
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125626
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 81 current paragraphs.
21 unchanged; 36 reworded; 24 added; 20 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Persistently low commodity prices and high input cost remain a challenge for the agricultural economy, however the supply chain has started to normalize and the recent decrease in interest rates should help to improve demand. Some pockets of strength have emerged, in areas such as biofertilizers, biostimulants and biochemicals, from which the Company has benefited. Notwithstanding these encouraging indicators, significant inventories of agricultural commodities remain in the supply chain that will need to be worked through before commodity prices can improve, thus a gradual recovery over several quarters is the most likely outcome for the agricultural economy.
Current report
Against this backdrop, overall sales for the third quarter of 2024 declined 21%, as compared to the third quarter of 2023. Domestic sales were down 33%, while international sales decreased by 4%. Our reported sales performance was negatively impacted by the voluntary product recall of our Dacthal product line, and lower sales of both granular soil insecticide and growth regulator products used on cotton accounted for the bulk of the sales decline. Other insecticide products and green solutions sales were relatively strong compared to the third quarter of 2023, but these areas of strength were not enough to overcome weakness in the previously mentioned categories.
Current report
The Company recorded a gross profit amounting to 15% of net sales, as compared to 29% in the same period of the prior year. The decline was driven primarily by the effect of the Dacthal recall (which amounted to a total value of $16,191) and generic price pressure on certain products - one key defoliant product in the U.S. crop market and a herbicide in Mexico. Further, the Company recorded additional inventory valuation reserves primarily associated with Dacthal inventories on hand.
Current report
Operating expenses, increased by 17%, as compared to the third quarter of 2023. Operating costs in the three months ended September 30, 2024 included non-recurring charges in the amount of $8,139, related to the on-going transformation activities.
Current report
Interest expense increased to $4,378 from $3,384 in the same period of the prior year, due almost entirely to higher interest rates as average debt was approximately flat with the same period last year. The increased interest rate was impacted by the terms of our credit facility agreement, by our overall financial performance and by costs associated with the recent modification.
Current report
Our domestic crop business recorded net sales during the third quarter of 2024 that were 48% lower than those of the third quarter of 2023 ($35,533 as compared to $67,749). The reduction in sales compared to the same quarter of the prior year is driven primarily by the reversal of sales associated with the voluntary product recall of Dacthal, which amounted to $11,783. In addition, in comparison to the same quarter of the prior year, we recorded lower sales of our granular soil insecticide Aztec. That product had not been available in the marketplace in the periods prior to the third quarter of 2023, and industry participants used availability in the third quarter of 2023 to rebuild inventory. In 2024, buying patterns have now normalized. Furthermore, sales or our granular soil insecticide Thimet were down as compared to the year ago period, as demand for this product emerged earlier than normal this year. .
Current report
Our domestic non-crop business posted a 17% increase in net sales in the third quarter of 2024, as compared to the same period in the prior year ($22,454 as compared to $19,250). Non-crop insecticides and OHP distribution sales were particularly strong during the quarter. OHP benefited from addition of sales from a new distribution agreement, including biologicals products.
Current report
Net sales in ourinternational business declined by 4% during the period ($60,320 in 2024, as compared to $62,517 in 2023). Our granular soil insecticide business was supply constrained in Asia, where demand exceeded our supply and Brazilian sales were negatively impacted by a weakening currency.
Current report
Operating expenses, including transformation costs, increased by 17% to $45,681, as compared to $38,893 in the same period of the prior year. Including in this increase, the Company incurred expenses in the amount of $8,139 related to on-going transformation activities. There were no comparable costs in the same period of the prior year. The changes in operating expenses by department are as follows:
Current report
Amortization increased slightly during the three months ended September 30, 2024, as compared to the same period of the prior year, resulting from the addition of intangible assets in connection with the acquisition of Punto Verde.
Current report
Nine Months Ended September 30, 2024 and 2023:
Current report
Agricultural commodity prices steadily trended lower in the first nine months of 2024. The pace of the downtrend slowed during the third quarter, leaving prices near a two-year low. Corn and soybean prices have been particularly weak, with corn prices down more than 10% and soybean prices down more than 20% year to date, wheat prices have fared somewhat better but are still down approximately 5% year to date. These factors have led to procurement practices remaining conservative, despite a recent easing in interest rates.
Current report
On a consolidated basis, sales were down 6% over the first nine months of the year, compared to the first nine months of 2023. Domestic sales were down 9%, while international sales were down 2%. Our reported sales performance was impacted by the voluntary product recall of our Dacthal product line, and by granular soil insecticides and plant growth regulators in the U.S. and by a herbicide in Mexico.
Current report
The Company generated a gross profit margin of 26% in the first nine months of the year, as compared to 31% during the same period of last year. Included in this performance, during the first nine months of 2024, the Company voluntarily recalled all Dacthal product globally, and recorded $16,191 in liabilities as a result.
