AMERICAN VANGUARD CORP
For the period ended Dec 31, 2025. Filed Mar 16, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 16, 2026
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-K
Period ended 2024-12-31; filed 2025-05-29.
0000950170-25-078615
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-16.
0001193125-26-108593
Item 7. 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 62 previous paragraphs and 65 current paragraphs.
19 unchanged; 24 reworded; 22 added; 19 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 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 (22)
Current report
For the discussion and analysis of our financial condition and results of operations, as well as cash flows, for 2024, as compared to 2023, please see “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2024, which was filed with the U.S. Securities and Exchange Commission on May 29, 2025.
Current report
Despite a challenging economic backdrop, we believe, American Vanguard has improved in the areas that are under management’s direct control. The Company is improving its procurement process through the implementation of advanced software systems and the recruitment of industry leading executives. This has led to higher gross profit margins, as compared to 2024, which are expected to further improve over the medium term, as additional refinements to our systems and processes take place. Management has also made substantial improvements to its operating cost structure and through initiatives that have already been announced, such as its decision to streamline our corporate structure by removing the international BV from our management structure, rationalizing and enhancing its IT systems and by making the decision to move its corporate headquarters. These and a number of other initiatives are expected to see further costs taken out of this category over the coming quarters.
Current report
While the management team has made meaningful progress implementing its business improvement initiatives, the agriculture economy is still in the midst of a cyclical downturn. Agricultural commodity prices remain near historically low levels as uncertainty remains around forecasted agricultural commodity inventory levels and crop acreage. Customer inventories now appear to be at low levels and during the second half of 2025 material that was being consumed in the field appeared to match purchasing patterns. Thus, it is likely that destocking has substantially run its course. Given the current economic uncertainty, it is unlikely that we will see a strong push to rebuild inventory, but an end to destocking would be a positive for the industry and the first step in an eventual cyclical upturn.
Current report
Turning to financial performance, the Company’s 2025 net sales declined, while gross profit margin and net loss improved, as compared to 2024, due, in part, to the management team’s business improvement plan. Net sales declined by approximately 6% during 2025, with domestic net sales remaining flat, while international net sales declining by 14%. Weakness in the international segment can be attributed to a prolonged severe drought in key markets in Australia and lower granular soil insecticide sales in Mexico, significantly impacted by excessive channel inventory.
Current report
Initiatives undertaken as part of the Company's business improvement plan resulted in reduced cost of sales in 2025 (71% of net sales) vs. 2024 (78% of net sales). The improvements are the result of lower reserves for slow moving and obsolete inventory in 2025 vs. 2024, and a significant improvement in our approach to strategic procurement driving lower raw material costs. In 2025, we recorded approximately $3,802 in inventory reserves as compared to $21,417 in 2024.
Current report
Operating expenses decreased by 21% in 2025, as compared to 2024. The Company spent significantly less on transformation and incurred lower asset impairment charges during 2025, as compared to 2024. In addition, Management continued its focus on containing selling, general and administrative expenses and decreased its research, product development and regulatory expense. The benefits from these efforts were partially offset by expenses related to product liability claims.
Current report
With continued comparative lower net sales and higher inventory level, the Company’s average indebtedness remained flat with the prior year at $194,669 as compared to $195,160, during 2024. Interest expenses was up slightly as a result of increased in effective interest rates and additional loan amendment origination fees .
Current report
Net sales of our U.S. crop business were 3% lower than those of the prior year. The primary areas of weakness were soil fumigants and granular soil insecticides. Fumigants were negatively impacted by weakness in the potato market, where farmers are planting fewer acres in response to a weak demand and pricing environment. This weakness was partially offset by strength in the herbicide segment where the company benefited from a full year of sales of a recently introduced product, Zalo, and strong demand for our Impact product line, the company’s broad-based herbicide used on corn crops.
Current report
Net sales of our U.S. non-crop business were 10% higher than the previous year. This improvement was driven by revenue recognized from a business-to-business technology licensing agreement in the amount of $11,250, partially offset by a decline in our nursery and ornamental business.
Current report
Net sales of our International businesses were 14% lower than the previous year. International sales were impacted by drought conditions in Australia, which led to low molluscicide sales. Our Mexican business saw weakness in net sales due to slower demand, as a result of channel inventory. On the other hand, biological net sales were an area of strength in our international business.
Current report
Overall costs of sales decreased by 14% across our U.S. crop, U.S. non-crop and International. The decreases resulted from improved strategic actions to manage raw material and manufacturing costs. Furthermore, in 2025 the Company identified certain items of slow moving or potentially obsolete inventories and took reserves in the amount of $3,802 to reduce those inventory items to net realizable value. In comparison, in 2024, the Company recorded reserves of $21,417.
Current report
Selling expenses decreased by $3,304 for the year ended December 31, 2025, as compared with the prior year. This was mainly associated with actions implemented to streamline our global commercial team and to improve effectiveness, including tight controls on advertising and promotions and other short term controllable costs.
Current report
Other general and administrative expenses decreased by $3,296, primarily associated with reduced headcount across the global business as we streamlined the organization.
Current report
Amortization declined as compared to prior year, as the result of assets that were retired during 2025 or were fully impaired at the end of 2024.
Current report
In 2024, the Company recorded a reserve for a legal settlement. There was no similar legal matter in 2025.
Current report
Research, product development and regulatory expenses decreased by $9,501 for the year ended December 31, 2025, as compared to 2024. This is the result of improved resource management and cost controls focused on regulatory and product development studies, and by the decision to not further invest in the SIMPAS delivery system.
Current report
In 2025, the Company recorded a charge of $9,730 related to product liability claims primarily associated with its non-crop business. There was no similar matter in the prior year.
Current report
Transformation costs related to the Company’s digital and structural transformation project reduced dramatically, as expected, and ended at $7,187, as compared to $20,162 in the prior year. The Company expects that these costs will continue to decline in 2026.
Current report
Asset impairments of $25,395 include the impairment of the remaining goodwill of our international business in the amount of $21,040 as a result of changes in discount rate assumptions that were essentially general economic adjustments rather than changes in the expected future performance of the international businesses, PCNB related intangible assets in the amount of $1,668 and PCNB related manufacturing equipment in the amount of $2,459. During 2024, the Company took impairment charges in the amount of $50,414 primarily associated with impairment charges associated with goodwill, the determination that its investment in SIMPAS technology was impaired and with other intangible assets.
