American Vanguard (AVD) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended June 30, 2024, were $128,209 thousand, a decrease of 3.9$132,790 thousand for the same period in 2023[15] - Gross profit for the three months ended June 30, 2024, was $37,763 thousand, down 12.1$42,909 thousand in the prior year[15] - Net loss for the three months ended June 30, 2024, was $(11,721) thousand, compared to a net loss of$(1,053) thousand for the same period in 2023[18] - Operating loss for the three months ended June 30, 2024, was $(9,232) thousand, a significant decline from operating income of$3,754 thousand in the same quarter last year[15] - Total net sales for the three months ended June 30, 2024, were $128,209 million, a decrease of 4.4$132,790 million for the same period in 2023[38] - The company recorded a net loss of $11,721 million for the three months ended June 30, 2024, compared to a net loss of$1,053 million for the same period in 2023[47] - The company recorded a net loss of $10,169 or ($0.36) per share for the first half of 2024, compared to a net income of $865 or$0.03 per share in the same period of 2023[97] Assets and Liabilities - Total current assets increased to $477,581 thousand as of June 30, 2024, from$432,021 thousand at December 31, 2023, reflecting a growth of 10.5%[21] - Total liabilities rose to $454,230 thousand as of June 30, 2024, compared to$397,538 thousand at the end of 2023, marking an increase of 14.3%[21] - Cash and cash equivalents increased to $17,949 thousand as of June 30, 2024, up from$11,416 thousand at December 31, 2023[21] - Total inventories increased to $244,935 million as of June 30, 2024, from$219,551 million as of December 31, 2023, reflecting a rise of 11.6%[43] - Long-term indebtedness from the revolving line of credit increased to $211,254 million as of June 30, 2024, compared to$138,900 million as of December 31, 2023[49] - As of June 30, 2024, the Company had long-term indebtedness of $210,218, an increase from$137,682 as of December 31, 2023[114] Sales Performance - U.S. crop sales for the three months ended June 30, 2024, were $52,289 million, down 6.8$56,212 million in the prior year[38] - International sales for the three months ended June 30, 2024, were $56,909 million, a decrease of 4.7$59,700 million in the same period last year[38] - U.S. crop net sales decreased by 7% to $52,289 in the second quarter of 2024, while U.S. non-crop sales increased by 13$19,011[83] - International net sales declined by 5% to $56,909, with herbicide sales down 27$8,599 thousand, a decrease of 8.6% from $9,413 thousand in the same period last year[15] - Operating lease expenses for the three months ended June 30, 2024, were$1,955 thousand, an increase from $1,674 thousand in the same period of 2023[33] - Operating expenses increased by 20$46,995 for the three-month period ended June 30, 2024, primarily due to non-recurring charges related to business transformation[86] - Operating expenses increased by approximately 12% to $83,322, driven by one-time business transformation costs and other administrative expenses[96][101] Cash Flow and Financing - Operating activities utilized net cash of$56,452 during the six-month period ended June 30, 2024, a decrease of 41.6% from $96,602 in the same period of 2023[107] - Financing activities provided$70,285 during the six-month period ended June 30, 2024, compared to $98,086 in the same period of the prior year[112] - Cash used for investing activities was$6,398 for the six-month period ended June 30, 2024, compared to $7,172 in the same period of 2023[111] Taxation - The company recorded an income tax benefit of$1,553 for the three months ended June 30, 2024, compared to an income tax expense of $1,541 in the same period of 2023[82] - The effective income tax rate for the six months ended June 30, 2024, was 0.7$1,181 in the same period of 2023[105] Stock and Compensation - The weighted average shares outstanding for basic earnings per share were 28,024 thousand for the three months ended June 30, 2024, compared to 28,428 thousand for the same period in 2023[15] - The company recognized stock-based compensation of $2,752 thousand for the six months ended June 30, 2024[30] - For the three months ended June 30, 2024, stock-based compensation expense was$747, down from $1,067 in the same period of 2023, representing a decrease of approximately 30$5,989, expected to be recognized over a weighted-average period of 1.6 years[55] Regulatory and Legal Matters - The company recorded a liability related to a plea agreement with the Department of Justice, which includes a fine and a three-year probation period[59] - The company is currently evaluating the impact of adopting new accounting standards issued by the FASB, effective for fiscal years beginning after December 15, 2023[65][66] - The company has recorded a loss contingency related to a wage and hour violation lawsuit, with mediation scheduled for September 2024[60] - The USEPA issued an emergency suspension of DCPA products on August 6, 2024, prohibiting their distribution, sale, and use, which could adversely affect financial performance[128] - The Company is engaged in a registration review process with the USEPA that could impair the commercial viability of its products, particularly DCPA[128] Transformation Initiatives - The Company has invested in transformation initiatives aimed at improving efficiencies and operating leverage during Q4 2023 and the first two quarters of 2024, but there is no guarantee of achieving targeted results[129] - Transformation costs related to the company's digital and structural initiatives amounted to $7,345 during the three months ended June 30, 2024[88] - The Company is taking measures to ensure the success of its transformation initiatives, but the return on these initiatives may not exceed the investment[129]