Current report
Operating expenses increased by 14%, as compared to the same period of 2023. Operating costs in the three months ended September 30, 2024 included non-recurring charges in the amount of $16,636, related to the on-going transformation activities.
Current report
Interest expense increased to $11,988 as compared to $8,282 in the first nine months of 2023, due to higher interest rates.
Current report
The Company's income tax benefit during the nine months ended September 30, 2024 was $7,093, as compared to an expense of $2,066 during the similar period of 2023.
Current report
Nine months ended September 30, 2024, and 2023
Current report
Our domestic crop business experienced a 17% decrease in net sales for the first nine months of the year (to $155,075 versus $185,823). This included the impact of the voluntary recall of our Dacthal product, and lower granular soil insecticides including our Aztec product which experienced higher sales in the first nine months of 2023, as the market restocked after a period of supply difficulties.
Current report
Ourdomestic non-crop business recorded a 18% increase in net sales for the first nine months of the year (to $59,241 from $50,041). OHP recorded sales up 30% as a result of newly implemented distribution agreement, and a surge in demand for biological products. In addition, our non-crop segment performed well as a result of weather and pest pressure in the south-east following storm activity in the south-eastern U.S.
Current report
Net sales of ourinternational businesses were slightly weaker than the first nine months of 2023 down 2% ($167,343 versus $171,327 in 2023). Two products, Mocap, a granular soil insecticide, and Assure II, a herbicide, account for virtually all of the weakness in international business. Weakness in Mocap can be attributed to a lack of inventory to service customer demand, while Assure II sales were pressured by generic competition.
Current report
On a consolidated basis, gross profit for the nine months of 2024 ended at $97,474, as compared to $124,529 for the same period of 2023. During the period, the Company assessed the liability associated with the global voluntary cancellation of the Dacthal registrations and has recorded a liability in the amount of $16,191. In addition, as noted above, the Company recorded lower sales in both the domestic and international crop businesses.
Current report
Selling expenses decreased by $2,266 to end at $39,022 for the nine-month period ended September 30, 2024, as compared to the same period of 2023. The main drivers were decreased employee and associated travel costs and reduced advertising and marketing spending.
Current report
$115,002 as of December 31, 2023. The Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent.
Removed paragraphs (20)
Previous report
Persistently low commodity prices coupled with high input costs and interest rates continue to place pressure on the global agricultural economy. 2024 will mark the second year of declining profitability for farm income, with government reports estimating farmer's income to be down more than 40% from the cyclical high of 2022. The just-in-time procurement approach that arose within the Company’s distribution channel in early 2023, impacted by high interest rates, has continued throughout the first half of 2024. It will take some time to work through the accumulated channel inventories (of both the Company’s and competitors’ products), and the timing of any meaningful adjustments to interest rates remains uncertain.
Previous report
Against this backdrop, overall sales for the second quarter of 2024 declined by 3% compared to the second quarter of 2023. From a regional perspective, our domestic sales decreased by 2% and our international sales decreased by 5%. Just-in-time purchasing by some of our largest customers continues to drag sales performance, with flat performance across our insecticide product line. Our herbicide sales decreased by 30% compared to the year ago period in the face of generic pressure from non-specific herbicide products in multiple regions.
Previous report
Inflationary pressures led to a higher cost of goods, which increased by about 1%, as compared to the same quarter of 2023. As a result of these factors, gross margins for the business decreased to 29% of net sales, as compared to 32% in the same period of 2023.
Previous report
Operating expenses increased by 20% compared to the first quarter of 2023. Substantially all of this increase can be attributed to non-recurring charges of approximately $9,310 related to the transformation of the business.
Previous report
Interest expense increased, based upon increased average borrowings and elevated interest rates. The Company’s borrowed debt rose in light of higher inventory levels and reduced sales, which yielded lower cash proceeds. Seasonally, working capital levels decrease in the latter half of the year.
Previous report
Ourdomestic crop business recorded net sales during the second quarter of 2024 that were 7% lower than those of the second quarter of 2023 ($52,289 as compared to $56,212). Our customers continue to focus on controlling inventory levels, as carrying costs for working capital remain elevated in the current interest rate environment.
Previous report
The domestic granular insecticide category was up 3% compared to the same period of the prior year, led by Thimet (with sales driven by demand from peanut and sugar cane growers) partially offset by reduced sales of Aztec (due to conservative, off-season procurement practices by the distribution channel) and soil fumigants (in light of potato pricing trends).
Previous report
Ourdomestic non-crop business posted a 13% increase in net sales in the second quarter 2024, as compared to the same period in the prior year ($19,011 in 2024 v. $16,878 in 2023). Sales of biologicals increased by 34%, as compared to the same period in 2023, driven by BotaniGard® and Mycotrol. Pest strip sales are also an area of strength for the company with sales up 22% compared to the year ago period. These sales were partially offset by lower Dibrom® mosquito adulticide sales, primarily related to a shift in timing of procurement by vector control regions.