Current report
On August 18, 2025, AMVAC, as borrower, and affiliates (including Registrant), as guarantors and/or borrowers, entered into Amendment Number Twelve (the “Amendment”) to the Credit Agreement. The Amendment extended the maturity date of the Credit Agreement from August 5, 2026, to December 31, 2026, and amended the borrowing capacity under the revolving credit facility to $245,000 through November 29, 2025, then $225,000 until December 30, 2025, then $200,000 until March 31, 2026 and then $180,000 through December 31, 2026. The Amendment also included additional changes to the Credit Agreement, including: (i) amending the applicable margins for the applicable interest rates and unused line fee and letter of credit fee; (ii) adding a year-to-date Consolidated EBIDTA requirement of $4,500 as of June 30, 2025, $9,500 as of September 30, 2025 and $35,000 as of December 31, 2025 and a TTM Consolidated EBITDA requirement of not less than $37,500 as of March 31, 2026; (iii) requiring the Company to make prepayments on the loans once the Company’s cash balance exceeds a threshold; and (iv) suspending the Total Leverage Ratio covenant until June 30, 2026 and then applying a fiscal quarter end ratio of 4.00:1.00.
Current report
On March 13, 2026, AMVAC, as borrower, and affiliates (including the Company), as guarantors, entered into two loan agreements that, in effect, entirely refinanced the previously existing Credit Agreement. The first is a Credit and Guaranty Agreement with Wilmington Trust, National Association, as administrative agent, and a group of lenders led by Centerbridge Partners, L.P., under the terms of which lenders provide a senior, secured term loan in the aggregate principal amount of $225,000 (the "First Priority Term Loan"). The First Priority Term Loan includes a five-year term, initial interest at SOFR (minimum of 3.0%) + 8.25 (with three potential stepdowns of 50bps each upon achievement of 1X, 1.5X and 2.0X inside closing net leverage ratio), amortization of 1.0% per annum, a no-call provision in year one (with potential for full repayment thereafter with additional exit fees), and two financial covenants - namely, a) a first lien debt-to-EBITDA ratio starting at 6.7X and stepping down to 4.0X in the fourth quarter of 2028, and b) a minimum liquidity requirement ranging from $20,000 to $45,000 on a monthly schedule through the fourth quarter of 2027 and increasing to $50,000 in January of 2028 and thereafter. Borrower may repay up to $35,000 per annum without incurring premium interest.
Current report
The second is a Credit and Guaranty Agreement with BMO Bank, N.A., as agent, and other lenders, under the terms of which lenders provide a second priority term loan in the aggregate principal amount of $60,000 (the "Second Priority Term Loan"). The Second Priority Term Loan is subordinate to the First Priority Term Loan, includes a five-year term, initial interest at SOFR + 2.0, amortization of 10% per annum starting in Q3 2027, no prepayment penalty and no financial covenants.
Removed paragraphs (19)
Previous report
Turning to financial performance, the Company’s overall performance in 2024 declined as compared to 2023 due in part to the uneven impact of nonrecurring charges as described in the immediately preceding paragraph and in part to persistently low commodity prices and high input costs which negatively impacted the agricultural economy. Supply chains are beginning to normalize, but given the current economic backdrop it may be some time before consumers are inclined to meaningfully increase their inventory levels. Some pockets of strength are present, with biofertilizers, biostimulants and biochemicals growing much faster than the broader agricultural economy. The Company has made significant investment in these areas of growth, has benefited from this investment and expects to do so in the future. Across the broader agricultural economy, the company expects a gradual recovery looking forward from 2024, during which channel inventory was higher-than-historically normal.
Previous report
Within this context, the Company experienced a drop in overall sales of approximately 5% during 2024, with domestic sales down 9% and international sales increasing by 1%. Most of the underperformance in sales was driven by two factors - a 40% drop in sales of the granular insecticide Aztec following unusually high sales in the prior year as a result of a period of product unavailability, and the impact of the voluntary cancellation and recall of the herbicide Dacthal.
Previous report
Cost of sales remained high, increasing by 7% to end at 78% of net sales. The increase is attributed to the impact of the Dacthal recall which resulted in approximately $12,200 in credits to customers and $3,153 in inventory write downs and disposal costs, the decision to record additional reserves in the amount of $21,417 regarding obsolete and slow-moving inventories resulting from the Company's strategic review of its product portfolio to identify areas that were not positively contributing to generating shareholder value. and, where relevant, the estimated disposal costs. Further, the Company experienced some pockets of generic pressure in our international markets resulting in lowering prices to maintain market position. In addition, the Company incurred higher raw material costs as a result of inflationary pressure on raw material input prices. Finally, factory performance generated a higher net expense, as compared to 2023, as the Company worked to manage inventory levels in the face of market destocking activity. As a result, gross margin dropped to 22% in 2024 from 31% as compared to the prior year.
Previous report
Operating expenses rose by about 42% in 2024, as compared to 2023, due primarily to certain non-cash asset impairment charges and our digital and structural transformation strategy. Primarily as a result of the nonrecurring impairment charges, operating expenses rose as a percentage of net sales to 40% in 2024, as compared to 27% in 2023.
Previous report
With continued comparative lower sales and higher inventory level, during 2024, the Company’s average indebtedness increased to $195,160, as compared to $167,976 during 2023 and, coupled with higher interest rates, interest expense for the year rose. Net sales improved in the fourth quarter and, coupled with customer prepayment activity, enabled the Company to reduce inventory and indebtedness by December 31, 2024.
Previous report
Net sales of our U.S. crop business were 15% lower than those of the prior year. The three key factors driving performance lower were the recall of Dacthal, lower sales of Aztec and lower agriculture acreage planted. During 2024, the Company halted manufacturing and then voluntarily cancelled the product registration for Dacthal following USEPA's preliminary findings of a potential adverse effect based upon a single study. The product recall associated with this cancellation negatively impacted 2024 revenue and profitability. With respect to Aztec, customer purchases exceeded end-user demand in 2023, and these customers worked down excess inventory in 2024, negatively impacting sales of this high-margin product. We expect demand patterns for Aztec to normalize over 2025. Further, negatively impacting results were the number of agriculture acres planted, as compared to 2023, with corn acres 4% lower than the prior year. Weak agricultural commodity prices, leading to lower farm net-income, were the reason that fewer acres were planted in 2024.
