AMERICAN VANGUARD CORP

Unless otherwise indicated or the context otherwise requires, the terms “Company,” “we,” “us,” and “our” refer to American Vanguard Corporation and its consolidated subsidiaries (“AVD”).

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. Generally, “may,” “could,” “will,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue” and similar words identify forward-looking statements. Forward-looking statements appearing in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources given that interest rate and inflation affect the debt market; the impact of, and our ability to, remediate the identified material weaknesses in our internal controls over financial reporting; and general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Security and Exchange Commission (“SEC”). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this report. You should evaluate all forward-looking statements made in this Form 10-K in the context of the risks and uncertainties disclosed in Part I, Item 1A of this Form 10-K under the heading "Risk Factors," in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in Item 7A "Quantitative and Qualitative Disclosures About Market Risk."

The forward-looking statements included in this Form 10-K are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

All dollar amounts reflected in the consolidated financial statements are expressed in thousands, except per share data.

Strategic Direction and Major Initiatives

During 2024, AVD took decisive and necessary measures to transform its entire enterprise into a platform for stronger growth and profitability. Leading up to 2024, it had become increasingly clear that while the Company had successfully grown in size and geographical reach through several years of acquisition activity, its operating leverage had eroded in the process. This, in turn, caused management and the board to take a close look at the consolidated enterprise with the goal of returning to higher EBITDA margins, achieving greater efficiency and laying the foundation for growth. To that end, the Company invested its resources by engaging outside consultants to study the business in depth and to map out a plan for transformation. Through these collective efforts, the Company defined a blueprint for success including both business transformation (e.g., driving down supply chain cost, optimizing manufacturing, establishing strategic go-to-market approach and structural reorganization). In addition, we are working with ERP provider QAD, to establish a robust, digital platform (to place the global business on a single platform, with standardized processes to support well-informed planning and business management). The vast majority of business transformation expenses were incurred in 2024. In subsequent years, the Company will be advancing the implementation plan largely through internal resources.

In the interest of expediting these transformation efforts, AVD recruited and hired a new CEO, Douglas A. Kaye III, in mid-December 2024. Mr. Kaye brings extensive experience in the crop protection industry, a keen business acumen and strong relationships with the Company's customers. Under Mr. Kaye's leadership, while establishing a new organizational structure, AVD has added experienced senior executives to newly created positions in supply chain and strategy roles to ensure sustainable, efficient operations and to help expand through new product launches while engendering a culture of accountability to KPIs captured in the mantra "simplify, execute and deliver".

Further, in the course of its assessment of development projects, investments, inventory trends and sales by product line, the Company identified a number of assets that have not maintained their current or future value and, under applicable accounting principles, are considered to be impaired. Chief among these assets is the Company's SIMPAS precision application technology, the adoption of which, after having improved modestly in prior years, came to a virtual halt in 2024. While SIMPAS has attained full functionality among current users, the Company has concluded that it is not positioned to commercialize this technology more broadly and cannot justify continued, significant investment. Similarly, AVD has concluded two herbicide products purchased in 2019 are impaired, their markets having largely evaporated. Taken together, nonrecurring charges including business transformation expenses, the impairment of the investment in SIMPAS, costs of voluntarily canceling Dacthal, goodwill and intangible assets impairment, inventory write downs, and certain other expenses during 2024 totaled $117,355. With these expenses behind us, the Company is moving with speed and intention to realize the substantial benefits of transformation and to return greater value to shareholders, as the new CEO leads the Company toward greater operational efficiency, growth and beneficial change.