Previous report
Net sales of ourinternational businesses declined by about 5% during the period ($56,909 in 2024 as compared to $59,700 in 2023). Herbicides sales had the largest negative impact on the quarter and were down 27% compared to the prior year, which are still feeling the effect of low-cost, generic alternatives. Regionally, Central America improved, yet it is still too early to determine if the supply of Asian low-cost generics has peaked. Brazil also showed improvement during the quarter, benefiting from less pressure from generics. Australia sales weakened, largely based upon currency.
Previous report
Six Months Ended June 30, 2024 and 2023:
Previous report
Commodity prices have steadily trended lower in the first half of 2024, including corn and soybean prices, that have shown steady weakness since the beginning of the year. Wheat prices experienced a period of exuberance during the spring, but the downturn recommenced in June, and wheat prices finished the second quarter lower than where they started the year. Already elevated inventory levels, coupled with a strong dollar and the expectation of a strong crop this season have led most agricultural commodities to finish the second quarter at the lowest price levels of the year. With this backdrop, procurement practices remain conservative. In an effort to control working capital levels and the associated carrying costs, the distribution channel for crop products remains tight. Despite this market dynamic, the Company’s net sales improved, and gross profit was in line with the first six months of 2023.
Previous report
On a consolidated basis, with domestic sales up 5% and international sales broadly in-line with the same period of last year, overall net sales increased by 3% ($263,352 in 2024 as compared to $257,674 in 2023) despite strong generic competition in certain products across several regions. Cost of sales increased by 4% on an absolute basis, driven by raw material price inflation and sales mix, partially offset by improved factory performance during the first half of 2024, as compared to the first half of 2023. These factors, taken together, yielded a gross profit that was in line with the same period of 2023 ($80,192 as compared to $81,444) and gross margin percentage slightly declined to 31% from 32% in the first half of 2023.
Previous report
In the first half of 2024, operating expenses increased by approximately 12%, as compared to those of the prior year period. Expenses were higher due to one-time expenses made up of business transformation costs, primarily related to the organizational redesign, standardized systems implementation and severance expenses for the former CEO.
Previous report
Interest expense increased significantly during the period due to increased working capital primarily driven by higher inventories. This has resulted in higher average borrowings, coupled with higher interest rates, resulting in significantly higher interest expense. The Company's income tax benefit during the six months ended June 30, 2024 was $69, as compared to an expense of $1,181 during the six months ended June 30, 2023.
Previous report
Six months ended June 30, 2024, and 2023
Previous report
Ourdomestic crop business recorded net sales that were 1% above those of first half of 2023 ($119,542 as compared to $118,105 in 2023). Herbicide sales were up 13% for the first half of the year, with the first quarter being particularly strong. Granular soil insecticides were up 2% in the first half of the year, led by Thimet sales, partially offset by lower Aztec sales.
Previous report
Ourdomestic non-crop business recorded a 20% increase in net sales for the first half of the year (to $36,787 from $30,759). Biologicals continue to be an area of strength in the non-crop segment, with BotaniGard® and Mycotrol® gaining market share in the pest control area focused on aphids, thrips and whiteflies. Through the first half of the year, Naled sales were up 5%. The season’s first storm, Beryl, came at the beginning of the storm season, slightly altering buying patterns for this mosquito adulticide.
Previous report
Net sales of ourinternational businesses were broadly comparable during the first half of 2024, as compared to the same period of the 2023 ($107,023 versus $108,810 in 2023). Central American sales increased by 5% during the first half of the year, driven by strong granular soil insecticide sales. Brazilian sales were up by 24% as the company appears to be gaining market share, while Asian Pacific sales were down nearly 2% due to a strong US Dollar, and Canadian sales were also down 2%. Herbicides sales were the offset to strength in some of the regions with first half sales off 12% as compared to the same period of the prior year as generic, non-specific herbicides continue to drag profitability in that product market.
Previous report
Selling expenses decreased by $290 to end at $26,281 for the six-month period ended June 30, 2024, as compared to the same period of 2023. The main drivers were increased costs associated with acquisition related additional headcount, offset by lower travel and marketing costs.
Previous report
Amortization declined slightly during the six months ended June 30, 2024, as compared to the same period of the prior year, as the result of completely amortized assets.
Reworded paragraphs (36)
Previous wording
The Company recorded an income tax benefit of $1,553, as compared to an income tax expense of $1,541 in the same period of last year.
Current wording
The Company recorded an income tax benefit of $7,024, as compared to an income tax expense of $885 in the same period of last year.