Previous report
Net sales of our U.S. non-crop business were 9% higher than those of the previous year. This improvement was driven by our business-to-business technical sales, along with growth in mosquito vector solutions. The company expects the non-crop business to continue to grow over the coming quarters driven by business-to-business gains and growth across all segments.
Previous report
Net sales of our International businesses were 1% higher than those of the previous year. Granular soil insecticides sales, our largest international product category, exhibited strength, increasing by 10% as compared to the prior period, while herbicide sales decreased by approximately 27%. Generic crop protection products continued to create a difficult pricing environment for many of our products, and results were negatively impacted near the year-end by strength in the U.S. Dollar and the attendant effect of foreign currency exchange.
Previous report
Overall costs of sales increased by 7% across our U.S. crop, U.S. non-crop and International. The increased cost of sales can be attributed to elevated raw material prices, which were fueled by broad-based inflationary pressures. In addition, as part of its strategic review, the Company has completed a comprehensive assessment of its inventories and determined that a number of items are either obsolete or slow moving and has taken a write down of $21,417 to reflect the net realizable value of these items.
Previous report
Selling, general and administrative expenses increased to end at $106,295 for the year ended December 31, 2024, as compared to $103,605 in 2023. Included within this expense, the Company's leadership team made the decision to pay a modest bonus to all employees as a recognition of the steadfast support for the Company’s transformation efforts during a challenging year.
Previous report
Amortization ended the year at $13,339 which was slightly up in comparison to the prior year and included accelerated amortization of $179 associated with two small assets.
Previous report
Research, product development and regulatory expenses decreased by 13% to $32,662 in 2024, as compared to $38,025 in 2023. The costs were reduced by lower spending as the Company made the decision to stop investing in the development and commercialization of the SIMPAS proprietary delivery systems.
Previous report
Transformation cost of $20,162 relate to the Company’s digital and structural transformation project. The digital transformation effort is intended to ensure that business process owners have access to current and complete data that has been generated through standardized processes. The structural transformation effort is intended to improve operating leverage by applying business analytics to current operations, structures, products and services. Included in these costs, the Company made the decision that it was necessary to recruit a new CEO to drive the business transformation. During 2024, third party consultants were engaged by the Company to assist it in navigating the project to gain the maximum benefit at the earliest possible time.
Previous report
Asset impairments of $50,414 includes costs associated with the Company’s determination that its investment in its SIMPAS technology is impaired. The impairment impacted fixed and intangible assets and resulted in a non-cash charges of $17,683. In addition, the Company recorded non-cash impairment charges related to its domestic and international goodwill assets in the amount of $27,049. Secondly, the Company concluded that there was an asset impairment related to the purchase of two herbicide products. The market for these two products has been greatly reduced by weed resistance and competitive products. As such, the Company has decided to no longer market the product, and recorded a non-cash impairment charge of $5,682.
Previous report
On November 7, 2023, the Company entered into Amendment Number Six to the Third Amended Loan and Security Agreement that provided relief in respect of both financial covenants. On August 8, 2024, the Company and the lenders entered into Amendment Number Seven to the Credit Agreement, effective June 30, 2024, under which the Maximum Total Leverage Ratio was modified to 4.25 for the period ended June 30, 2024; 5.0 for the period ended September 30, 2024; 4.5 for the period ended December 31, 2024, 4.5 for the period ending March 31, 2025, 4.25 for the period ending June 30, 2025; 4.0 for the period ending September 30, 2025, and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The Minimum Fixed Charge Coverage Ratio remains the same, and a new covenant (added as part of Amendment Number seven), the Minimum Modified Current Ratio of not less than 1.5 (defined as the ratio of (i) Accounts Receivable plus Inventory, to (ii) Funded Debt of the Company and its Subsidiaries on a consolidated basis). In addition, the Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent. In addition, for purposes of calculating Consolidated EBITDA, the basket for transformation and one-time (cash and non-cash charges (which are excluded from such measure) has been increased from $5,000 to $12,500 in second quarter 2024, $45,000 (in third quarter 2024, fourth quarter 2024 and first quarter 2025), $42,500 in second quarter 2025, $15,000 in third quarter 2025 and $7,500 in fourth quarter 2025, as measured on a four-quarter trailing basis. Finally, the interest rates for the Credit Agreement, as amended, were increased by 25bps to the extent the Total Leverage Ratio equals or exceeds 4.0 and remains at the rates set forth in the Amendment Number Six to the extent the Total Leverage Ratio is below 4.0.
Previous report
On March 12, 2025, the Company entered into Amendment Number Eight to the Third Amended Loan and Security Agreement that provided relief in respect of both financial covenants, under which the Maximum Total Leverage Ratio was modified to 6.25 for the period ending March 31, 2025; 6.25 for the period ending June 30, 2025; 5.75 for the period ending September 30, 2025 and returning to 3.25 for the periods ending December 31, 2025 and thereafter. The Minimum Fixed Charge Coverage Ratio is changed to 1.15 for the period ending March 31, 2025, and returning to 1.25 for the period ending June 30, 2025 and thereafter. In addition, the Applicable Margins for the Revolver Loans are changed to 3.75% for SOFR and 2.75% as the Adjusted Base Rate; the Unused Line Fee Rate is 0.35% and the Letter of Credit Fee is 3.75%. Further, notwithstanding financial performance, the borrowing capacity is capped below the facility’s previous maximum ($275,000) by $50,000 through June 30, 2025, then by $40,000 through December 31, 2025, and then by $75,000 through the expiration of the facility. Finally, the definition of Consolidated EBITDA was changed to exclude non-recurring non-cash charges as well as cash charges that do not exceed various sums in various categories over the balance of the term.
Previous report
On May 27, 2025, the Company and the lenders entered into Amendment Number Eleven to the Third Amended Loan and Security Agreement, under which events of default arising from the failure of Borrowers to be in compliance with both the Total Leverage Ratio and the Fixed Charge Coverage Ratio as of March 31, 2025, were waived. In addition, the Total Revolver Commitment was reduced from $275,000 to the following: $245,000, effective from the Closing Date through November 29, 2025; $225,000 effective from November 30, 2025, through December 30, 2025; and $200,000 from December 31, 2025, through the expiration of the agreement. In addition, the due date for audited fiscal year-end financial statements was extended to one hundred fifty-seven (157) days (after the end of the fiscal year) for 2025 only, and the due date for first quarter financial statements was extended to sixty-seven (67) days after March 31, 2025. In addition, the Maximum Total Leverage Ratio covenant was suspended for the quarters ending on June 30, 2025, September 30, 2025, and December 31, 2025, and set at 4.00 to 1.00 for the quarter ending March 31, 2026, and thereafter. Further, the Fixed Charge Coverage Ratio covenant was suspended for the quarter ending June 30, 2025, then set at 1.00 to 1.00 for the quarter ending September 30, 2025, then set at 1.25 to 1:00 for the quarter ending December 31, 2025, and thereafter.
Previous report
In addition, under the terms of the Eleventh Amendment, two new covenants were added. First, commencing June 30, 2025, Borrowers must maintain Liquidity measured on a monthly basis of not less than: $30,000 for the month ending June 30, 2025; $35,000 for the month ending July 31, 2025; $4,042 for the month ending August 31, 2025; $25,000 for the month ending September 30, 2025; $3,000 for the month ending October 31, 2025; $9,292 for the month ending November 30, 2025; and $20,000 for the month ending December 31, 2025, it being understood that Liquidity will include the sum of Borrowers’ cash, plus 50% of cash held in accounts outside of the U.S. plus the amount by which the revolver commitments exceed the revolver balance (net of letters of credit). Second, Borrowers must attain minimum, year-to-date Consolidated EBITDA (reflecting the exclusion of non-recurring non-cash charges and certain other charges as per the Eighth Amendment) as measured quarterly in the following amounts: $4,500 as of June 30, 2025; $9,500 as of September 30, 2025; and $35,000 as of December 31, 2025. With these changes, with respect to Revolver Loans, the Applicable Margins for SOFR are set at 3.75% from the Closing through September 30, 2025, and then rises to 4.75% as of October 1, 2025, and thereafter, while the Adjusted Base Rate increases to 2.75% and 3.75% during those respective periods.
Previous report
At December 31, 2024, by virtue of Amendment Number Eight to the Third Amended Loan and Security Agreement, the Company is deemed to be in compliance with its financial covenants. According to the terms of the Credit Agreement and based on our performance against the most restrictive covenant, the Company had the capacity to increase its borrowings by up to $28,623, as compared to $115,002 as of December 31, 2023. Furthermore, at December 31, 2024, the Company’s leverage, as defined in the credit facility agreement was 3.57. Under the terms of the latest amendment to the credit facility agreement, currently, the Company may not repurchase shares, pay cash dividends to shareholders or make Permitted Acquisitions without Lenders’ consent.
Reworded paragraphs (24)
Previous wording
The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. Generally, “may,” “could,” “will,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue” and similar words identify forward-looking statements. Forward-looking statements appearing in this Report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; tariffs on imported goods; the potential for attaining the full benefits of our transformation initiatives; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; the impact of, and our ability to remediate, the identified material weaknesses in our internal controls over financial reporting; and general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Security and Exchange Commission (“SEC”). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Report.
Current wording
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, including those set forth in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K. The information contained in this section should also be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Annual Report on Form 10-K. See also “Forward-Looking Statements” immediately prior to Part I, Item 1, “Business” in this Annual Report on Form 10-K.
Previous wording
On a full-year basis, the Company generated net loss of $126,340 (or $4.50 per share), as compared to generating a net income of $7,519 (or $0.26 per share) during 2023. Details of our financial performance are set forth below.
Current wording
On a full-year basis, the Company generated a net loss of $49,882 (or $1.75 per share) in 2025, as compared to a net loss of $126,340 (or $4.50 per share) during 2024. Details of our financial performance are set forth below.
Previous wording
Operating expenses increased by $66,003 in 2024 to $221,872, as compared to $155,869 in 2023. The differences in operating expenses by department are as follows:
Current wording
Operating expenses decreased by $46,015 in 2025 to $175,857, as compared to $221,872 in 2024. The differences in operating expenses by department are as follows:
Previous wording
During 2024, AVD took decisive and necessary measures to transform its entire enterprise into a platform for stronger growth and profitability. First, the Company engaged third party consultants to initiate a business transformation on multiple fronts (e.g., driving down supply chain cost, optimizing manufacturing, establishing strategic go-to-market approach and structural reorganization). These transformation efforts are expected to yield substantial benefits by 2026. Second, working with ERP provider QAD, the Company initiated a global-wide digital transformation to put all our businesses on one ERP platform with standardized processes. Third, the Company recruited and hired a new CEO to help expedite the transformation, following a charge to "simplify, execute and deliver." Fourth, in the process of examining its investments, inventory trends and assets, the Company concluded that certain assets - primarily, the Company’s investment in SIMPAS, and two herbicide products - were impaired. Taken together with the goodwill impairment, various business transformation related expenses, the expenses associated with the decision to voluntarily recall Dacthal products, and certain inventory write downs, the Company incurred nonrecurring charges of $117,355 during 2024. That said, the vast majority of business transformation expenses were incurred in 2024, and in subsequent years, the Company will be advancing the implementation plan largely through internal resources. Further, the Company proceeds into 2025 with an improved balance sheet and strong, focused leadership for realizing the benefits from our transformation efforts.
Current wording
AVD undertook a strategic initiative to transform its entire enterprise into a platform for stronger growth and profitability. The Company engaged third party consultants to initiate a business transformation on multiple fronts (including supply chain cost, optimizing manufacturing, establishing strategic go-to-market approaches and a structural reorganization). We believe these transformation efforts will yield substantial benefits by 2026. The Company also initiated a Company-wide digital transformation across all of our geographies including a uniform ERP platform with standardized processes. Third, the Company recruited and hired a new CEO tasked with leading the transformation project. The following table shows the different components of the transformation expense for the years ended December 31, 2025 and 2024:
Previous wording
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc. (Clean Seed) in the amount of $1,190. The investment is carried at fair value and is included in other assets on the Company’s consolidated balance sheets. The Company recorded a gain related to Clean Seed’s change in fair value in the amount of $513 during 2024, as compared to losses of $359 in 2023. These gains and losses are included in change in fair value of equity investments on the Company’s consolidated statements of operations.