Previous wording
These factors yielded a net loss of $11,721, or $(0.42) per share, compared to a loss of $1,053, or $(0.04) per share, in the prior year quarter. Without one-time nonrecurring charges of $9,310, the adjusted net loss would be $2,411 or $(0.09) per share. Further details on our financial performance are set forth below.
Current wording
These factors yielded a net loss of $25,742, or $(0.91) per share, compared to a loss of $325, or $(0.01) per share, in the prior year. Further details of our financial performance are set forth below.
Previous wording
On aconsolidated basis, gross profit for the second quarter of 2024 decreased by 12% ($37,763 in 2024 as compared to $42,909 in 2023). The overall gross margin percentage ended at 29% in the second quarter of 2024, as compared to 32% in the second quarter of the prior year.
Current wording
On aconsolidated basis, gross profit for the third quarter of 2024 decreased by 60% ($17,293 in the three months ended September 30, 2024, as compared to $43,084 in 2023). During the three months ended September 30, 2024, the Company commenced a product recall arising from our voluntary cancellation of Dacthal registrations. The Company recorded charges associated with the product recall from distribution, retail and growers and has recorded a liability in the amount of $16,191. The overall gross margin percentage ended at 15%, including the impact of the product recall, as compared to 29% in the second quarter of the prior year.
Previous wording
Selling expenses increased by $201 for the three months ended June 30, 2024, as compared with the same period of the prior year. This included increased costs associated with employees following a small acquisition in the second half of 2023, offset by lower travel and marketing expenses.
Current wording
Selling expenses decreased by $1,977 for the three months ended September 30, 2024, as compared with the same period of the prior year. This included decreased costs associated with employee wages and travel and reduced advertising and marketing spending.
Previous wording
Other general and administrative expenses decreased by $249 for the three months ended June 30, 2024, as compared to the same period of 2023, primarily driven by reductions in costs associated with stock compensation, travel, and potential credit losses.
Current wording
Other general and administrative expenses decreased by $849 for the three months ended September 30, 2024, as compared to the same period of 2023, primarily driven by reductions in costs associated with stock compensation.
Previous wording
Legal reserves are contingencies related to certain labor and employment matters.
Current wording
Legal reserves are contingencies related to certain labor and employment matters. This matter was settled during the third quarter and the adjustment of $780 is to adjust the reserve amount to the agreed settlement.
Previous wording
Transformation costs related to the Company’s digital and structural transformation project amounted to $7,345. 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 improvements. The Company has engaged a third-party consulting firm to assist it in navigating the project to gain the maximum benefit at the earliest possible time. Severance costs relating to the Company’s former CEO, which were incurred in connection with the staffing and execution of the Company’s transformation initiatives, are included in the transformation costs.
Current wording
Transformation costs related to the Company’s digital and structural transformation project amounted to $8,139. 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 improvements. The Company has engaged a third-party consulting firm to assist it in navigating the project to gain the maximum benefit at the earliest possible time. Severance costs relating to the Company’s former CEO, which were incurred in connection with the staffing and execution of the Company’s transformation initiatives, are included in the transformation costs.
Previous wording
Research, product development costs and regulatory expenses decreased by $815 for the three months ended June 30, 2024, as compared to the same period of 2023. The main drivers were reductions in costs associated with regulatory and product development studies, and with the commercialization of our SIMPAS delivery system.
Current wording
Research, product development costs and regulatory expenses increased by $2,097 for the three months ended September 30, 2024, as compared to the same period of 2023. The main drivers were increase in costs associated with regulatory and product development studies.
Previous wording
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. The Company recorded negative fair value adjustments in the amount of $125 and $55 during the three months ended June 30, 2024 and 2023, respectively.
Current wording
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. The Company did not record a fair value adjustment for the three-month period ended September 30, 20204. During the same period of the prior year, the Company and recorded negative fair value adjustments in the amount of $247 during the three months ended September 30, 2023.
Previous wording
Interest costs net of capitalized interest were $3,917 and $3,211 during the three-month period ended June 30, 2024 and 2023, respectively. Interest costs are summarized in the following table:
Current wording
Interest costs net of capitalized interest were $4,378 and $3,384 during the three-month period ended September 30, 2024 and 2023, respectively. Interest costs are summarized in the following table:
Previous wording
The Company’s average overall debt for the three-month period ended June 30, 2024 was $214,107, as compared to $152,750 for the same period of the prior year. Our borrowings increased primarily as a result of higher inventory levels. As can be seen from the table, the effective bank interest rate on our revolving line of credit was 7.5% and 7.1% for the three-month periods ended June 30, 2024 and 2023, respectively.
Current wording
The Company’s average overall debt for the three-month period ended September 30, 2024 was $209,840, as compared to $200,247 for the same period of the prior year. Our borrowings increased primarily as a result of higher inventory levels. As can be seen from the table, the effective bank interest rate on our revolving line of credit was 8.1% and 7.1% for the three-month periods ended September 30, 2024 and 2023, respectively.
Previous wording
Income tax benefit was $1,553. The effective income tax rate for the three months ended June 30, 2024, was computed based on the estimated effective tax rate for the full year which is approximately 39%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the second quarter was 11.7%. During the three months ended June 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure, which resulted in a decrease in the effective tax rate.
Current wording
Income tax benefit was $7,023 for the three months ended September 30, 2024, as compared to an income tax expense of $885 for the three months ended September 30, 2023. The effective income tax rate for the three months ended September 30, 2024, was computed based on the actual effective tax rate for the year-to-date period ended September 30, 2024 which is approximately 4.3%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the third quarter was 21.4%. During the three months ended September 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure, which resulted in a decrease in the effective tax rate. Additionally, refer to the table below for details comprising the income tax benefit of $7,024 and the overall effective tax rate of 21.4% for the three months ended September 30, 2024.
Previous wording
We generated a loss before provision for income taxes of $13,274 and income $488 for the three months ended June 30, 2024 and 2023, respectively. Our net loss (after income taxes) for the three-month period ended June 30, 2024, was $11,721 or ($0.42) per basic and diluted share, as compared to $1,053 or ($.04) per basic and diluted share in the same quarter of 2023.
Current wording
We generated a loss before provision for income taxes of $32,766 and income $560 for the three months ended September 30, 2024 and 2023, respectively. Our net loss (after income taxes) for the three-month period ended September 30, 2024, was $25,742 or ($0.91) per basic and diluted share, as compared to $325 or ($.01) per basic and diluted share in the same quarter of 2023.
Previous wording
The Company recorded a net loss of $10,169 or ($.36) per basic and diluted share, as compared to net income of $865 or $0.03 per basic and diluted share in the first half of the prior year. Without one-time nonrecurring charges of $10,462, the adjusted net income would be $293 or $0.01 per share. Details on our financial performance are set forth below.
Current wording
The Company recorded a net loss of $35,911 or ($1.28) per basic and diluted share, as compared to net income of $540 or $0.02 per basic and diluted share in the first nine months of the prior year.
Previous wording
On a consolidated basis, gross profit for the six months of 2024 was flat at $80,181, as compared to $81,444 last year. Gross margin performance in 2024 decreased to 30% from 32% compared to the first half of 2023.
Current wording
Gross margin performance in 2024 decreased to 26%, as compared to 31% during the same period of the prior year.
Previous wording
Operating expenses increased by $7,840 to $46,995 for the three-month period ended June 30, 2024, as compared to the same period in 2023. The changes in operating expenses by department are as follows:
Current wording
Operating expenses increased by $15,686 to $129,003 for the nine-month period ended September 30, 2024, as compared to the same period in 2023. The changes in operating expenses by department are as follows:
Previous wording
Other general and administrative expenses increased by $3,396 to end at $25,715 for the six-month period ended June 30, 2024, as compared to the same period of 2023. The main drivers were additional audit and tax advisory services, increased other outside services and changes in transactional foreign exchange gains/losses.
Current wording
Other general and administrative expenses increased by $2,545 to end at $36,660 for the nine-month period ended September 30, 2024, as compared to the same period of 2023. The main drivers were additional audit and tax advisory services, increased other outside services, increased potential credit losses and changes in transactional foreign exchange gains/losses.
Previous wording
During the six-months ended June 30, 2023, the Company spent $541 in fees associated with Proxy activities. There were no similar expenses during the same six-month period this year.
Current wording
During the nine-months ended September 30, 2023, the Company spent $541 in fees associated with Proxy activities. There were no similar expenses during the same nine-month period this year.
Previous wording
Amortization declined slightly during the three months ended June 30, 2024, as compared to the same period of the prior year, as the result of completely amortized assets.
Current wording
Amortization increased slightly during the nine months ended September 30, 2024, as compared to the same period of the prior year, resulting from the addition of intangible assets in connection with the Punto Verde acquisition, largely offset by completely amortized assets.
Previous wording
Legal reserves are contingencies related to certain labor and employment matters.
Current wording
Legal reserves represent the expected settlement related to certain labor and employment matters.
Previous wording
Transformation costs related to the Company’s digital and structural transformation project amounted to $10,462. 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 improvements. The Company has engaged a third-party consulting firm to assist it in navigating the project to gain the maximum benefit at the earliest possible time. Severance costs relating to the Company’s former CEO, which were incurred in connection with the staffing and execution of the Company’s transformation initiatives, are included in the transformation costs.
Current wording
Transformation costs related to the Company’s digital and structural transformation project amounted to $16,636. 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 improvements. The Company has engaged a third-party consulting firm to assist it in navigating the project to gain the maximum benefit at the earliest possible time. Severance costs relating to the Company’s former CEO, which were incurred in connection with the staffing and execution of the Company’s transformation initiatives, are included in the transformation costs.