Current wording
On April 1, 2020, the Company made a strategic investment in Clean Seed Inc. (Clean Seed) in the amount of $1,190. The investment is carried at fair value and is included in other assets on the Company’s consolidated balance sheets. At December 31, 2025, the fair value of the investment amounted to $501. The Company recorded a loss related to Clean Seed’s change in fair value in the amount of $437 during 2025, as compared to a gain of $513 in 2024. These fair value adjustments are included in change in fair value of equity investments on the Company’s consolidated statements of operations.
Previous wording
Net interest expense was $16,243 in 2024, as compared to $12,639 in 2023. Interest costs are summarized in the following table:
Current wording
Net interest expense was $18,470 in 2025, as compared to $16,243 in 2024. Interest costs are summarized in the following table:
Previous wording
The Company’s average debt for the year ended December 31, 2024, was $195,160, as compared to $167,976 for the year ended December 31, 2023. The increase in average debt can be in large part attributed to the global agriculture market continuing to focus on buying smaller individual order quantities frequently and closer to the time of use and with enhanced focus on their own inventory levels. This effective destocking of the channel is a global agricultural market reaction to high interest rates and the drive by distribution to push working capital back to manufacturers. Our effective interest rate on our senior credit facility increased to 8.0%, as compared to 7.2% in 2023.
Current wording
The Company’s average debt for the year ended December 31, 2025, was $194,669, as compared to $195,160 for the year ended December 31, 2024. The continuing comparatively high average borrowings can be in large part attributed to the global agriculture market continuing to focus on channel inventory levels and lower levels of prepay in the U.S.. This effective destocking of the channel is a global agricultural market reaction to high interest rates and the drive by distribution to push working capital back to manufacturers. Our effective interest rate on our senior credit facility increased from 8.0% in 2024 to 8.5% in 2025.
Previous wording
Our provision for income taxes for 2024 was $5,882, as compared to $2,778 for 2023. The effective tax rate for 2024 was negative 4.9%, as compared to 27.0% in 2023. The decrease of the effective tax rate in 2024, as compared to 2023, was primarily due to the establishment of a valuation allowance recorded against the U.S. net deferred tax assets during 2024.
Current wording
Our provision for income taxes for 2025 was $2,679, as compared to $5,882 for 2024. The effective income tax rate for 2025 was negative 5.7%, as compared to negative 4.9% in 2024. The decrease of the effective tax rate in 2025, as compared to 2024, was primarily due to the decrease in the loss before provision for income taxes for entities that maintained a full valuation allowance during 2025.
Previous wording
Net loss was $126,340 or $4.50 per basic share and diluted share in 2024, as compared to a net income of $7,519 or $0.27 per basic and $0.26 per diluted share in 2023.
Current wording
Net loss was $49,882 or $1.75 per basic share and diluted share in 2025, as compared to $126,340 or $4.50 per basic and diluted share in 2024.
Previous wording
Comprehensive loss was $139,170 in 2024, as compared to a comprehensive income of $13,738 in 2023. In addition to net (loss) income, foreign currency translation adjustment, net of tax is included in comprehensive (loss) income. The foreign currency translation adjustment, net of tax, was negative $13,824 in 2024, as compared to a positive $6,219 in 2023. The negative adjustment in 2024 was driven by the US Dollar getting stronger compared to the local currencies of the Company's international operations in Mexico, Brazil, and Australia, which use the respective local currencies as their functional currency.
Current wording
Comprehensive loss was $43,153 in 2025, as compared to $139,106 in 2024. In addition to net loss, foreign currency translation adjustment, net of tax, is included in comprehensive loss. The foreign currency translation adjustment, net of tax, was positive $6,729 in 2025, as compared to a negative $12,766 in 2024. The negative adjustment in 2024 was driven by the US Dollar getting stronger compared to the local currencies of the Company's international operations in Mexico, Brazil, and Australia, which use the respective local currencies as their functional currency.
Previous wording
Cash in operating activities provided $3,923 during the year ended December 31, 2024, as compared to cash used in operating activities of $58,748 in the prior year. Included in the $3,923 are net loss of $126,340, plus non-cash depreciation, amortization of intangibles and other long-term assets in the amount of $22,548, amortization of deferred loan fees and discounted liabilities of $536, gain on disposal of property, plant and equipment of $1,000, impairment of assets including fixed assets, intangible assets and goodwill of $50,414, and provision for bad debts in the amount of $2,319. In addition, stock-based compensation of $4,412, change in value of deferred income taxes of $1,462, change in value for uncertain tax positions or unrecognized tax benefits of $1,547, change in fair value of investments of $2,356, non-cash lease expense of $37, and net foreign currency adjustment of $804, resulted in net cash used in operating activities (prior to changes in assets and liabilities associated with operations, net of business combinations) of $44,083, as compared to net cash provided by operating activities of $29,713 for the same period of 2023.
Current wording
Cash used in operating activities amounted to $21,191 during the year ended December 31, 2025, as compared to cash provided in operating activities of $3,923 in the prior year. Included in the $21,191 are net loss of $49,882, plus non-cash depreciation, amortization of intangibles and other long-term assets in the amount of $18,763, amortization of deferred loan fees and discounted liabilities of $1,906, impairment of assets including fixed assets, intangible assets and goodwill of $25,395, and provision for bad debts in the amount of $2,360, stock-based compensation of $2,016, change in fair value of investments of $437. These adjustments were offset by deductions related to a gain on sale of fixed assets of $75, reductions in value of deferred income taxes of 1,351, reductions in value for uncertain tax positions or unrecognized tax benefits of $201, non-cash lease expense of $147, and net foreign currency adjustment of $193. This resulted in net cash used in operating activities (prior to changes in assets and liabilities associated with operations, net of business combinations) of $972, as compared to net cash provided by operating activities of $44,083 for the same period of 2024.