Previous wording
Research, product development costs and regulatory expenses decreased by $3,978 to end at $14,305 for the six-month period ended June 30, 2024, as compared to the same period of 2023. The costs were reduced by a data compensation settlement and by lower spending associated with related to the commercialization of our SIMPAS proprietary delivery systems.
Current wording
Research, product development costs and regulatory expenses decreased by $1,881 to end at $25,482 for the nine-month period ended September 30, 2024, as compared to the same period of 2023. The costs were reduced by lower spending associated with related to the commercialization of our SIMPAS proprietary delivery systems.
Previous wording
During the six-month period ended June 30, 2024, the Company recorded an increase in the fair value of our equity investment in Clean Seed in the amount of $513, as compared to a decrease of $77 during the six months ended June 30, 2023. These changes in fair value of our investment directly reflect changes in the stock’s quoted market price.
Current wording
During the nine-month period ended September 30, 2024, the Company recorded an increase in the fair value of our equity investment in Clean Seed in the amount of $513, as compared to a decrease of $324 during the nine months ended September 30, 2023. These changes in fair value of our investment directly reflect changes in the stock’s quoted market price.
Previous wording
Interest costs net of capitalized interest were $7,610 in the first six-month period of 2024, as compared to $4,898 in the same period of 2023. Interest costs are summarized in the following table:
Current wording
Interest costs net of capitalized interest were $11,988 in the first nine-month period of 2024, as compared to $8,282 in the same period of 2023. Interest costs are summarized in the following table:
Previous wording
The Company’s average overall debt for the six-month period ended June 30, 2024, was $195,375, as compared to $123,248 for the same period of the prior year. Our borrowings increased as a result of higher inventory levels. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 7.9% for the six months ended June 30, 2024, as compared to 6.9% in 2023.
Current wording
The Company’s average overall debt for the nine-month period ended September 30, 2024, was $200,187, as compared to $149,009 for the same period of the prior year. Our borrowings increased as a result of higher inventory levels. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 8.0% for the nine months ended September 30, 2024, as compared to 7.0% in 2023.
Previous wording
Income tax benefit was $69 for the six months ended June 30, 2024, as compared to an income tax expense of $1,181 for the six-months ended June 30, 2023. The effective income tax rate for the six months ended June 30, 2024, was computed based on the estimated effective tax rate for the full year which is approximately 39%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the six months ended June 30, 2024 was 0.7%. During the six months ended June 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure and beginning to develop options for alternative, more efficient, operating structures and the result was a decrease in the effective tax rate.
Current wording
Income tax benefit was $7,093 for the nine months ended September 30, 2024, as compared to an income tax expense of $2,066 for the nine-months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024, was computed based on the actual; effective tax rate for the year-to-date period ended September 30, 2024 which is approximately 4.3%, excluding discrete items and entities subject to full valuation allowances against related net deferred tax assets. The Company’s subsidiaries in Brazil incurred losses during the period. These losses did not result in any tax benefits as the Brazilian subsidiaries maintain full valuation allowances against their net deferred tax assets. With the inclusion of discrete items and entities subject to full valuation allowances against related net deferred tax assets, the Company’s overall effective tax rate for the nine months ended September 30, 2024 was 16.5%. During the nine months ended September 30, 2024, the Company gained a tax benefit from transformation costs incurred as part of evaluating the current business structure and beginning to develop options for alternative, more efficient, operating structures and the result was a decrease in the effective tax rate. Additionally, refer to the table below for details comprising the income tax benefit of $7,093 and the overall effective tax rate of 16.5% for the nine months ended September 30, 2024.
Previous wording
We incurred a loss before provision before income taxes of $10,238 for the six months ended June 30, 2024, as compared to income before taxes of $2,046 for the six months ended June 30, 2023. Our net loss (after income taxes) for the six-month period ended June 30, 2024 was $10,169 or ($0.36) per basic and diluted share, as compared to income of $865 or $0.03 per basic and per diluted share in the same period of 2023. Without one-time, nonrecurring charges of $10,462, the adjusted net income would be $293 or $0.01 per share.
Current wording
We incurred a loss before income taxes of $43,004 for the nine months ended September 30, 2024, as compared to income before taxes of $2,606 for the nine months ended September 30, 2023. Our net loss (after income taxes) for the nine-month period ended September 30, 2024 was $35,912 or ($1.28) per basic and diluted share, as compared to income of $540 or $0.02 per basic and per diluted share in the same period of 2023.
Previous wording
The Company’s operating activities utilized net cash of $56,452 during the six-month period ended June 30, 2024, as compared to $96,602 during the six months ended June 30, 2023. Included in the $56,452 are net loss of $10,169, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of $11,093, and provision for bad debts in the amount of $883, change in deferred income taxes of $276 and changes in liabilities for uncertain tax positions or unrecognized tax benefits of $71. Also included are stock-based compensation of $2,752, change in fair value of an equity investment of $513, and net foreign currency adjustments of $376. These together provided net cash inflows of $3,932, as compared to $15,670 for the same period of 2023.