Previous wording
The Company’s working capital decreased by $54,983 at December 31, 2024. Included in this change, accounts receivable increased by $11,073 as a result of timing of orders, mix of customers, products and jurisdictions, inventories decreased by $35,213 as a result of a hard drive to reduce inventories and the result of recording certain inventory write downs, tax receivable increased by $3,775 driven by losses recorded at the end of 2024, and prepaid expenses increased by $654. Customer prepayments decreased by $12,882, driven by customer decisions to make early payments in return for future discounts on product purchases as part of the Company’s early cash incentive programs and their choices about when to utilize the prepaid amounts. Our accounts payable balances increased by $3,714 primarily due to timing of supplier invoice due dates and the drive by the Company to reduce inventory in the final quarter of the year. Program accruals increased by $1,775, and other payables and accrued expenses increased by $17,202.
Current wording
The Company’s working capital increased by $14,533 at December 31, 2025. Included in this change, accounts receivable decreased by $7,697 as a result of timing of orders, mix of customers, products and jurisdictions, inventories decreased by $6,287 as a result of a hard drive to reduce inventories and the result of recording certain inventory write downs, tax receivable decreased by $9 driven by losses recorded 2025, and prepaid expenses increased by $8,638. The liability for customer prepayments at the end of 2025, decreased by $19,582, as a result of return to pre-Covid levels of normal working capital by customers. Our accounts payable balances increased by $15,434 primarily as a result of management focus on controlling net trade working capital and the drive by the Company to reduce inventory in the final quarter of the year. Program accruals decreased by $17,384, and other payables and accrued expenses decreased by $4,024.
Previous wording
With regard to our program accrual, the year-over-year change is primarily driven by the mix of product line sales and customers in 2024, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Most of our programs relate to domestic sales. Typically, domestic crops have a growing season that ends on August 31 stof each year. During 2024, the Company made accruals in the amount of $93,301 and payments in the amount of $92,188. During 2023, the Company made accruals in the amount of $93,264 and payments in the amount of $85,931.
Current wording
With regard to our program accrual, the year-over-year change is primarily driven by the mix of product line sales volumes, and customers in 2025, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Most of our programs relate to domestic sales. Typically, domestic crops have a growing season that ends on August 31 stof each year. During 2025, the Company made accruals in the amount of $69,307 and payments in the amount of $86,529. During 2024, the Company made accruals in the amount of $93,301 and payments in the amount of $92,188.
Previous wording
Cash used for investing activities amounted to $6,623 for the year ended December 31, 2024, as compared to $17,017 in 2023. In 2024, the Company spent $7,279 on capital expenditures primarily focused on continuing to invest in manufacturing infrastructure focused on safety and improvement of production efficiency and capabilities. Furthermore, the Company spent $409 on registrations and patents and received $1,065 in disposal of fixed assets. In 2024, the Company did not make any business acquisitions.
Current wording
Cash used for investing activities amounted to $3,608 for the year ended December 31, 2025, as compared to $6,623 in 2024. In 2025, the Company spent $3,793 on capital expenditures primarily on continuing to invest in manufacturing infrastructure focused on safety and improvement of production efficiency and capabilities. Furthermore, the Company spent $165 on registrations and patents and received $477 in disposal of fixed assets. In 2024, the Company spent $409 on registrations and patents and received $1,065 in disposal of fixed assets.
Previous wording
During the year ended December 31, 2024, financing activities provided $4,540 as compared to $66,737 provided during the prior year. This included increasing net borrowings by $8,431, as compared to an increase of $86,600 in 2023. The Company paid $850 in deferred loan fees during the year ended December 31, 2024. During 2024, the Company paid dividends to stockholders amounting to $2,510, as compared to $3,384 in 2023. Further, the Company did not repurchase common stock in 2024, as compared to using $15,539 to repurchase common stock in 2023. The Company made no payments for contingent consideration in 2024 or 2023.
Current wording
During the year ended December 31, 2025, financing activities provided $23,704 as compared to $4,540 provided during the prior year. This included increasing net borrowings by $26,669, as compared to an increase of $8,431 in 2024. The Company paid $3,389 in deferred loan fees during the year ended December 31, 2025, as compared to $850 in the prior year. During 2024, the Company paid dividends to stockholders amounting to $2,510, no dividend payment was made in 2025.
Previous wording
The Company and certain of its affiliates are parties to a senior credit facility agreement entitled the “Third Amended and Restated Loan and Security Agreement” dated as of August 5, 2021 (the “Credit Agreement”), which is a senior secured lending facility among AMVAC, the Company’s principal operating subsidiary, as Agent (including the Company and AMVAC BV), as "Borrowers", on the one hand, and a group of commercial lenders led by BMO Bank, N.A. (formerly Bank of the West) as administrative agent, documentation agent, syndication agent, collateral agent and sole lead arranger, on the other hand. The Credit Agreement consists of a line of credit of up to $275,000, an accordion feature of up to $150,000, a letter of credit and swingline sub-facility (each having limits of $25,000) and has a maturity date of August 5, 2026. The Credit Agreement amended and restated the previous credit facility, which had a maturity date of June 30, 2022. With respect to key financial covenants, the Credit Agreement contains two: namely, borrowers are required to maintain a Total Leverage (“TL”) Ratio of no more than 3.5-to-1, during the first three years, stepping down to 3.25-to-1 as of December 31, 2024, and a Fixed Charge Coverage Ratio ("FCCR") of at least 1.25-to-1. In addition, to the extent that it completes acquisitions totaling $15,000 or more in any 90-day period, AMVAC may step-up the TL Ratio by 0.5-to-1, not to exceed 4.00-to-1, for the next three full consecutive quarters. Acquisitions below $50,000 did not require Agent consent.
Current wording
The Company and certain of its affiliates were parties to a senior credit facility agreement entitled the “Third Amended and Restated Loan and Security Agreement” dated as of August 5, 2021 (the “Credit Agreement”), which is a senior secured lending facility among AMVAC, the Company’s principal operating subsidiary, as Agent (including the Company and AMVAC BV), as "Borrowers", on the one hand, and a group of commercial lenders led by BMO Bank, N.A. (formerly Bank of the West) as administrative agent, documentation agent, syndication agent, collateral agent and sole lead arranger, on the other hand. The Credit Agreement initially consisted of a line of credit of up to $275,000, an accordion feature of up to $150,000, a letter of credit and swingline sub-facility (each having limits of $25,000) and had a maturity date of August 5, 2026. The Credit Agreement has underwent twelve amendments since 2021.
Previous wording
The Company’s borrowing capacity varies with its financial performance, measured in terms of Consolidated EBITDA as defined in the Credit Agreement, for the trailing twelve-month period. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with proper notice, on either (i) London Interbank Offered Rate ("LIBOR") plus the “Applicable Margin” which is based upon the Total Leverage (“TL”) Ratio (“LIBOR Revolver Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month LIBOR Rate plus 1.00%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). The Company and the Lenders entered into an amendment to the Credit Agreement, effective March 9, 2023, whereby LIBOR was replaced by the Secured Overnight Financing Rate ("SOFR") with a credit spread adjustment of 10.0 bps for all SOFR periods. The revolving loans now bear interest at a variable rate based at our election with proper notice, on either (i) SOFR plus 0.1% per annum and the “Applicable Margin” or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month SOFR Rate plus 1.10%, plus, in the case of (x), (y) or (z) the Applicable Margin (“Adjusted Base Rate Revolver Loan”). Interest payments for SOFR Revolver Loans are payable on the last day of each interest period (either one-, three- or six- month periods, as selected by the Company) and the maturity date, while interest payments for Adjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date.
Current wording
Under the Credit Agreement, revolving loans bore interest at a variable rate based, at borrower’s election with proper notice, on either (i) SOFR plus 0.1% per annum and the “Applicable Margin” or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month SOFR Rate plus 1.10%, plus, in the case of (x), (y) or (z), the Applicable Margin (“Adjusted Base Rate Revolver Loan”). Interest payments for SOFR Revolver Loans were payable on the last day of each interest period (either one-, three- or nine- months, as selected by the Company) and the maturity date, while interest payments for Adjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date.
Previous wording
The Company believes that the combination of its cash flows from future operations, current cash on hand and the availability under the Company’s credit facility will be sufficient to meet its working capital and capital expenditure requirements and will provide the Company with adequate liquidity to meet its anticipated operating needs for at least the next 12 months from the issuance of these consolidated financial statements. Although operating activities are expected to provide cash, to the extent of growth in the future, its operating and investing activities will use cash and, consequently, this growth may require the Company to access some or all of the availability under the credit facility. It is also possible that additional sources of finance may be necessary to support additional growth.
Current wording
The Company believes that the combination of its cash flows from future operations, current cash on hand and the availability under the Company’s credit facilities will be sufficient to meet its working capital and capital expenditure requirements and will provide the Company with adequate liquidity to meet its anticipated operating needs for at least the next 12 months from the issuance of these consolidated financial statements. Although operating activities are expected to provide cash, to the extent of growth in the future, its operating and investing activities will use cash and, consequently, this growth may require the Company to access some or all of the availability under the credit facility.
Previous wording
Current Expected Credit Losses —The Company maintains an allowance to cover its Current Expected Credit Losses ("CECL") on its trade receivables, other receivables and contract assets arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over the life of its trade receivables, other receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. In most instances, the Company’s policy is to write-off trade receivables when they are deemed uncollectible. The vast majority of the Company's trade receivables, other receivables and contract assets are less than 365 days. Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on multiple portfolios. The determination of portfolios is based primarily on geographical location, type of customer and receivables aging.
Current wording
Current Expected Credit Losses —The Company maintains an allowance to cover its Current Expected Credit Losses ("CECL") on its trade receivables, other receivables and contract assets arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over the life of its trade receivables, other receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. In most instances, the Company’s policy is to write-off trade receivables when they are deemed uncollectible. The vast majority of the Company's trade receivables, other receivables and contract assets are due in less than 365 days. Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on multiple portfolios. The determination of portfolios is based primarily on geographical location, type of customer and receivables aging.
Previous wording
Inventories— The Company values its inventories at lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) or average cost method, including, as appropriate, raw materials, labor, factory overhead and subcontracting services. The Company writes down its inventory to the net realizable value following assessments of slow-moving and obsolete inventory and other annual adjustments to ensure that our standard costs continue to closely reflect actual manufacturing cost. During the years ended December 31, 2024 and 2023, the Company recorded inventory adjustments of $21,417 and $2,700, respectively.
Current wording
Inventories— The Company values its inventories at lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) or average cost method, including, as appropriate, raw materials, labor, factory overhead and subcontracting services. The Company writes down its inventory to the net realizable value following assessments of slow-moving and obsolete inventory and other annual adjustments to ensure that our standard costs continue to closely reflect actual manufacturing cost. During the years ended December 31, 2025 and 2024, the Company recorded inventory adjustments of $3,802 and $21,417, respectively.
Previous wording
Intangible Assets—The primary identifiable intangible assets of the Company relate to assets associated with its product and business acquisitions. All of the Company’s intangible assets have finite lives and are amortized. The estimated useful life of an identifiable intangible asset is based upon a number of factors including the effects of demand, competition, and expected changes in the marketability of the Company’s products. During the year ended December 31, 2024, the Company recorded intangible asset impairment charges in the amount of $9,345. There were no such charges in 2023.
Current wording
Intangible Assets Other Than Goodwill—The primary identifiable intangible assets of the Company relate to assets associated with its product and business acquisitions. All of the Company’s intangible assets have finite lives and are amortized. The estimated useful life of an identifiable intangible asset is based upon a number of factors including the effects of demand, competition, and expected changes in the marketability of the Company’s products. During the year ended December 31, 2025, the Company recorded intangible asset impairment charges in the amount of $1,802, as compared to $9,345 in 2024. The Company evaluated and determined its intangible assets corresponding to the Company’s operations in countries for which the Company has recorded a full deferred tax asset valuation allowance was not material.