Current wording
The Company’s operating activities utilized net cash of $29,402 during the nine-month period ended September 30, 2024, as compared to $145,854 during the nine months ended September 30, 2023. Included in the $29,402 are a net loss of $35,911, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of $17,143, and provision for bad debts in the amount of $1,278, change in deferred income taxes of $9,110 and changes in liabilities for uncertain tax positions or unrecognized tax benefits of $106. Also included are stock-based compensation of $3,887, change in fair value of an equity investment of $513, and net foreign currency adjustments of $121. These together provided net cash outflows of $22,889, as compared to a net cash inflows $23,793 for the same period of 2023.
Previous wording
During the six-month period of 2024, the Company increased working capital by $49,375, as compared to an increase of $110,845 during the same period of the prior year. Included in this change: inventories increased by $25,962, as compared to $50,900 for the same period of 2023. While increases in inventories are normal for the Company’s annual cycle, this year the Company has seen distinct changes in buying patterns across its global markets as customers are pushing back purchase close to time of use as they manage working capital and interest expense. In response the Company has worked hard to hold inventory levels down including holding down manufacturing output.
Current wording
During the nine-month period of 2024, the Company decreased working capital by $1,725, as compared to an increase of $160,094 during the same period of the prior year. Included in this change: inventories increased by $29,429, as compared to $58,163 for the same period of 2023. While increases in inventories are normal for the Company’s annual cycle, this year the Company has been successful at adjusting manufacturing output to better reflect customer changing buying patterns and have seen inventories rise at a slower rate as a result. We are now positioned to see inventories decline towards our year-end target.
Previous wording
Customer prepayments decreased by $53,468, as compared to $83,225 in the same period of 2023, driven by customer decisions regarding the amount of prepayments they made during the final quarter of 2023, and by purchase orders received from those customers during the first two quarters and the product mix and payment terms on those purchase orders. Our accounts payable balances increased by $29,776, as compared to $9,105 in the same period of 2023, reflecting both the timing and terms of the related purchase orders. Accounts receivables increased by $13,498, as compared to a decrease of $6,092 in the same period of 2023. This is primarily driven by the amount of customers prepayments (which reduced), and the timing of customer demand and the geographic location for the sales. Prepaid expenses increased by $3,078, as compared to $1,749 in the same period of 2023. Income tax receivable changed by $7,129 as compared to $3,510 in the prior year. Accrued programs increased by $18,209, as compared to $19,607 in the prior year, driven by changes in mix of sales (products attract different program arrangements) and lower sales in our US Crop business (which is the main driver from programs). Finally, other payables and accrued expenses decreased by $1,665, as compared to an increase of $7,824 in the prior year.
Current wording
Customer prepayments decreased by $38,375, as compared to a decrease of $104,590 in the same period of 2023. This included customer decisions to make prepayments amounting to $57,000 during the three months ended September 30, 2024, and by purchase orders received from those customers during the first nine months of 2024 and the product mix and payment terms on those purchase orders. Our accounts payable balances increased by $6,141, as compared to $1,240 in the same period of 2023, reflecting both the timing and terms of the related purchase orders. Accounts receivables decreased by $33,475, as compared to an increase of $29,055 in the same period of 2023. This is primarily driven by the amount of customers prepayments (which reduced), and the timing of customer demand and the geographic location for the sales. Prepaid expenses increased by $4,107, as compared to $633 in the same period of 2023. Income tax receivable increased by $6,216 as compared to an increase of $4,046 in the prior year. Accrued programs increased by $17,721, as compared to $29,779 in the prior year, driven by changes in mix of sales (products attract different program arrangements) and lower sales in our US Crop business (which is the main driver from programs). Finally, other payables and accrued expenses increased by $13,878, as compared to a decreased of $4,406 in the prior year.
Previous wording
Accrued program costs are recorded in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30 thof each year. During the first six months of 2024, the Company made accruals for programs in the amount of $44,633 and payments in the amount of $26,615, resulting in a net increase in accrued program costs of $18,018. During the first six months of the prior year, the Company made accruals in the amount of $44,714 and made payments in the amount of $25,124, resulting in a net increase of accrued program costs of $19,607. The accruals for programs in the first six months of 2024 remains flat, as compared to prior year.
Current wording
Accrued program costs are recorded in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30 thof each year. During the first nine months of 2024, the Company made accruals for programs in the amount of $55,455 and payments in the amount of $37,866, resulting in a net increase in accrued program costs of $17,721. During the first nine months of the prior year, the Company made accruals in the amount of $62,248 and made payments in the amount of $32,469, resulting in a net increase of accrued program costs of $29,779.