Previous wording
Goodwill—The Company reviews goodwill for impairment triggers utilizing either a qualitative or quantitative assessment. If the Company decides that it is appropriate to perform a qualitative assessment and concludes that the fair value of a reporting unit more likely than not exceeds its carrying value, no further evaluation is necessary. If the Company performs a quantitative assessment, the Company compares the fair value of a reporting unit with its carrying value and recognizes an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. The Company annually tests goodwill for impairment at the beginning of the fourth quarter, or earlier if triggering events occur. Fair value determinations require considerable judgment and are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenue growth rates, gross margins, expenses, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, and synergies available to market participants. As of October 1, 2024, the Company conducted its most recent annual impairment test by quantitatively testing goodwill assigned to its domestic and international reporting units. Based on the results of the quantitative test, the Company concluded that goodwill related to its domestic reporting unit in the amount of $9,131 was fully impaired. The carrying value of the international reporting unit exceeded its respective fair value by $17,918. As a result, the Company recorded impairment charges to its goodwill balance in the amount of $27,049 during the year ended December 31, 2024. The remaining carrying value of the international reporting unit is mainly sensitive to discount rates, the projected net sales growth rates, gross margin improvements, and terminal growth rates. After recording the goodwill impairment, the carrying value of the international reporting unit equaled its fair value. Therefore, any negative deviations from the Company’s projections and changes in assumptions used in its quantitative impairment test may result in further impairments of the international reporting unit's remaining goodwill balance which amounted to $19,701 at December 31, 2024.
Current wording
Goodwill—The Company reviews goodwill for impairment triggers utilizing either a qualitative or quantitative assessment. If the Company decides that it is appropriate to perform a qualitative assessment and concludes that the fair value of a reporting unit more likely than not exceeds its carrying value, no further evaluation is necessary. If the Company performs a quantitative assessment, the Company compares the fair value of a reporting unit with its carrying value and recognizes an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. The Company annually tests goodwill for impairment at the beginning of the fourth quarter, or earlier if triggering events occur. Fair value determinations require considerable judgment and are sensitive to inherent uncertainties and changes in estimates and assumptions regarding revenue growth rates, gross margins, expenses, capital expenditures, working capital requirements, tax rates, terminal growth rates, discount rates, and synergies available to market participants. As of October 1, 2025, the Company conducted its most recent annual impairment test by quantitatively testing goodwill assigned to its international reporting units. Based on the results of the quantitative test, the carrying value of the international reporting unit exceeded its respective fair value by $23,816. As a result, the Company concluded that goodwill related to its international reporting unit in the amount of $21,040 was fully impaired and recorded a corresponding impairment charge during the year ended December 31, 2025.
Previous wording
Impairment—The carrying values of long-lived assets other than goodwill are reviewed for impairment annually and/or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The Company evaluates recoverability of an asset group by comparing the carrying value to the future undiscounted cash flows that it expects to generate from the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, measurement of the impairment loss is based on the fair value of the asset. In 2024, the Company determined that the carrying value related to some of its equipment and intangible assets was impaired. These included the following: The Company invested in developing the SIMPAS technology platform over more than a 10-year period. As part of the strategic review of capital allocation and operating leverage considerations that was conducted over the last 12 months and completed during the fourth quarter of 2024, the Company has found that, while the SIMPAS technology platform had attained full functionality and had been adopted by a small group of growers who use the Company’s products, its adoption slowed to a near halt in 2024 and further, that its primary market appeal was driven not by the technology itself, but, rather, by the products being dispensed by the system. The Company concluded that it does not have the wherewithal to achieve greater commercialization beyond incumbent users. While we continue to search for a partner that is better able to fund large-scale commercialization, the Company has concluded that continuing to invest in this technology will not generate a sufficient return on investment in a manner that would justify retaining such assets at full value. Secondly, the Company concluded that there was an asset impairment related to the purchase of two herbicide products. The market for these two products has been greatly reduced by weed resistance and competitive products. As a result, the Company recorded impairment charges of $23,365. No material impairment losses were recorded in 2023 and 2022.
Current wording
Impairment—The carrying values of long-lived assets other than goodwill are reviewed for impairment annually and/or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The Company evaluates recoverability of an asset group by comparing the carrying value to the future undiscounted cash flows that it expects to generate from the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, measurement of the impairment loss is based on the fair value of the asset. In 2025, the Company made the decision that it will stop manufacturing PCNB. During 2026 and 2027, the Company plans to sell its remaining global inventory but will not produce anymore PCNB. Accordingly, the Company reviewed its fixed assets associated with the manufacturing equipment supporting the PCNB product line and decided to write off the net book value of clearly identifiable assets. In 2024, the Company determined that the carrying value related to some of its packaging equipment was impaired, primarily associated with its investments in the SIMPAS technology platform. As a result, the Company recorded impairment charges of $4,354 for the year ended December 31, 2025 and $23,365 for the year ended December 31, 2024.
Previous wording
Income taxes—Income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect the Company’s best estimate of current and future taxes to be paid. The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The Company assessed the ability to realize deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it is more likely than not that the net deferred tax assets relating to the Company’s operations in the United States, Brazil, Spain, Dominican Republic, Honduras, Hong Kong, and Ukraine will not be realized and a full valuation allowance has been recorded in those jurisdictions. Significant judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, we will adjust these estimates in future periods, which may result in a change in the effective tax rate in a future period. Accounting for income taxes involves uncertainty and judgment on how to interpret and apply tax laws and regulations within the Company’s annual tax filings. Such uncertainties from time to time may result in a tax position that may be challenged and overturned by a tax authority in the future, which could result in additional tax liability, interest charges and possibly penalties. The Company classifies interest and penalties as a component of income tax expense.
Current wording
Income taxes—Income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect the Company’s best estimate of current and future taxes to be paid. The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The Company assessed the ability to realize deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it is more likely than not that the net deferred tax assets relating to the Company’s operations in the United States, Brazil, Spain, Dominican Republic, Honduras, Nicaragua, Hong Kong, and Ukraine will not be realized and a full valuation allowance has been recorded in those jurisdictions. Significant judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, we will adjust these estimates in future periods, which may result in a change in the effective tax rate in a future period. Accounting for income taxes involves uncertainty and judgment on how to interpret and apply tax laws and regulations within the Company’s annual tax filings. Such uncertainties from time to time may result in a tax position that may be challenged and overturned by a tax authority in the future, which could result in additional tax liability, interest charges and possibly penalties. The Company classifies interest and penalties as a component of income tax expense.