Previous wording
Cash used for investing activities for the six-month period ended June 30, 2024, and 2023 was $6,398 and $7,172, respectively. In 2024, the Company spent $4,944 on purchases of fixed assets primarily focused on continuing to invest in manufacturing infrastructure, as compared to $6,498 for the same period of prior year. The Company made a payment of $1,529 for a product acquisition. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of $755, as compared to $44 in the prior year.
Current wording
Cash used for investing activities for the nine-month period ended September 30, 2024, and 2023 was $6,828 and $9,148, respectively. In 2024, the Company spent $6,106 on purchases of fixed assets primarily focused on continuing to invest in manufacturing infrastructure, as compared to $8,589 for the same period of prior year. The Company made a payment of $788 for a product acquisition for the nine-month period ended September 30, 2024, as compared to $759 for the same period in prior year. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of $66, as compared to $200 in the prior year.
Previous wording
During the six months ended June 30, 2024, financing activities provided $70,285, as compared to $98,086 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $72,354 during the six-month period ended June 30, 2023, as compared to $108,450 in the same period of the prior year. The Company paid dividends to stockholders amounting to $1,670 during the six months ended June 30, 2024, as compared to $1,702 in the same period of 2023. During the six-month period ended June 30, 2023, the Company paid $7,226 for the repurchase of 408,201 shares of its common stock. The Company did not repurchase shares during the six-month period ending June 30, 2024. The Company received $430 for the issuance of ESPP shares and exercise of stock options for the six months ended June 30, 2024, as compared to $512 for the same period in prior year. Lastly, in exchange for shares of common stock returned by employees, the Company paid $829 and $1,948 for tax withholding on stock-based compensation awards during the six months ended June 30, 2024 and 2023, respectively.
Current wording
During the nine months ended September 30, 2024, financing activities provided $36,824, as compared to $146,680 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $39,849 during the nine-month period ended September 30, 2023, as compared to $165,700 in the same period of the prior year. The Company paid dividends to stockholders amounting to $2,510 during the nine months ended September 30, 2024, as compared to $2,550 in the same period of 2023. During the nine-month period ended September 30, 2023, the Company paid $15,539 for the repurchase of 885,290 shares of its common stock. The Company did not repurchase shares during the nine-month period ending September 30, 2024. The Company received $901 for the issuance of ESPP shares and exercise of stock options for the nine months ended September 30, 2024, as compared to $980 for the same period in prior year. Lastly, in exchange for shares of common stock returned by employees, the Company paid $1,416 and $1,957 for tax withholding on stock-based compensation awards during the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
At June 30, 2024, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $21,245, compared to $115,002 as of December 31, 2023.
Current wording
At September 30, 2024, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $44,716, compared to
Previous wording
On April 9, 2024, out of an abundance of caution, the Company voluntarily suspended sales of Dacthal pending review and potential approval of a significantly narrower label submitted to the USEPA (refer to Note 12 to the condensed consolidated financial statements for further details). The Company performed an interim test for goodwill impairment in April 2024, conservatively excluding all Dacthal sales from its projected net sales. Based on the results of this quantitative test, the Company concluded that the fair value of both the domestic and international reporting units still exceed their respective carrying value by 11% and 6%, respectively.
Current wording
On April 9, 2024, out of an abundance of caution, the Company voluntarily suspended sales of Dacthal pending review and potential approval of a significantly narrower label submitted to the USEPA (refer to Note 12 to the condensed consolidated financial statements for further details). The Company performed an interim test for goodwill impairment in April 2024, excluding all Dacthal sales from its projected net sales. Based on the results of this quantitative test, the Company concluded that the fair value of both the domestic and international reporting units still exceed their respective carrying value by 11% and 6%, respectively.
Previous wording
The carrying value of both reporting units is mainly sensitive to discount rates, the projected net sales growth rates, gross margin improvements, and terminal growth rates. Negative deviations from the Company’s projections and assumptions used in its quantitative impairment test may result in an impairment. As of June 30, 2024, goodwill related to the domestic and international reporting units amounted to $9,132 and $39,746, respectively.
Current wording
The carrying value of both reporting units is mainly sensitive to discount rates, the projected net sales growth rates, gross margin improvements, and terminal growth rates. Negative deviations from the Company’s projections and assumptions used in its quantitative impairment test may result in an impairment. As of September 30, 2024, goodwill related to the domestic and international reporting units amounted to $9,132 and $38,880, respectively.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
During the three-months ended June 30, 2023, the Company spent $541 in fees associated with its proxy activities. There were no similar expenses during the same three-month period this year.
Previous report — wording carried elsewhere
Operating expenses increased by $8,899 to $83,322 for the six-month period ended June 30, 2024, as compared to the same period in 2023. The changes in operating expenses by department are as follows: