UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number 001-13795

AMERICAN VANGUARD CORPORATION


Delaware	95-2588080
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification Number)

4695 MacArthur Court, Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

(949) 260-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $.10 par value

AVD

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value — ~~29,581,627~~29,297,022 shares as of ~~November 2, 2022.~~August 1, 2023.

AMERICAN VANGUARD CORPORATION

INDEX

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Net sales	$	152,117		$	147,298		$	449,636		$	398,063		$	132,790		$	148,203		$	257,674		$	297,797
Cost of sales		(90,733	)		(90,234	)		(267,280	)		(243,729	)		(89,881	)		(98,872	)		(176,230	)		(197,070	)
Gross profit		61,384			57,064			182,356			154,334			42,909			49,331			81,444			100,727
Operating expenses		(50,140	)		(48,410	)		(145,550	)		(132,934	)		(39,155	)		(38,518	)		(74,423	)		(75,165	)
Adjustment to bargain purchase gain on business acquisition		—			292			—			171
Operating income		11,244			8,946			36,806		��	21,571			3,754			10,813			7,021			25,562
Change in fair value of equity investments		(454	)		(668	)		(857	)		103
Other income		—			—			—			672
Change in fair value of equity investment														(55	)		(486	)		(77	)		(403	)
Interest expense, net		(1,086	)		(962	)		(2,256	)		(2,921	)		(3,211	)		(772	)		(4,898	)		(1,170	)
Income before provision for income taxes and loss on equity method investment		9,704			7,316			33,693			19,425
Income before provision for income taxes														488			9,555			2,046			23,989
Income tax expense		(2,963	)		(1,517	)		(10,187	)		(5,324	)		(1,541	)		(2,725	)		(1,181	)		(7,224	)
Income before loss on equity method investment		6,741			5,799			23,506			14,101
Loss on equity method investment		—			(301	)		—			(388	)
Net income	$	6,741		$	5,498		$	23,506		$	13,713
Earnings per common share—basic	$	.23		$	.18		$	.80		$	.46
Earnings per common share—assuming dilution	$	.23		$	.18		$	.78		$	.45
Net income (loss)													$	(1,053	)	$	6,830		$	865		$	16,765
Net income (loss) per common share—basic													$	(.04	)	$	.23		$	.03		$	.57
Net income (loss) per common share—assuming dilution													$	(.04	)	$	.23		$	.03		$	.55
Weighted average shares outstanding—basic		29,214			29,892			29,496			29,854			28,428			29,602			28,397			29,639
Weighted average shares outstanding—assuming dilution		29,805			30,390			30,128			30,470			28,428			30,225			28,985			30,289

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023		2022
Net income	$	6,741		$	5,498		$	23,506		$	13,713
Other comprehensive loss:
Net income (loss)													$	(1,053	)	$	6,830		$	865	$	16,765
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax effects		(2,764	)		(3,459	)		(1,748	)		(3,048	)		3,505			(6,064	)		6,051		1,016
Comprehensive income	$	3,977		$	2,039		$	21,758		$	10,665		$	2,452		$	766		$	6,916	$	17,781

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS


		September 30, 2022			December 31, 2021				June 30, 2023			December 31, 2022
Current assets:
Cash and cash equivalents		$	20,808		$	16,285			$	14,632		$	20,328
Receivables:
Trade, net of allowance for doubtful accounts of $4,535 and $3,938, respectively			194,515			149,326
Trade, net of allowance for doubtful accounts of $6,135 and $5,136, respectively										151,479			156,492
Other			10,022			9,595				11,473			9,816
Total receivables, net			204,537			158,921				162,952			166,308
Inventories			192,309			154,306				237,587			184,190
Prepaid expenses			16,967			12,488				17,546			15,850
Income taxes receivable			2,180			—				5,436			1,891
Total current assets			436,801			342,000				438,153			388,567
Property, plant and equipment, net			68,598			66,111				73,452			70,912
Operating lease right-of-use assets			25,402			25,386				23,724			24,250
Intangible assets, net			187,207			197,841				178,624			184,664
Goodwill			46,215			46,260				48,219			47,010
Other assets			11,936			16,292				10,193			10,769
Deferred income tax assets, net			16			270				293			141
Total assets		$	776,175		$	694,160			$	772,658		$	726,313

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	—		$	802
Accounts payable			81,919			67,140			$	78,876		$	69,000
Customer prepayments			222			63,064				27,368			110,597
Accrued program costs			108,016			63,245				80,333			60,743
Accrued expenses and other payables			24,390			20,745				13,273			20,982
Income taxes payable			—			3,006
Current operating lease liabilities			5,329			5,059				5,493			5,279
Total current liabilities			219,876			223,061				205,343			266,601
Long-term debt, net			148,414			52,240				160,750			51,477
Long-term operating lease liabilities			20,536			20,780				18,884			19,492
Other liabilities, net of current installments			5,457			5,335				4,923			4,167
Deferred income tax liabilities, net			19,324			20,006				13,683			14,597
Total liabilities			413,607			321,422				403,583			356,334
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued			—			—				—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 34,463,947 shares at September 30, 2022 and 34,248,218 shares at December 31, 2021			3,446			3,426
Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,643,674 shares at June 30, 2023 and 34,446,194 shares at December 31, 2022										3,464			3,444
Additional paid-in capital			101,426			101,450				106,719			105,634
Accumulated other comprehensive loss			(15,532	)		(13,784	)			(6,131	)		(12,182	)
Retained earnings			325,698			304,385				327,911			328,745
Less treasury stock at cost, 4,884,200 shares at September 30, 2022 and 3,361,040 shares at December 31, 2021			(52,470	)		(22,739	)
Less treasury stock at cost, 5,438,093 shares at June 30, 2023 and 5,029,892 shares at December 31, 2022										(62,888	)		(55,662	)
Total stockholders’ equity			362,568			372,738				369,075			369,979
Total liabilities and stockholders' equity		$	776,175		$	694,160			$	772,658		$	726,313

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023

(In thousands, except share data)

(Unaudited)


	Common Stock						Additional			Accumulated Other						Treasury Stock								Common Stock					Additional			Accumulated Other						Treasury Stock
	Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			Total			Shares			Amount		Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			Total
Balance, December 31, 2021		34,248,218		$	3,426		$	101,450		$	(13,784	)	$	304,385			3,361,040	$	(22,739	)	$	372,738
Common stock issued under ESPP		26,751			2			434			—			—			—		—			436
Cash dividends on common stock ($0.025 per share)		—			—			—			—			(736	)		—		—			(736	)
Balance, December 31, 2022																									34,446,194		$	3,444	$	105,634		$	(12,182	)	$	328,745			5,029,892	$	(55,662	)	$	369,979
Stocks issued under ESPP																									22,101			2		478			—			—			—		—			480
Cash dividends on common stock ($0.030 per share)																									—			—		—			—			(851	)		—		—			(851	)
Foreign currency translation adjustment, net		—			—			—			7,080			—			—		—			7,080			—			—		—			2,546			—			—		—			2,546
Stock-based compensation		—			—			1,563			—			—			—		—			1,563			—			—		1,474			—			—			—		—			1,474
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(183,093	)		(18	)		(2,156	)		—			—			—		—			(2,174	)		(4,466	)		—		5			—			—			—		—			5
Shares repurchased																	332,404		(6,219	)		(6,219	)		—			—		—			—			—			27,835		(557	)		(557	)
Net income		—			—			—			—			9,935			—		—			9,935			—			—		—			—			1,918			—		—			1,918
Balance, March 31, 2022		34,091,876			3,410			101,291			(6,704	)		313,584			3,693,444		(28,958	)		382,623
Cash dividends on common stock ($0.025 per share)		—			—			—			—			(742	)		—		—			(742	)
Balance, March 31, 2023																									34,463,829			3,446		107,591			(9,636	)		329,812			5,057,727		(56,219	)		374,994
Cash dividends on common stock ($0.030 per share)																									—			—		—			—			(848	)		—		—			(848	)
Foreign currency translation adjustment, net		—			—			—			(6,064	)		—			—		—			(6,064	)		—			—		—			3,505			—			—		—			3,505
Stock-based compensation		—			—			1,273			—			—			—		—			1,273			—			—		1,067			—			—			—		—			1,067
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		351,358			35			892			—			—			—		—			927			179,845			18		(1,939	)		—			—			—		—			(1,921	)
Shares repurchased		—			—			—			—			—			606		(13	)		(13	)		—			—		—			—			—			380,366		(6,669	)		(6,669	)
Net income		—			—			—			—			6,830			—		—			6,830
Balance, June 30, 2022		34,443,234			3,445			103,456			(12,768	)		319,672			3,694,050		(28,971	)		384,834
Common stock issued under ESPP		24,489			2			399			—			—			—		—			401
Cash dividends on common stock ($0.025 per share)		—			—			—			—			(715	)		—		—			(715	)
Foreign currency translation adjustment, net		—			—			—			(2,764	)		—			—		—			(2,764	)
Stock-based compensation		—			—			1,560			—			—			—		—			1,560
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(3,776	)		(1	)		11			—			—			—		—			10
Shares repurchased		—			—			—			—			—			387,340		(7,499	)		(7,499	)
Accelerated share repurchase pending final settlement		—			—			(4,000	)		—			—			802,810		(16,000	)		(20,000	)
Net income		—			—			—			—			6,741			—		—			6,741
Balance, September 30, 2022		34,463,947		$	3,446		$	101,426		$	(15,532	)	$	325,698			4,884,200	$	(52,470	)	$	362,568
Net loss																									—			—		—			—			(1,053	)		—		—			(1,053	)
Balance, June 30, 2023																									34,643,674		$	3,464	$	106,719		$	(6,131	)	$	327,911			5,438,093	$	(62,888	)	$	369,075

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022

(In thousands, except share data)

(Unaudited)


	Common Stock						Additional			Accumulated Other						Treasury Stock								Common Stock						Additional			Accumulated Other						Treasury Stock
	Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			AVD Total			Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			AVD Total
Balance, December 31, 2020		33,922,433		$	3,394		$	96,642		$	(9,322	)	$	288,182			3,061,040	$	(18,160	)	$	360,736
Balance, December 31, 2021																									34,248,218		$	3,426		$	101,450		$	(13,784	)	$	304,385			3,361,040	$	(22,739	)	$	372,738
Common stock issued under ESPP		25,120			2			338			—			—			—		—			340			26,751			2			434			—			—			—		—			436
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(596	)		—		—			(596	)
Foreign currency translation adjustment, net		—			—			—			(2,503	)		—			—		—			(2,503	)
Stock-based compensation		—			—			1,792			—			—			—		—			1,792
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(73,231	)		(7	)		(2,787	)		—			—			—		—			(2,794	)
Net income		—			—			—			—			3,071			—		—			3,071
Balance, March 31, 2021		33,874,322			3,389			95,985			(11,825	)		290,657			3,061,040		(18,160	)		360,046
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(600	)		—		—			(600	)
Foreign currency translation adjustment, net		—			—			—			2,914			—			—		—			2,914
Stock-based compensation		—			—			1,806			—			—			—		—			1,806
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		387,329			39			22			—			—			—		—			61
Net income		—			—			—			—			5,144			—		—			5,144
Balance, June 30, 2021		34,261,651			3,428			97,813			(8,911	)		295,201			3,061,040		(18,160	)		369,371
Common stock issued under ESPP		25,662			2			401														403
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(594	)		—		—			(594	)
Cash dividends on common stock ($0.025 per share)																									—			—			—			—			(736	)		—		—			(736	)
Foreign currency translation adjustment, net		—			—			—			(3,459	)		—			—		—			(3,459	)		—			—			—			7,080			—			—		—			7,080
Stock-based compensation		—			—			1,711			—			—			—		—			1,711			—			—			1,563			—			—			—		—			1,563
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(14,648	)		(2	)		(8	)		—			—			—		—			(10	)		(183,093	)		(18	)		(2,156	)		—			—			—		—			(2,174	)
Shares repurchased		—			—			—			—			—			300,000		(4,579	)		(4,579	)																	332,404		(6,219	)		(6,219	)
Net income		—			—			—			—			5,498			—		—			5,498			—			—			—			—			9,935			—		—			9,935
Balance, September 30, 2021		34,272,665		$	3,428		$	99,917		$	(12,370	)	$	300,105			3,361,040	$	(22,739	)	$	368,341
Balance, March 31, 2022																									34,091,876			3,410			101,291			(6,704	)		313,584			3,693,444		(28,958	)		382,623
Cash dividends on common stock ($0.025 per share)																									—			—			—			—			(742	)		—		—			(742	)
Foreign currency translation adjustment, net																									—			—			—			(6,064	)		—			—		—			(6,064	)
Stock-based compensation																									—			—			1,273			—			—			—		—			1,273
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)																									351,358			35			892			—			—			—		—			927
Shares repurchased																									—			—			—			—			—			606		(13	)		(13	)
Net income																									—			—			—			—			6,830			—		—			6,830
Balance, June 30, 2022																									34,443,234			3,445			103,456			(12,768	)		319,672			3,694,050		(28,971	)		384,834

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Nine Months Ended September 30,						For the Six Months Ended June 30,
	2022			2021			2023			2022
Cash flows from operating activities:
Net income	$	23,506		$	13,713		$	865		$	16,765
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		16,649			17,045
Depreciation of property, plant and equipment								4,322			4,077
Amortization of intangibles assets								6,707			6,927
Amortization of other long-term assets		2,656			2,981			1,117			1,739
Loss on disposal of property, plant and equipment		265			—
Accretion of discounted liabilities		28			(10	)
Amortization of deferred loan fees		174			294
Provision for bad debts		597			1,202			902			470
Loan principal and interest forgiveness		—			(672	)
Fair value adjustment to contingent consideration		621			520			—			635
Stock-based compensation		4,396			5,309			2,541			2,836
Change in deferred income taxes		(64	)		(560	)		(1,015	)		109
Changes in liabilities for uncertain tax positions or unrecognized tax benefits								419			—
Change in fair value of equity investments		857			(103	)		77			403
Loss on equity method investment		—			388
Adjustment to bargain purchase gain on business acquisition		—			(171	)
Other								117			412
Net foreign currency adjustments		218			(330	)		(382	)		(20	)
Changes in assets and liabilities associated with operations:
Increase in net receivables		(46,289	)		(42,979	)
Decrease (increase) in net receivables								6,092			(18,645	)
Increase in inventories		(38,987	)		(4,325	)		(50,900	)		(27,774	)
Increase in prepaid expenses and other assets		(4,272	)		(2,194	)		(1,749	)		(3,652	)
(Increase) decrease in income tax receivable/payable, net		(5,201	)		2,031
Increase in net operating lease liability		10			183
Change in income tax receivable/payable, net								(3,510	)		(3,526	)
Increase (decrease) in net operating lease liability								132			(21	)
Increase in accounts payable		14,418			7,769			9,105			19,439
Decrease in customer prepayments		(62,831	)		(38,272	)		(83,225	)		(62,789	)
Increase in accrued program costs		45,016			33,982			19,607			35,987
Increase in other payables and accrued expenses		2,555			4,025
Decrease in other payables and accrued expenses								(7,824	)		(602	)
Net cash used in operating activities		(45,678	)		(174	)		(96,602	)		(27,230	)
Cash flows from investing activities:
Capital expenditures		(8,946	)		(7,963	)		(6,498	)		(5,654	)
Proceeds from disposal of property, plant and equipment		46			—			44			27
Acquisition of product line		—			(10,000	)
Intangible assets		(1,078	)		(285	)		(718	)		(1,044	)
Investments		—			(183	)
Net cash used in investing activities		(9,978	)		(18,431	)		(7,172	)		(6,671	)
Cash flows from financing activities:
Payments under line of credit agreement		(64,000	)		(57,408	)		(54,050	)		(56,600	)
Borrowings under line of credit agreement		160,000			86,000			162,500			105,000
Payment of contingent consideration		—			(250	)
Net receipt from the issuance of common stock under ESPP		837			743
Receipt from the issuance of common stock under ESPP								480			436
Net receipt from the exercise of stock options		783			172			32			765
Payment for tax withholding on stock-based compensation awards		(2,020	)		(2,915	)		(1,948	)		(2,012	)
Repurchase of common stock		(33,731	)		(4,579	)		(7,226	)		(6,232	)
Payment of cash dividends		(2,072	)		(1,789	)		(1,702	)		(1,330	)
Net cash provided by financing activities		59,797			19,974			98,086			40,027
Net increase in cash and cash equivalents		4,141			1,369
Net (decrease) increase in cash and cash equivalents								(5,688	)		6,126
Effect of exchange rate changes on cash and cash equivalents		382			(574	)		(8	)		(354	)
Cash and cash equivalents at beginning of period		16,285			15,923			20,328			16,285
Cash and cash equivalents at end of period	$	20,808		$	16,718		$	14,632		$	22,057

See notes to the Condensed Consolidated Financial Statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(In thousands, except share data)

(Unaudited)

1. Summary of Significant Accounting Policies — The accompanying unaudited condensed consolidated financial statements of American Vanguard Corporation and Subsidiaries (“AVD” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of consolidating adjustments, eliminations and normal recurring accruals) considered necessary for a fair ~~statement~~presentation have been included. Operating results for the ~~three-~~three and ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023. The financial statements and related notes do not include all information and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2021.~~

The Company continues to closely monitor the impact of the novel coronavirus (COVID-19) pandemic on all aspects of its business, including how the pandemic will impact its customers, business partners, and employees. The Company is considered an essential business by most governments2022. Certain operating cash flow items have been reclassified in the ~~jurisdictions and territories in which~~prior period condensed consolidated financial statements to conform with the ~~Company operates and, as a result, did not incur significant disruptions from the COVID-19 pandemic during the three- and nine-month periods ended September~~June 30, 2022 and 2021. During the three- and nine-month periods ended September 30, 2022, the Company experienced strong demand for its domestic crop and international products, and generally more normal business activities including face-to-face meetings with customers and suppliers etc. The Company established a pandemic working group at the start of the COVID-19 pandemic.

Looking forward, the Company is unable to predict the impact that the pandemic may have on its future financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its customers in the near term will depend on future developments, which are highly uncertain and, beyond extrapolating our experience since the start of the pandemic, cannot be predicted with confidence. The Company continues to monitor its business for adverse impacts of the pandemic, including some continuing volatility in foreign exchange markets, supply-chain disruptions in certain markets, and increased costs of employee safety and retention, among others.2023 presentation.

2. Leases — The Company has operating leases for warehouses, manufacturing facilities, offices, cars, railcars and certain equipment. The lease term includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not terminate) that the Company is reasonably certain to exercise. The Company has leases with a lease term ranging from 1one year ~~year~~ to 20 years ~~years.~~

. Finance leases are immaterial to the accompanying condensed consolidated financial statements. There were no lease transactions with related parties as of and for the three- and ~~nine-month~~six-month periods presented in the table below.

The operating lease expense for the ~~three-month periods~~three months ended ~~September~~June 30, ~~2022,~~2023 and ~~2021,~~2022, was $~~1,653~~1,674 and $~~1,568~~1,619, respectively, and $~~4,876~~3,310 and $~~4,464~~3,223 for the ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Lease expenses related to variable lease payments and short-term leases were immaterial. Additional information related to operating leases are as follows:


									Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	Three months ended September 30, 2022		Three months ended September 30, 2021		Nine months ended September 30, 2022		Nine months ended September 30, 2021		2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	1,613	$	1,260	$	4,846	$	4,271	$	1,544	$	1,559	$	3,187	$	3,233
ROU assets obtained in exchange for new liabilities	$	2,378	$	5,805	$	4,202	$	17,872	$	693	$	898	$	2,576	$	1,825

The weighted-average remaining lease term and discount rate related to the operating leases as of ~~September~~June 30, ~~2022~~2023 were as follows:


Weighted-average remaining lease term (in years)	~~6.08~~5.48
Weighted-average discount rate	~~4.00~~4.17	%

Future minimum lease payments under non-cancellable operating leases as of ~~September~~June 30, ~~2022~~2023 were as follows:


2022 (excluding nine-months ended September 30, 2022)	$	1,603
2023		5,977
2023 (excluding six months ended June 30, 2023)				$	3,235
2024		5,132			5,880
2025		4,610			5,330
2026		3,439			4,077
2027					2,700
Thereafter		8,580			6,200
Total lease payments		29,341			27,422
Less: imputed interest		(3,476	)		(3,045	)
Total	$	25,865		$	24,377
Amounts recognized in the condensed consolidated balance sheets:
Operating lease liabilities, current	$	5,329
Operating lease liabilities, long-term	$	20,536

Amounts recognized in the condensed consolidated balance sheets at June 30, 2023:


Operating lease liabilities, current	$	5,493
Operating lease liabilities, long-term	$	18,884

3. Revenue Recognition —The Company recognizes revenue from the sale of its products, which include crop and non-crop products. The Company sells its products to customers, which include distributors, retailers, and growers. In addition, the Company recognizes royalty income from licensing agreements. ~~Based on similar economic and operational characteristics, the Company’s business is aggregated into~~The Company has one reportable segment. ~~one~~ ~~reportable segment.~~Selective enterprise information of sales disaggregated by category and geographic region is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Net sales:
U.S. crop	$	69,115	$	66,722	$	220,503	$	184,052	$	56,212	$	63,513	$	118,105	$	151,349
U.S. non-crop		18,936		21,622		53,648		60,563		16,878		20,996		30,759		34,753
Total U.S.		88,051		88,344		274,151		244,615		73,090		84,509		148,864		186,102
International		64,066		58,954		175,485		153,448		59,700		63,694		108,810		111,695
Total net sales:	$	152,117	$	147,298	$	449,636	$	398,063	$	132,790	$	148,203	$	257,674	$	297,797
Timing of revenue recognition:
Goods and services transferred at a point in time	$	152,117	$	147,298	$	449,493	$	397,762	$	132,790	$	148,166	$	257,631	$	297,654
Goods and services transferred over time		—		—		143		301		—		37		43		143
Total net sales:	$	152,117	$	147,298	$	449,636	$	398,063	$	132,790	$	148,203	$	257,674	$	297,797

Contract assets relate to royalties earned on certain functional licenses granted for the use of the Company’s intellectual property and amounted to $~~3,000~~ ~~and $3,900~~3,100 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022. The short-term and long-term contract assets of $~~1,525~~2,493 and $~~1,475~~607 are included in other receivables and other assets, respectively, on the condensed consolidated balance sheets as of ~~September~~June 30, ~~2022. The~~2023. As of December 31, 2022, the short-term and long-term assets ofamounted to $~~1,825~~2,098 and $~~2,075~~1,002 ~~are included in other receivables and other assets, respectively, on the condensed consolidated balance sheets as of December 31, 2021.~~, respectively.

The Company sometimes receives payments from its customers in advance of goods and services being provided in return for early cash incentive programs. These payments are included in customer prepayments on the condensed consolidated balance sheets. Revenue recognized for the ~~three-~~three and ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022,~~2023, that was included in customer prepayments at the beginning of ~~2022,~~2023, was $~~272~~42,966 and $~~63,064~~65,725, ~~respectively.~~respectively, and $17,500 was refunded to a customer. The Company expects to recognize all its remaining customer prepayments as revenue in fiscal ~~2022.~~2023.

4. Property, Plant and Equipment — Property, plant and equipment at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consists of the following:


	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Land	$	2,755		$	2,756		$	2,764		$	2,757
Buildings and improvements		19,909			19,844			21,062			20,794
Machinery and equipment		140,309			132,159			146,476			142,980
Office furniture, fixtures and equipment		10,419			10,094			11,304			13,231
Automotive equipment		1,595			1,832			1,506			1,584
Construction in progress		7,898			8,199			7,811			5,897
Total gross value		182,885			174,884			190,923			187,243
Less accumulated depreciation		(114,287	)		(108,773	)		(117,471	)		(116,331	)
Total net value	$	68,598		$	66,111		$	73,452		$	70,912

The Company recognized depreciation expense related to property and equipment of $~~2,091~~2,143 and $~~2,496~~1,974 for the three-month ~~periods~~period ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company recognized depreciation expense related to property and equipment of $~~6,207~~4,322 and $~~6,341~~4,077 for the ~~nine-month periods~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Substantially all of the Company’s assets are pledged as collateral to its banks.

5. Inventories — Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) or average cost methods. The components of inventories consist of the following:


	September 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Finished products	$	163,359	$	138,159	$	203,210	$	155,128
Raw materials		28,950		16,147		34,377		29,062
	$	192,309	$	154,306	$	237,587	$	184,190

6. Segment Reporting — ~~Based on similar economic and operational characteristics, the Company’s business is aggregated into~~ The Company has one reportable segment. Selective enterprise information is as follows:


	For the three months ended September 30,										For the three months ended June 30,
	2022		2021		Change			% Change			2023		2022		Change			% Change
Net sales:
U.S. crop	$	69,115	$	66,722	$	2,393			4	%	$	56,212	$	63,513	$	(7,301	)		-11	%
U.S. non-crop		18,936		21,622		(2,686	)		-12	%		16,878		20,996		(4,118	)		-20	%
U.S. total		88,051		88,344		(293	)		0	%		73,090		84,509		(11,419	)		-14	%
International		64,066		58,954		5,112			9	%		59,700		63,694		(3,994	)		-6	%
Net sales:	$	152,117	$	147,298	$	4,819			3	%	$	132,790	$	148,203	$	(15,413	)		-10	%
Gross profit:
U.S. crop	$	34,502	$	30,237	$	4,265			14	%	$	21,703	$	23,913	$	(2,210	)		-9	%
U.S. non-crop		8,811		8,882		(71	)		-1	%		7,109		9,244		(2,135	)		-23	%
U.S. total		43,313		39,119		4,194			11	%		28,812		33,157		(4,345	)		-13	%
International		18,071		17,945		126			1	%		14,097		16,174		(2,077	)		-13	%
Total gross profit:	$	61,384	$	57,064	$	4,320			8	%	$	42,909	$	49,331	$	(6,422	)		-13	%


	For the nine months ended September 30,										For the six months ended June 30,
	2022		2021		Change			% Change			2023		2022		Change			% Change
Net sales:
U.S. crop	$	220,503	$	184,052	$	36,451			20	%	$	118,105	$	151,349	$	(33,244	)		-22	%
U.S. non-crop		53,648		60,563		(6,915	)		-11	%		30,759		34,753		(3,994	)		-11	%
U.S. total		274,151		244,615		29,536			12	%		148,864		186,102		(37,238	)		-20	%
International		175,485		153,448		22,037			14	%		108,810		111,695		(2,885	)		-3	%
Net sales:	$	449,636	$	398,063	$	51,573			13	%	$	257,674	$	297,797	$	(40,123	)		-13	%
Gross profit:
U.S. crop	$	104,599	$	78,313	$	26,286			34	%	$	40,585	$	56,186	$	(15,601	)		-28	%
U.S. non-crop		24,826		28,047		(3,221	)		-11	%		14,298		16,730		(2,432	)		-15	%
U.S. total		129,425		106,360		23,065			22	%		54,883		72,916		(18,033	)		-25	%
International		52,931		47,974		4,957			10	%		26,561		27,811		(1,250	)		-4	%
Total gross profit:	$	182,356	$	154,334	$	28,022			18	%	$	81,444	$	100,727	$	(19,283	)		-19	%

7. Accrued Program Costs — The Company offers various discounts to customers based on the volume purchased within a defined time period, other pricing adjustments, some grower volume incentives or other key performance indicator driven payments, which are usually made at the end of a growing season, to distributors, retailers or growers. The Company describes these payments as “Programs”. Programs are a critical part of doing business in both the U.S. crop and non-crop chemicals marketplaces. These discount Programs represent variable consideration. Revenues from sales are recorded at the net sales price, which is the transaction price net of the impact of Programs and includes estimates of variable consideration. Variable consideration includes amounts expected to be paid to its customers estimated using the expected value method. Each quarter management reviews individual sale transactions with Programs to determine what, if any, estimated program liabilities have been incurred. Once this initial calculation is made for the specific quarter, sales and marketing management, along with support from financial analysts, reviews the accumulated Program balance and, for volume driven payments, make assessments of whether or not customers are tracking in a manner that indicates that they will meet the requirements set out in agreed upon terms and conditions attached to each Program. Following this assessment, management makes adjustments to the accumulated accrual to properly reflect the Company’s best estimate of the liability at the balance sheet date. Programs are then reviewed with executive management for final approval. Programs are paid out predominantly on an annual basis, usually in the final quarter of the financial year or the first quarter of the following year. No significant changes in estimates were made during the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023, and ~~2021.~~2022.

8. Cash Dividends on Common Stock —The Company has declared and paid the following cash dividends in the periods covered by this Form 10-Q:

Declaration Date

Record Date

Distribution Date

Dividend
Per Share

Total
Paid

September 12, 2022

September 23, 2022

October 7, 2022

$
0.025

$
715

June 6, 2022

June 24, 2022

July 8, 2022

$
0.025

$
742

March 14, 2022

March 25, 2022

April 15, 2022

$
0.025

$
736

December 13, 2021

December 27, 2021

January 10, 2022

$
0.020

$
594

September 13, 2021

October 1, 2021

October 15, 2021

$
0.020

$
594

June 8, 2021

June 24, 2021

July 8, 2021

$
0.020

$
600

March 10, 2021

March 15, 2021

April 15, 2021

$
0.020

$
596

December 7, 2020

December 23, 2022

January 6, 2021

$
0.020

$
592


Declaration Date	Record Date	Distribution Date	Dividend Per Share		Total Paid
June 12, 2023	June 28, 2023	July 14, 2023	$	0.030	$	848
March 13, 2023	March 24, 2023	April 14, 2023	$	0.030	$	851
December 13, 2022	December 28, 2022	January 11, 2023	$	0.030	$	851
June 6, 2022	June 24, 2022	July 8, 2022	$	0.025	$	742
March 14, 2022	March 25, 2022	April 15, 2022	$	0.025	$	736
December 13, 2021	December 27, 2021	January 10, 2022	$	0.020	$	594

9. ~~Earnings~~Net income (loss) Per Share — The components of basic and diluted ~~earnings~~net income (loss) per share were as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Numerator:

Net income attributable to AVD

$
6,741

$
5,498

$
23,506

$
13,713

Denominator: (in thousands)

Weighted average shares outstanding-basic

29,214

29,892

29,496

29,854

Dilutive effect of stock options and grants

591

498

632

616

Weighted average shares outstanding-diluted

29,805

30,390

30,128

30,470


	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023		2022
Numerator:
Net income (loss)	$	(1,053	)	$	6,830	$	865	$	16,765
Denominator: (in thousands)
Weighted average shares outstanding-basic		28,428			29,602		28,397		29,639
Dilutive effect of stock options and grants		—			623		588		650
Weighted average shares outstanding-diluted		28,428			30,225		28,985		30,289

Due to a net loss for the three-month period ended June 30, 2023, stock options and other grants were excluded from the computation of diluted net income (loss) per share. For the ~~three-~~three-month period ended June 30, 2023, and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023, and ~~2021, respectively,~~2022, no stock options were excluded from the computation of diluted ~~earnings~~net income (loss) per share.

10. Debt — The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. The Company has no short-term debt as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. The debt is summarized in the following table:


Long-term indebtedness ($000's)	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Revolving line of credit	$	149,300		$	53,300		$	160,750		$	52,300
Deferred loan fees		(886	)		(1,060	)		(863	)		(823	)
Net long-term debt	$	148,414		$	52,240
Total indebtedness, net of deferred loan fees							$	159,887		$	51,477

The ~~Company’s main bank is Bank~~deferred loan fees as of June 30, 2023 are included in other assets on the ~~West, a wholly-owned subsidiary of the French bank, BNP Paribas. Bank of the West has been the Company’s bank for more than 40 years and is the syndication manager for the Company’s loans.~~condensed consolidated balance sheets.

The Company and certain of its affiliates are parties to a revolving line of credit 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 Borrower Agent ~~and~~ (including the Company and AMVAC BV), as Borrowers, on the one hand, and a group of commercial lenders led by Bank of the West as administrative agent, documentation agent, syndication agent, collateral agent and sole lead arranger, ~~and book runner,~~ 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 ~~amends~~amended and ~~restates~~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;~~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 September 30, 2024, and a Fixed Charge Coverage Ratio ("FCCR") of at least ~~1.25-to-1.~~1.25-to-1. In addition, to the extent that it completes acquisitions totaling $15 million 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 million do not require Agent consent. Distributions to the Company’s shareholders are limited to net income for the four fiscal quarter period ending on the fiscal quarter immediately prior to the fiscal quarter in which the current distribution was declared.

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) 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 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 ~~LIBOR~~SOFR Revolver Loans are payable on the last day of each interest period (either ~~one, two, three~~one-, three- or ~~six months,~~six- month periods, as selected by the ~~borrower)~~Company) and the maturity date, while interest payments for Adjusted Base Rate Revolver Loans are payable on the last business day of each ~~calendar quarter~~ month and the maturity ~~date.~~date. The interest rate ~~as of September~~on June 30, ~~2022~~2023, was ~~4.46~~6.83%. Interest was $2,699 and $745 for the three months ended June 30, 2023 and 2022, respectively, and $4,241 and $1,146 for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, the Company was in compliance with the TL Ratio but noncompliant with respect to the FCCR. On August 3, 2023, the Company obtained a waiver for the FCCR noncompliance.

~~At September 30, 2022,~~According to the ~~Company was compliant with all covenants to its current credit agreement. Also, at September 30, 2022, the Company’s total Funded Debt amounted to $149,300. At that date the Company’s rolling four quarter Consolidated EBITDA (as defined in the Credit Agreement) amounted to $77,167, which results in a leverage ratio~~terms of~~1.93, as compared to a maximum leverage ratio permitted under~~ the Credit Agreement, of ~~3.5. At September 30, 2022,~~as amended, and based on our performance against the most restrictive covenant listed above, the Company ~~has~~had the capacity to increase its borrowings by up to $~~120,783~~22,858~~, according to the terms thereof. This compares to an available borrowing capacity of~~ and $~~94,973~~200,372 as of ~~September~~June 30, ~~2021. At~~2023 and December 31, ~~2021,~~2022, respectively.

11. Classification Corrections — Corrections to the condensed consolidated statements of operations for the three and six months ended June 30, 2022 were made in connection with the Company’s operations in Australia, where the Company ~~had borrowing capacity~~sells its products to distribution companies as well as directly to growers via third-party agents. The Company identified errors related to the classification of $~~178,705~~.third-party agent’s commission amounts. The ~~level~~Company evaluated these errors and the impact to previously issued financial statements and concluded that the impact of ~~borrowing capacity~~this classification error is ~~driven by three factors: (1) our~~not material to any previously issued quarterly or annual financial ~~performance, as measured in EBITDA for both~~statements. However, management has recorded correcting adjustments to the ~~trailing twelve-month period~~previously reported financial statement line items and ~~proforma basis arising from acquisitions, (2) net borrowings, and (3) the leverage covenant (the TL Ratio).~~

~~Agrinos had an existing Paycheck Protection Program (PPP) loan~~related disclosures. The third-party agents’ commission in the amount of $~~705~~119 asand $278 was reclassified from net sales to operating expenses for the three and six months ended June 30, 2022, respectively. The impact was an increase in net sales and gross profit in the amount of $119 and $278 and an offsetting increase in operating expenses in the ~~date it was acquired by~~same amount. This correction did not have any impact on operating income, net income, and earnings per common share.

12. Change in Accounting Principle — Historically, the Company included warehousing, handling and outbound freight costs in ~~October 2020. This PPP loan was granted~~operating expenses on its Consolidated Statements of Operations. Effective January 1, 2023, the Company elected to ~~Agrinos~~include these costs in cost of sales instead of operating expenses on ~~April 27, 2020. On January 7, 2021, the Small Business Administration forgave $667~~ ~~in principal and $~~5 ~~in interest of this PPP loan. As a result, the PPP loan was extinguished on January 7, 2021 and the total amount forgiven of $672~~ ~~was recorded as other income in the Company’s~~its condensed consolidated statements of ~~operations~~operations. The effects of the change in accounting have been retrospectively applied to all periods presented. The Company believes that the change in accounting is preferable as it aligns the Company’s classification of this warehousing, handling and ~~represents~~outbound freight costs in such a ~~non-cash financing activity on~~way as to present operational management with a clearer vision of the ~~condensed consolidated statement~~operational performance by business unit. This accounting change also increases the comparability of ~~cash flows~~the Company’s financial performance with its peer companies as most peer companies include warehousing, handling and outbound freight costs in cost of sales rather than operating expenses. As a result, this change is intended to help interested parties better understand the Company’s performance and facilitate comparisons with most of the Company’s peer companies. The following table compares the Company’s historical classification with the classification after the adoption of the change in accounting for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021.~~2023 and 2022:


	Classification after adoption of accounting change						Previous classification
	For the three months ended June 30,						For the three months ended June 30,
	2023			2022			2023			2022
Net sales	$	132,790		$	148,203		$	132,790			148,084
Cost of sales		(89,881	)		(98,872	)		(80,263	)		(88,305	)
Gross profit		42,909			49,331			52,527			59,779
Operating expenses		(39,154	)		(38,518	)		(48,772	)		(48,966	)
Operating income	$	3,755		$	10,813		$	3,755		$	10,813


	Classification after adoption of accounting change						Previous classification
	For the six months ended June 30,						For the six months ended June 30,
	2023			2022			2023			2022
Net sales	$	257,674		$	297,797		$	257,674			297,519
Cost of sales		(176,230	)		(197,070	)		(157,356	)		(176,547	)
Gross profit		81,444			100,727			100,318			120,972
Operating expenses		(74,423	)		(75,165	)		(93,297	)		(95,410	)
Operating income	$	7,021		$	25,562		$	7,021		$	25,562

The change in accounting principle did not have any impact on operating income, net income and earnings per share.

~~11.~~ ~~Reclassifications —~~ ~~Certain items may have been reclassified in the prior period condensed consolidated financial statements to conform with the September 30, 2022, presentation.~~

~~12.~~13. Comprehensive Income (Loss) — Total comprehensive income (loss) includes, in addition to net income (loss), changes in equity that are excluded from the condensed consolidated ~~statement~~statements of operations and are recorded directly into a separate section of stockholders’ equity on the condensed consolidated balance sheets. For the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023 and ~~2021,~~2022, total comprehensive income consisted of net income ~~attributable to American Vanguard~~(loss) and foreign currency translation adjustments.

~~13.~~14. Stock-Based Compensation — The following tables illustrate the Company’s stock-based compensation, unamortized stock-based compensation, and remaining weighted average amortization period.


	Stock-Based Compensation for the Three months ended		Stock-Based Compensation for the Nine months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)		Stock-Based Compensation for the Three months ended			Stock-Based Compensation for the Six months ended			Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)
September 30, 2022
June 30, 2023
Restricted Stock	$	1,184	$	3,257	$	8,010		2.0	$	1,211		$	2,410		$	9,147		2.2
Unrestricted Stock		130		369		347		0.7		130			260			477		0.9
Performance-Based Restricted Stock		246		770		3,093		1.9		(274	)		(129	)		3,238		2.2
Total	$	1,560	$	4,396	$	11,450			$	1,067		$	2,541		$	12,862

September 30, 2021
June 30, 2022
Restricted Stock	$	1,246	$	3,469	$	8,277		2.0	$	1,079		$	2,072		$	9,277		2.2
Unrestricted Stock		100		317		267		0.7		122			239			476		0.9
Performance-Based Restricted Stock		365		1,523		3,522		2.0		72			525			3,781		2.1
Total	$	1,711	$	5,309	$	12,066			$	1,273		$	2,836		$	13,534

The Company also granted stock options in past periods. All outstanding stock options are fully vested and exercisable and no expense was recorded during the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023, and ~~2021.~~2022.

Time-Based Restricted and Unrestricted Stock — A summary of non-vested shares as of, and for, the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023, and ~~2021~~2022 is presented below:

Three and Nine Months Ended
September 30, 2022

Three and Nine Months Ended
September 30, 2021

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Nonvested shares at December 31st

817,290

$
17.04

820,624

$
16.64

Vested

(230,080
)

17.31

(197,615
)

19.91

Forfeited

(24,109
)

17.10

(11,580
)

16.95

Nonvested shares at March 31st

563,101

16.93

611,429

15.57

Granted

242,067

23.79

289,757

20.10

Vested

(27,482
)

22.35

(30,112
)

16.72

Forfeited

(14,070
)

18.53

(11,231
)

16.60

Nonvested shares at June 30th

763,616

18.88

859,843

17.04

Granted

13,600

$
18.94

3,400

15.17

Vested

(1,262
)

19.39

(5,962
)

15.36

Forfeited

(15,945
)

20.09

(13,841
)

17.21

Nonvested shares at September 30th

760,009

$
18.86

843,440

$
17.04


	Three and Six Months Ended June 30, 2023					Three and Six Months Ended June 30, 2022
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31st		742,050		$	18.86		817,290		$	17.04
Vested		(2,017	)		15.71		(230,080	)		17.31
Forfeited		(5,479	)		19.87		(24,109	)		17.10
Nonvested shares at March 31st		734,554			18.86		563,101			16.93
Granted		279,419			21.17		242,067			23.79
Vested		(309,318	)		14.83		(27,482	)		22.35
Forfeited		(16,354	)		19.50		(14,070	)		18.53
Nonvested shares at June 30th		688,301		$	21.59		763,616		$	18.88

Performance-Based Restricted Stock — A summary of non-vested performance-based shares as of, and for, the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022,~~2023, and ~~2021,~~2022, respectively is presented below:

Three and Nine Months Ended
September 30, 2022

Three and Nine Months Ended
September 30, 2021

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Nonvested shares at December 31st

379,061

$
16.43

391,771

$
16.26

Additional granted (forfeited) based on
performance achievement

(41,088
)

16.56

71,180

20.53

Vested

(78,704
)

17.18

(175,087
)

19.78

Forfeited

(7,074
)

16.77

(505
)

19.26

Nonvested shares at March 31st

252,195

16.17

287,359

15.16

Granted

83,190

23.63

102,043

20.03

Forfeited

(7,829
)

17.50

—

—

Nonvested shares at June 30th

327,556

16.58

389,402

16.44

Forfeited

(2,577
)

17.80

(3,733
)

17.04

Nonvested shares at September 30th

324,979

$
16.57

385,669

$
16.43


	Three and Six Months Ended June 30, 2023					Three and Six Months Ended June 30, 2022
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31st		318,699		$	18.05		379,061		$	16.43
Additional granted (forfeited) based on performance achievement		—			—		(41,088	)		16.56
Vested		—			—		(78,704	)		17.18
Forfeited		—			—		(7,074	)		16.77
Nonvested shares at March 31st		318,699			18.05		252,195			16.17
Additional granted (forfeited) based on performance achievement		(58,827	)		14.73		—			—
Granted		94,028			21.51		83,190			23.63
Vested		(86,188	)		13.99		—			—
Forfeited		(3,316	)		16.91		(7,829	)		17.50
Nonvested shares at June 30th		264,396		$	21.36		327,556		$	16.58

Stock Options — The Company has stock options outstanding under its incentive stock option plans and performance incentive stock option plan. All outstanding stock options are vested and exercisable. The following tables present details for each type of plan:

Incentive Stock Option Plans

Activity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022:~~2023:

Number of
Shares

Weighted
Average Price
Per Share

Balance outstanding, December 31, 2021 and March 31, 2022

108,036

$
11.49

Options exercised

(33,745
)

11.49

Balance outstanding, June 30, 2022

74,291

$
11.49

Options exercised

(1,541
)

11.49

Balance outstanding, September 30, 2022

72,750

$
11.49


	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2022		68,896		$	11.49
Options exercised		(1,537	)		11.49
Balance outstanding, March 31, 2023		67,359		$	11.49
Options exercised		(1,287	)		11.49
Balance outstanding, June 30, 2023		66,072		$	11.49

All the incentive stock options outstanding as of ~~September~~June 30, ~~2022,~~2023, have an exercise price per share of $11.49, total intrinsic value of $~~525~~422, and a remaining life of 2718 months ~~months.~~.

Activity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2021:~~2022:

Number of
Shares

Weighted
Average Price
Per Share

Balance outstanding, December 31, 2020

123,087

$
11.48

Options exercised

(5,838
)

11.49

Balance outstanding, March 31, 2021

117,249

11.48

Options exercised

(8,826
)

11.35

Balance outstanding, June 30, 2021

108,423

11.49

Options exercised

(387
)

11.49

Balance outstanding, September 30, 2021

108,036

$
11.49


	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2021 and March 31, 2022		108,036		$	11.49
Options exercised		(33,745	)		11.49
Balance outstanding, June 30, 2022		74,291		$	11.49

Performance Incentive Stock Option Plan

~~Activity~~There was no activity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2022:~~2023. There were 81,808 performance incentive stock options outstanding as of June 30, 2023, with an exercise price per share of $11.49 and a remaining life of 18 months.

Number of
Shares

Weighted
Average Price
Per Share

Balance outstanding, December 31, 2021 and March 31, 2022

114,658

$
11.49

Options exercised

(32,850
)

11.49

Balance outstanding, June 30 and September 30, 2022

81,808

$
11.49

Activity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2021:~~2022:

Number of
Shares

Weighted
Average Price
Per Share

Balance outstanding, December 31, 2020

114,658

$
11.49

Options exercised

—

—

Balance outstanding, September 30, 2021

114,658

$
11.49


	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2021		114,658		$	11.49
Options exercised		(32,850	)		11.49
Balance outstanding, June 30, 2022		81,808		$	11.49

All the performance incentive stock options outstanding as of ~~September~~June 30, ~~2022,~~2023, have an exercise price per share of $11.49, total intrinsic value of $~~590~~522, and a remaining life of 2718 months ~~months.~~.

~~14.~~15. Legal Proceedings — — During the reporting period, there have been no material developments in legal proceedings that were reported in the Company’s Form 10-K for the year ended December 31, ~~2021,~~2022, except as described below.

~~EPA FIFRA/RCRA Matter.~~Department of Justice and Environmental Protection Agency Investigation. On November 10, 2016, ~~the Company~~AMVAC was served with a grand jury subpoena from the United States Attorney’s Office for the Southern District of Alabama, seeking documents regarding the importation, transportation, and management of a specific pesticide. The Company retained defense counsel to assist in responding to the subpoena and otherwise in defending the Company’s interests. AMVAC is cooperating in the investigation.

~~Since April 2018,~~ After interviewing multiple witnesses (including three employees before a grand jury in February 2022) and making multiple document requests, the Department of Justice (“~~DOJ”~~DoJ”) has conducted several interviews of AMVAC employees and issued supplemental document requests in connection with the investigation. In November 2020, DOJ issued a second grand jury subpoena seeking records and related communications with regard to a submission made by the Company to the Environmental Protection Agency (“EPA”) in connection with a request to amend a pesticide’s registration. Soon thereafter, DOJ also identified the Company and ~~one of its non-executive employees~~a manager-level employee as targets of the government’s investigation. ~~In January 2021, DOJ and EPA informed the Company that it is investigating~~DoJ’s investigation focused on potential violations of two environmental statutes, the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) and the Resource Conservation and Recovery Act (“RCRA”), as well as obstruction of an agency proceeding and false statement statutes. DOJ also identified evidence that it contends supports alleged violations with respect to both the Company and the individual target. As part of discussions regarding possible resolution, in October 2021, the Company presented its evaluation of the legal and factual issues raised by the government (which do not include any allegations of harm to human health or the environment) to both DOJ and USEPA. Further, three corporate witnesses were interviewed by the grand jury in Mobile, Alabama in February 2022. Following that interview,In March 2022, the individual target entered into a plea agreement ~~which was entered by the court having jurisdiction~~relating to provision of false information in ~~this matter in May 2022.~~a government proceeding. In July 2022, the ~~DOJ outlined its current view~~DoJ sent correspondence to the Company’s counsel to the effect that it was focusing on potential RCRA violations relating to the reimportation of Australian containers in 2015. Our defense counsel spoke with DoJ on the ~~investigation~~subject in early October 2022 and ~~indicated~~then again in May 2023, at which times DoJ expressed an interest in ~~reaching~~resolving the matter. The Company anticipates further discussion on resolution of the matter. ~~Further discussions on that subject are imminent. The Company expects that talks regarding potential resolution will resume in the near future.~~

The governmental agencies involved in this investigation have a range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of FIFRA, RCRA and other federal statutes including, but not limited to, injunctive relief, fines, penalties and modifications to business practices and compliance programs, including the appointment of a monitor. If violations are established, the amount of any fines or monetary penalties which could be assessed and the scope of possible non-monetary relief would depend on, among other factors, findings regarding the amount, timing, nature and scope of the violations, and the level of cooperation provided to the governmental authorities during the investigation. As a result, the Company cannot yet anticipate the timing or predict the ultimate resolution of this investigation, financial or otherwise, which could have a material adverse effect on our business prospects, operations, financial condition and cash ~~flow.~~flows. Accordingly, ~~we have~~the Company has not recorded a loss contingency for this matter.

~~Harold Reed~~Pitre etc. v. ~~AMVAC~~Agrocentre Ladauniere et al. ~~During January 2017,~~ On February 11, 2022, a strawberry grower named Les Enterprises Pitre, Inc. filed a complaint in the ~~Company was served with two Statements~~Superior Court, District of ~~Claim that had been filed on March 29, 2016 with~~Labelle, Province of Quebec, Canada, entitled Pitre, etc. v. Agrocentre Ladauniere, Inc. etal, including Amvac Chemical Corporation, seeking damages in the ~~Court~~amount of Queen’s Bench of Alberta, Canada (as case numbers 160600211 and 160600237) in which plaintiffs, Harold Reed (an applicator) and 819596 Alberta Ltd. dba Jem Holdings (an application equipment rental company), allege physical injury and damage to equipment, respectively,approximately $5 million arising from stunted growth of, and reduced yield from, its strawberry crop allegedly from the application of AMVAC’s soil fumigant, Vapam, in spring of 2021. Examinations of plaintiff were held in mid-August 2022, during which plaintiff in effect confirmed that he had planted his seedlings before expiration of the full-time interval following product application (as per the product label), that he had failed to follow the practice of planting a ~~fire~~few test seedlings before planting an entire farm, and that ~~occurred during an~~he had placed his blind trust in his application adviser on all manner of timing and rate. An examination of the Company’s potato sprout inhibitor, SmartBlock, at a potato storage facility in Coaldale, Alberta on April 2, 2014. Four other related matters were subsequently consolidated into this case (alleging loss of potatoes, damage to equipment, damage to Quonset huts and loss of business income). The parties have exchanged written discovery, and depositions of persons most knowledgeable ~~took~~witness is scheduled to take place ~~during the first quarter of 2019. Citing the length of the cases’ pendency and the expense,~~ in December 2019, plaintiff Reed voluntarily dismissed two actions (160600211 and 160600237) for no consideration. Over the course of 2020, discovery was completed, and the parties held a mediation on March 11, 2021; however, no settlement was reached. The parties participated in a second mediation in August 2022, during which plaintiffs significantly lowered their collective demands, and all parties were ableNovember 2023. Information to reach a settlement under the terms of which three co-defendants (including the Company) are equally sharing in a cash contribution. The Company’s contribution toward settlement was largely covered by pre-existing reserves and, in any event,date is not ~~material~~sufficient to ~~its financial performance~~form a judgment as to either the probability or ~~operations. The court~~amount of loss; thus, the Company has ~~entered an order of dismissal with prejudice pursuant to the settlement agreement; thus,~~not recorded a loss contingency for this ~~matter is resolved.~~matter.

Notice of Intention to Suspend DCPA ~~Suspension Proceedings~~. ~~In May~~On April 28, 2022, the USEPA ~~issued~~published a notice of ~~intention~~intent to suspend (“NOITS”) DCPA, the active ingredient of an ~~herbicidal product~~herbicide marketed by the Company under the name ~~Dacthal, on~~Dacthal. The agency cited as the basis for the suspension that the Company ~~acted allegedly inappropriately in providing~~did not take appropriate steps to provide data studies ~~that had been~~ requested byin support of the ~~agency.~~registration review. In fact, ~~the agency had requested 89 data studies and,~~ over the course of several years, the Company ~~had supplied 69 such~~cooperated in performing the vast majority of the nearly 90 studies requested by USEPA and had been working ~~constructively on mutually acceptable timetables either~~in good faith to ~~complete, or~~meet the agency’s schedule. After an appeals court (the Environmental Appeals Board) clarified the proper standard for use at the hearing (namely, whether registrant took appropriate steps to ~~obtain waivers for,~~respond to the ~~balance of the studies. The Company petitioned an administrative law judge (“ALJ”) to appeal the notice of intention to suspend ("NOITS"). In response to USEPA’s motion,~~data call-in), a hearing was held in January 2023 before the ALJ, ~~granted an accelerated~~by which time USEPA had narrowed the scope of its claim to nine outstanding studies, all of which have been completed by the Company and 8 of 9 of which have been submitted to the agency and none of which are necessary for USEPA to commence its risk assessment. In April 2022, the ALJ reached a decision, ~~to uphold~~finding that the agency acted within its authority in issuing the NOITS. The ~~Company,~~company is in ~~turn, has appealed~~ the ~~ALJ’s decision to the Environmental Appeals Board (“EAB”),~~midst of discussions with USEPA on the ~~ground that~~terms of a settlement, and, to date, the ~~basis was erroneous,~~parties have agreed to extend the company’s deadline for filing an appeal. During the course of these proceedings, AMVAC has been free to make, sell and distribute both ~~with respect~~the technical grade material and end-use product and may continue to ~~statutory construction~~do so unless and ~~factual inferences being improperly made in~~until there is an adverse ruling at both the agency’s favor. In October 2022, the EAB reversed the ALJ’s order, finding that that court had used a statutorily improper standard (namely, whether the Company had submitted all requested data as opposed to the proper standard of whether the Company acted appropriately in responding to the data call-ins)trial and appellate level (if any). The ~~matter has been remanded to the ALJ, which has set~~Company believes that a ~~hearing date of January 24, 2023. At the same time, USEPA has expressed an interest in settlement of the matter; thus, the Company, USEPA~~loss is neither probable nor estimable and, the Office of General Counsel are engaged in settlement discussions in parallel with the proceedings at the ALJ. At this stage, the Company is unable to predict the probable outcome of the matter and, accordingly,consequently, has not recorded a loss contingency ~~with respect thereto.~~for this matter.

~~15.~~16. Recent Issued Accounting Guidance —

~~Accounting Standards Adopted~~

In November 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2021-10, “Disclosures by Business Entities about Government Assistance.” This ASU codifies new requirements to disclose information about the nature of certain government assistance received, the accounting policy used to account for the transactions, the location in the financial statements where such transactions were recorded, and significant terms and conditions associated with such transactions. The guidance is effective for annual periods beginning after December 15, 2021. Effective January 1, 2022, the Company adopted ASU No. 2021-10 on a prospective basis. ~~The adoption of this standard was not material to the Company’s condensed consolidated financial statements.~~

~~Accounting Standards Not Yet Adopted~~

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers.” This ASU requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606. The ASU is effective for fiscal years and interim periods beginning after December 15, 2022, with early adoption permitted. The Company is evaluating the impact of adopting this ASU and does not expect a material impact on its condensed consolidated financial statements.

The Company reviewed all ~~other~~ recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to its condensed consolidated financial statements.

~~16.~~17. Fair Value of Financial Instruments — The accounting standard for fair value measurements provides a framework for measuring fair value and requires certain disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard established a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amount of the Company’s financial instruments, which principally include cash and cash equivalents, short-term investments, accounts receivable, ~~long-term investments,~~ accounts payable and accrued expenses, approximates fair value because of the relatively short maturity of such instruments. The carrying amount of the Company’s ~~short-term and long-term~~ borrowings, which are considered Level 2 liabilities, approximates fair value ~~based upon~~as they bear interest at a variable rate that represents current ~~rates and terms available to the Company for similar debt.~~market rates.

The Company measures its contingent earn-out liabilities in connection with business acquisitions at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. The Company did not have any contingent earn-out liabilities at June 30, 2023 and December 31, 2022.

The following table illustrates the Company’s contingent ~~consideration~~earn-out liability movements related to its business ~~acquisitions:~~acquisitions as of, and for, the three-and six-month periods ended June 30, 2022:

Three months ended
September 30, 2022

Three months ended
September 30, 2021

Balance, June 30

$
1,367

$
2,116

Fair value adjustment

—

(493
)
Payments on existing obligations

(1,292
)

—

Accretion of discounted liabilities

10

(1
)
Foreign exchange effect

(85
)

(57
)
Balance, September 30

$
—

$
1,565

Nine months ended
September 30, 2022

Nine months ended
September 30, 2021

Balance, December 31

$
786

$
2,468

Purchase price adjustment

—

(955
)
Fair value adjustment

635

520

Payments on existing obligations

(1,292
)

(250
)
Accretion of discounted liabilities

28

(10
)
Foreign exchange effect

(157
)

(208
)
Balance, September 30

$
—

$
1,565


	Three months ended June 30, 2022			Six months ended June 30, 2022
Balance, March 31, 2022 and December 31, 2021	$	1,437		$	786
Fair value adjustment		36			635
Accretion of discounted liabilities		11			17
Foreign exchange effect		(117	)		(71	)
Balance, June 30, 2022	$	1,367		$	1,367

~~The contingent consideration in the amount of $786~~ ~~is included in current installments of other liabilities on the condensed consolidated balance sheets as of December 31, 2021.~~

~~17.~~18. Accumulated Other Comprehensive Loss (“AOCL”)—The following table lists the beginning balance, annual activity and ending balance of accumulated other comprehensive loss, which consists of foreign currency (FX) translation adjustments:


	Total
Balance, December 31, 2022	$	(12,182	)
Foreign currency translation adjustment, net of tax effects of ($132)		2,546
Balance, March 31, 2023		(9,636	)
Foreign currency translation adjustment, net of tax effects of ($122)		3,505
Balance, June 30, 2023	$	(6,131	)

Balance, December 31, 2021	$	(13,784	)
Foreign currency translation adjustment, net of tax effects of ($48)		7,080
Balance, March 31, 2022		(6,704	)
Foreign currency translation adjustment, net of tax effects of $109		(6,064	)
Balance, June 30, 2022	$	(12,768	)
~~Foreign currency translation adjustment, net of tax effects of $~~81		(~~2,764~~	)
~~Balance, September 30, 2022~~	$	(~~15,532~~	)

~~Balance, December 31, 2020~~	$	(~~9,322~~	)
~~Foreign currency translation adjustment, net of tax effects of $1,179~~		(~~2,503~~	)
~~Balance, March 31, 2021~~		(~~11,825~~	)
~~Foreign currency translation adjustment, net of tax effects of ($1,731~~)		~~2,914~~
~~Balance, June 30, 2021~~		(~~8,911~~	)
~~Foreign currency translation adjustment, net of tax effects of $1,359~~		(~~3,459~~	)
~~Balance, September 30, 2021~~	$	(~~12,370~~	)

~~18.~~ 19. Equity Investments — In February 2016, AMVAC Netherlands BV made an investment in Biological Products for Agriculture (“Bi-PA”). Bi-PA develops biological plant protection products that can be used for the control of pests and disease of agricultural crops. As of ~~September~~June 30, ~~2022~~2023 and ~~December 31, 2021,~~2022, the Company’s ownership position in Bi-PA was 15%. Since this investment does not have a readily determinable fair value, the Company has elected to measure the investment at cost less impairment, if any, and also records an increase or decrease for changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Bi-PA. The Company periodically reviews the investment for possible impairment. There was no impairment or observable price changes on the investment during the ~~three-~~three and ~~nine-month periods~~six months ended ~~September~~June 30, 2023 and 2022. The ~~Company recorded an impairment in the amount of $399~~ ~~during the three- and nine-month periods ended September 30, 2021.The~~ investment is recorded within other assets on the condensed consolidated balance sheets and amounted to $~~2,884~~2,869 as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

On April 1, 2020, AMVAC purchased 6.25 million shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. (TSX Venture Exchange: “CSX”) for $1,190. The shares are publicly traded, have a readily determinable fair value, and are considered a Level 1 investment. The fair value of the stock amounted to $~~659~~708 and $~~1,516~~784 as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The Company recorded a loss of $~~454~~55 and $~~269~~486 for the ~~three-month periods~~three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.The Company recorded a loss of $~~857~~77 and ~~a gain of~~ $~~502~~403 for the ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The investment is recorded within other assets on the condensed consolidated balance sheets.

1918

~~19.~~ ~~Product and Business Acquisitions~~ ~~— The Company did not complete any acquisitions during the three- and nine-month periods ended September 30, 2022. The Company completed~~ ~~one~~ ~~product acquisition during the three- and nine-months ended September 30, 2021. The acquisition was completed on July 1, 2021, for $10,000~~ ~~in cash consideration. The acquisition was accounted for as an asset acquisition and the $10,000 in consideration was allocated as follows: product registrations and product rights $8,225, trade names and trademarks $1,650, and prepaid asset $125~~.

20. Income Taxes —Income tax expense for the three and six months ended June 30, 2023 and 2022, is computed using the estimated effective tax rates applicable to each of the domestic and international taxable jurisdictions for the full year. The Company’s tax rate is subject to management’s quarterly review and revision, as necessary. The Company’s provision for income taxes and effective income tax rate are significantly impacted by the mix of the Company’s domestic and foreign income (loss) before income taxes. Income tax expense was $~~2,963~~1,541 and $~~1,517~~2,725 for the three-month period ended ~~September~~June 30, 2023, and 2022, respectively, and ~~2021,~~$1,181 and $7,224 for the six months ended June 30, 2023, and 2022, respectively. The effective income tax rate was ~~30.5~~315.36% and ~~20.7~~28.5% for the three-month periods ended ~~September~~June 30, 2023 and 2022, respectively, and ~~2021, respectively. Income tax expense was $10,187~~ ~~and $5,324~~ ~~for the nine months ended September 30, 2022, and 2021, respectively. The effective tax rate for the nine-month periods ended September 30, 2022 and 2021, was~~ ~~30.2~~57.7% and ~~27.4~~30.1%, for the six months ended June 30, 2023 and 2022, respectively. For the ~~three- and nine-month periods~~three-month period ended ~~September~~June 30, ~~2022,~~2023, the effective income tax rate increased compared to the same ~~periods~~period of ~~2021 reflecting the mix~~2022 primarily due to withholding tax charges, net of income tax credits, associated with interest on certain intercompany loans, and losses incurred at certain entities which did not result in ~~different jurisdictions. For~~a benefit for income tax ~~years beginning after December 31, 2021,~~purposes as these entities continue to maintain a valuation allowance against their net deferred tax assets. In addition to these factors, the ~~Tax Cuts and Jobs Act (“TCJA”) of 2017 amends Internal Revenue Code Section 174 Costs wherein research and development expenditures will no longer be deducted~~increase in the effective income tax ~~year~~rate for the six months ended June 30, 2023, as compared to the same period in 2022 is due to establishing liabilities for uncertain tax positions in certain jurisdictions, partially offset by a benefit from the remeasurement of certain U.S. federal and state deferred taxes.

It is expected that ~~such costs are incurred but must now~~$1,814 of unrecognized tax benefits will be ~~capitalized and amortized over either a five- or fifteen-year period, depending on~~released within the ~~location~~next twelve months due to expiration of the ~~activities performed. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.~~statute of limitations.

21. Stock Re-purchase Programs — The Company periodically repurchases shares of its common stock under a board-authorized repurchase program through a combination of open market transactions and accelerated share repurchase (ASR) arrangements.

On March 8, 2022, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate number of up to 1,000,000 shares of its common stock under a 10b5-1 plan, par value $0.10 per share, in the open market over the succeeding one year, subject to limitations and restrictions under applicable securities laws. During 2022 and 2023, the Company purchased 761,985 shares of its common stock for a total of $14,558 at an average price of $19.11 per share under this plan which terminated on March 8, 2023.

On May 25, 2023, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase up to $15,000 of its common stock under a 10b5-1 plan, par value $0.10 per share, in the open market over the succeeding one year, subject to limitations and restrictions under applicable securities laws. During the three months ended June 30, 2023, the Company purchased 380,366 shares of its common stock for a total of $6,669 at an average price of $17.51 per share under this plan.

The table below summarizes the number of shares of the Company’s common stock that were repurchased during the ~~three-~~three and ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022. There were no such purchases during the three-~~2023 and ~~nine-month periods ended September 30, 2021.~~2022.

Month ended

Total number of
shares purchased

Average price
paid per share

Total amount paid

Maximum number
of shares that may
yet be purchased
under the plan

March 31, 2022

332,404

$
18.71

$
6,219

667,596

Balance at March 31, 2022

332,404

$
6,219

667,596

April 30, 2022

100

$
19.99

$
2

667,496

May 31, 2022

506

$
19.99

$
11

666,990

Balance at June 30, 2022

606

$
19.99

$
13

666,990

August 31, 2022

165,039

$
19.59

$
3,234

501,951

September 30, 2022

222,301

$
19.19

$
4,265

279,650

Balance at September 30, 2022

387,340

$
19.36

$
7,499

279,650

Total number of shares repurchased

720,350

$
19.06

$
13,731

279,650


Three months ended	Total number of shares purchased		Average price paid per share		Total amount paid
June 30, 2023		380,366	$	17.51	$	6,669
June 30, 2022		606	$	19.99	$	13

Six months ended	Total number of shares purchased		Average price paid per share		Total amount paid
June 30, 2023		408,201	$	17.88	$	7,226
June 30, 2022		333,010	$	18.71	$	6,232

~~On August 22, 2022, pursuant to a Board~~As of ~~Directors resolution,~~June 30, 2023, the Company ~~entered into an accelerated share repurchase arrangement~~may yet purchase up to ~~repurchase~~ $~~20,000~~8,331 of its common ~~stock. Under the agreement, the Company paid $20,000~~ ~~and immediately received an initial delivery of~~ ~~802,810~~ ~~shares in the amount of $16,000, which the Company recorded as treasury shares. The Company recorded the remaining $4,000~~ ~~as a reduction to additional paid-in capital pending final settlement in the fourth quarter of 2022. The final number of shares that the Company ultimately receives~~stock under the agreement will be determined based on the average of the Rule 10b-18 volume-weighted average prices of the Company’s common stock during the term of the agreement, less and agreed discount, and subject to adjustments pursuant to the terms of the agreement.

The table below summarizes the number of shares of the Company’s common stock that were received under the accelerated share repurchase arrangement during the three- and nine-month periods ended September 30, 2022. ~~There were no such transactions during the three- and nine-month periods ended September 30, 2021.~~

Month ended

Total number of
shares received

Average price
paid per share

Total amount paid

August 31, 2022

802,810

$
19.93

$
16,000

~~In summary, the Company added a total of~~ ~~1,190,150~~ ~~and~~ ~~1,523,160~~ ~~of treasury shares of the Company’s common stock during the three- and nine-month periods ended September 30, 2022.~~its current 10b5-1 plan.

22. Supplemental Cash Flow Information


	For the Nine Months Ended September 30,				For the Six Months Ended June 30,
	2022		2021		2023		2022
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	2,073	$	2,839	$	2,556	$	1,100
Income taxes, net	$	15,530	$	3,836	$	5,641	$	10,749
Non-cash transactions:
ROU assets exchanged for lease liabilities	$	4,202	$	17,872
Deferred consideration in connection with business acquisitions:					$	—	$	635
Cash dividends declared and included in accrued expenses	$	715	$	594	$	848	$	742

2119

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers in thousands)

FORWARD-LOOKING STATEMENTS/RISK FACTORS:

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to a number of risks, uncertainties and other factors. In connection with the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statements identifying important factors which, among other things, could cause the 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 Annual 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; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 3., Quantitative and Qualitative Disclosures about Market Risk, and Part II, Item 1A., Risk Factors, in this Quarterly Report on Form 10-Q.

~~MANAGEMENT OVERVIEW~~Effective January 1, 2023, the Company includes warehousing, handling and outbound freight costs in cost of sales instead of operating expenses on its condensed consolidated statements of operations. The effects of the change in accounting have been retrospectively applied to all periods presented. The Company believes that the change in accounting is preferable as it aligns the Company’s classification of this warehousing, handling and outbound freight costs in such a way as to present operational management with a clearer vision of the operational performance by business unit. This accounting change also increases the comparability of the Company’s financial performance with its peer companies as most peer companies include warehousing, handling and outbound freight costs in cost of sales rather than operating expenses. As a result, this change is intended to help interested parties better understand the Company’s performance and facilitate comparisons with most of the Company’s peer companies. The change in accounting principle did not have any impact on operating income, net income and earnings per share. Please refer to Note 12 to the condensed consolidated financial statements for further details.

Overview of the Company’s Performance

~~During~~The Company’s financial performance for the ~~third~~second quarter of 2022, the agriculture industry continued to demonstrate resiliency. Driven by geopolitical conditions, corn and soybean commodity prices for row crops remained high. Further, supply chain conditions continued to improve across many industries. Further, thus far, the industry has been able to compensate for the effects of inflation through price increases. The Company responded to these conditions by increasing prices, where possible, and deployed its factory assets to continue meeting demand. Consequently, the Company’s overall operating results for the third quarter of 2022 improved modestly in terms of net sales and more significantly in terms of profitability, as compared with those of the same period of 2021. Led by increased sales within our international business, consolidated net sales increased by 3% (to end at $152,1172023 declined as compared to ~~$147,298)~~the second quarter of 2022. While commodity prices remained stable, in the face of increasing interest rates, the distribution channel within domestic crop implemented strict measures to control inventory and ~~net income increased by 23% (to $6,741~~otherwise limit the carrying costs of working capital. As a result, customers are allowing inventories to reduce to low levels before ordering closer to the time of use. In addition, during the quarter, the Company experienced supply unavailability of one of its high-margin herbicides. Within the non-crop business, retailers – whether big box stores, nurseries, or garden centers – broke with traditional stocking patterns and both delayed placing orders until closer to time of use and ordered less product, relying on the Company to hold inventory. Further, during the period, our international businesses experienced significant market pressure from ~~$5,498).~~China-based suppliers that flooded the Central American markets with low-priced generic goods.

OnAgainst this backdrop, on a consolidated basis, domestic sales ~~were flat, and~~declined by 14% while international sales ~~increased 9%~~declined by 6%, resulting in an overall net sales ~~improvement~~decline of 3%10%. ~~By contrast,~~Overall cost of sales was virtually flat, quarter-over-quarter. This lower comparative increase in cost of sales was a result of higher selling prices and a favorable mix of higher-margin products in the third quarter of 2022, as compared to the same period of the prior year.decreased by 9%. Cost of sales were ~~60%~~68% of sales in ~~the third quarter of 2022,~~2023, as compared to ~~61%~~67% for the same period of ~~2021.~~2022. These factors, taken together ~~yielded~~with slightly higher manufacturing costs (both labor and service-related), resulted in a ~~8% increase~~13% decrease in gross profit (to $42,909 in 2023 from $49,311 in the comparable quarter of 2022), while overall gross margin percent ~~improved~~declined to ~~40%~~32% from ~~39% quarter-over-quarter, as a result of selling more higher margin products, increased prices, and better factory performance.~~33% quarter-over-quarter.

Operating expenses ~~remained flat at 33%~~increased to $39,154 for the three-months period ended June 30, 2023 from $38,518, as compared to prior year; further, operating expenses as a percent of net sales ~~notwithstanding significant inflationary pressure.~~ rose to 29% in the second quarter of 2023 from 26% in the comparable period of 2022, largely due to higher research, product development costs, regulatory expenses costs and increase sales and marketing expenses.

Operating income for the period ~~increased by 26% (to $11,244~~decreased to $3,755 from ~~$8,946),~~$10,813, driven by reduced sales, decreased gross margin percentage and proportionately higher operating expenses. During the ~~overall sales increase,~~second quarter, the Company experienced significantly higher ~~selling prices and improved factory utilization. Interest expense was flat as compared with~~interest expenses, due to comparatively higher interest rates. Income before taxes ended at $489 including a profitable performance for most of the ~~same period~~Company’s operating entities around the world, offset by losses in a small number of ~~2021, while~~businesses. One of the businesses which lost money in the quarter is in Brazil. Losses at that entity generate a tax benefit, offset by a valuation allowance. As a result, net tax expense ~~rose by 95% (from $1,517~~exceeded income before taxes, resulting in a net loss for the ~~third quarter of 2021~~quarter. Additionally, a withholding tax charge was incurred on interest relating to ~~$2,963 in the same period of 2022) due to an increase in taxable income and higher effective tax rate.~~ intercompany debt.

These factors yielded a net ~~income~~loss for the period of ~~$6,741, a 23% increase over~~$1,052, as compared to ~~$5,498~~net income of $6,830 in the ~~third~~second quarter of ~~2021.~~2022. Details on our financial performance are set forth below.

RESULTS OF OPERATIONS

Quarter Ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	2022			2021			Change			% Change			2023			2022			Change			% Change
Net sales:
U.S. crop	$	69,115		$	66,722		$	2,393			4	%	$	56,212		$	63,513		$	(7,301	)		-11	%
U.S. non-crop		18,936			21,622			(2,686	)		-12	%		16,878			20,996			(4,118	)		-20	%
Total U.S.		88,051			88,344			(293	)		0	%		73,090			84,509			(11,419	)		-14	%
International		64,066			58,954			5,112			9	%		59,700			63,694			(3,994	)		-6	%
Total net sales:	$	152,117		$	147,298		$	4,819			3	%	$	132,790		$	148,203		$	(15,413	)		-10	%
Cost of sales:
U.S. crop	$	34,613		$	36,485		$	(1,872	)		-5	%	$	(34,509	)	$	(39,600	)	$	5,091			-13	%
U.S. non-crop		10,125			12,740			(2,615	)		-21	%		(9,769	)		(11,752	)		1,983			-17	%
Total U.S.		44,738			49,225			(4,487	)		-9	%		(44,278	)		(51,352	)		7,074			-14	%
International		45,995			41,009			4,986			12	%		(45,603	)		(47,520	)		1,917			-4	%
Total cost of sales:	$	90,733		$	90,234		$	499			1	%	$	(89,881	)	$	(98,872	)	$	8,991			-9	%
Gross profit:
U.S. crop	$	34,502		$	30,237		$	4,265			14	%	$	21,703		$	23,913		$	(2,210	)		-9	%
U.S. non-crop		8,811			8,882			(71	)		-1	%		7,109			9,244			(2,135	)		-23	%
Total U.S.		43,313			39,119			4,194			11	%		28,812			33,157			(4,345	)		-13	%
International		18,071			17,945			126			1	%		14,097			16,174			(2,077	)		-13	%
Total gross profit	$	61,384		$	57,064		$	4,320			8	%	$	42,909		$	49,331		$	(6,422	)		-13	%
Gross margin:
U.S. crop		50	%		45	%								39	%		38	%
U.S. non-crop		47	%		41	%								42	%		44	%
Total U.S.		49	%		44	%								39	%		39	%
International		28	%		30	%								24	%		25	%
Total gross margin		40	%		39	%								32	%		33	%

Our domestic crop business recorded net sales during the second quarter of 2023 that were ~~4% higher~~11% lower than those of the ~~third~~second quarter of ~~2021~~2022 ($~~69,115~~56,212 as compared to ~~$66,722)~~$63,513). ~~Year-over-year gains~~This overall decline was largely attributable to a broad-based slowdown in distribution channel purchasing, as our customers focused on inventory reduction in the face of rising interest rates and higher carrying costs for working capital. Within our several product lines, there was nevertheless a degree of variability. While overall net sales of our corn products were ~~posted by Dacthal (a leading weed control solution for~~relatively stable year-over-year, with soil insecticides higher compared to the second quarter of the prior year, we recorded reduced sales of our Impact post-emergent corn herbicides, due largely to higher-than-normal inventory levels of generic herbicides in the distribution channel. Further, we recorded no sales of Dacthal®, our specialty crop herbicide, in the second quarter due to unavailability of goods from our overseas supply chain partner as compared to second quarter of the prior year, when inventory was readily available, and demand was strong in light of news of a ~~variety of high value vegetable crops including onions), Folex (which benefited from favorable harvest weather conditions and the~~potential suspension. In our cotton products, we experienced an increase in ~~2022 cotton acres in the Mississippi Delta region), and Bidrin (our cotton~~sales of our foliar insecticide, Bidrin®, which ~~benefitted from increased early-season pest pressure). These gains~~ were partially offset by ~~lower~~a decline in sales of ~~corn soil insecticide Aztec, due~~Folex®, our harvest defoliant – we expect that these sales will shift to later in 2023. The cotton market was also influenced by a ~~shift~~decline in ~~customer purchasing patterns,~~cotton commodity prices and ~~temporarily delayed~~a decline in planted cotton acres (down approximately 2 million acres year-over-year). Partially offsetting these declines, we saw an increase in sales of Thimet for sugarcane applications which were curtailed at the end of the quarter due to the impact of Hurricane Ian on logistics in Florida. Further, while drought conditions in our Western and Southwestern markets adversely impacted the physical volume of our soil fumigants ~~products, we achieved~~with improved ~~net~~agricultural water allocation in the western region and stronger sales ~~through appropriate price adjustments.~~of our Thimet® granular insecticide for use in peanuts and sugar cane.

Cost of sales within the domestic crop business decreased by 5%13% (from ~~$36,485~~$39,600 in ~~2021~~2022 to ~~$34,613~~$34,509 in ~~2022) primarily~~2023) as a result of ~~selling more higher-margin~~decreased volumes, lower in-bound freight costs and a change in the mix of products ~~and improved~~sold, as compared to the second quarter of 2022. Our net factory ~~performance. As~~cost for the quarter rose, due largely to increased factory overhead costs. Domestic crop recorded a ~~result of these factors and increased pricing, domestic crop generated an 14% increase~~9% decrease in gross profit (from ~~$30,237~~$23,913 in 2022 to $21,703 in 2023) and an overall improvement in gross margin percentage to 39% versus 38% for the ~~third~~comparable quarter ~~of 2021 to $34,502 this year) on a 4% increase~~ in ~~sales.~~2022.

Our domestic non-crop businessposted a ~~decline~~20 % decrease in net sales in the ~~third~~second quarter ~~of 2022,~~2023, as compared to the same period in the prior year ~~(down 12%~~($16,878 in 2023 v. $20,996 in 2022). We experienced lower demand for our consumer pest control products, as retail channels significantly tightened their procurement activity in order to ~~$18,936~~reduce working capital carrying costs. Many such retailers are operating on a just-in-time approach toward stocking, which is a break from ~~$21,622 in 2021). In~~ the ~~quarter, demand for~~historical norm. Additionally, our non-crop business recorded lower net sales from our OHP nursery and ornamental ~~products declined, as consumer spending paused on concerns over a possible economic recession. Conversely, we saw an uptick in demand for goods that we supply~~businesses, which were similarly influenced by inventory reduction at point of sale. Partially offsetting these decreases, our Dibrom® mosquito adulticide generated higher sales compared to ~~professional pest control applicators and landscapers. Mosquito control product sales were below~~the same quarter of the prior year, ~~third quarter, but~~as wet weather in the ~~aftermath~~western United States has engendered greater mosquito pressure and, with it, the upsurge of ~~Hurricane Ian channel inventories~~vector-borne diseases such as malaria and Zika virus. Finally, royalty and license fees for our Envance proprietary solutions were higher than the second quarter of ~~our Dibrom adulticide are being depleted and is expected to be replenished in the next two quarters.~~last year.

Cost of sales within the domestic non-crop business ~~declined~~decreased by ~~21%~~about 17% in the ~~third~~second quarter ~~of 2022,~~2023, as compared to the same period in the prior year (from ~~$12,740~~$11,752 to $9,769). This was driven by a different mix of products including some lower margin products. This, in ~~2021~~turn, led to ~~$10,125~~a decrease in ~~2022), primarily resulting from lower sales offset by price increases and improved factory performance and associated overhead cost recovery. Gross~~gross profit for domestic non-crop ~~decreased by 1%~~of 23% (from ~~$8,882~~$9,244 in ~~2021~~2022 to ~~$8,811~~$7,109 in ~~2022).~~2023) and yielded a gross margin percentage of 42% versus 44% for the comparable quarter in 2022.

Net sales of our international businesses ~~rose~~declined by 9%about 6% during the period ($~~64,066~~59,700 in ~~2022~~2023 vs. ~~$58,954~~$63,694 in ~~2021)~~2022). Broadly speaking, we experienced sales decreases in herbicides and ~~constituted 42%~~soil fumigants, partially offset by increases in fungicides, foliar insecticides and granular soil insecticides Counter® and Mocap®. Regionally speaking, we posted sales decreases in the Central American market through our AgriCenter group due to Asian suppliers flooding the market with low-priced, generic products and drought conditions in Panama. Similarly, demand for our Assure II herbicide for soybeans in Canada lessened, following historically stronger sales in the first quarter. Net sales of our ~~consolidated quarterly sales. These results were achieved despite~~business in Brazil declined due to general market conditions that reflect price erosion competition from generic products sourced in Asia. Partly offsetting these decreases, our Australian business delivered higher sales and steady gross profits versus the ~~challenges posed by~~prior year, as the strong US Dollar and various production, supply, and transportation difficulties. The business benefited from sales increases in soil fumigants, Mocap and Nemacur soil insecticides and an especially strongaddition of AgNova products has enhanced our market position. Similarly, our performance in Brazil, where our Counter nematicide sales are accelerating. Our Central American business experienced increased demand in the pineapple, banana, and citrus markets, along with continuing expansion of our Greenplants micronutrient solutions. In Mexico remained solid, despite drought conditions, our business experienced good performance by penetrating previously untapped regions of the country with at-plant fumigants and herbicides on high-value crops. Despite sufficient rainfall and heavy demand for molluscicides and other insecticide products for use on canola, winter wheat and pulse, our Australian operations posted lower sales as a result of supply constraints and transportation-related difficulties.some temporary product manufacturing impediments.

Cost of sales in our international business ~~increased~~decreased by ~~12%~~4% (from ~~$41,009~~$47,520 in ~~2021~~2022 to ~~$45,995~~$45,603 in ~~2022)~~2023), ~~on sales that increased~~and gross profit decreased by ~~9% and was impacted by cost increases (including logistics and freight) of the third-party products that we distribute.~~13% (to $14,097 in 2023 from $16,174 in 2022). Gross ~~profit~~margin percentage for the international ~~businesses increased by 1% (to $18,071 in 2022~~business dropped to 24% from ~~$17,945 in 2021).~~25% quarter-over-quarter.

On a consolidated basis,gross profit for the ~~third~~second quarter of 2023 decreased by 13% (from $49,331 in 2022 ~~increased by 8% (from $57,064~~to $42,909 in ~~2021 to $61,384 in 2022)~~2023). ~~Overall~~Taken together, the overall gross margin percentage ended at ~~40%~~32% in the ~~third~~second quarter of ~~2022,~~2023, as compared to ~~39%~~33% in the ~~third~~second quarter of the prior year. The primary driver for this increase was higher selling prices coupled with improved factory performance, partially offset by inflation on raw materials and logistics and, for our international businesses, higher purchases costs related to increases in the US Dollar.

Operating expenses increased by ~~$1,730~~$637 to ~~$50,140~~$39,155 for the three-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. The changes in operating expenses by department are as follows:


	2022		2021		Change			% Change			2023		2022		Change			% Change
Selling	$	14,162	$	12,462	$	1,700			14	%	$	13,200	$	12,717	$	483			4	%
General and administrative		15,570		15,727		(157	)		-1	%
Other												16,542		16,258		284			2	%
Proxy contest activities												—		1,785		(1,785	)		-100	%
Research, product development and regulatory		8,513		7,674		839			11	%		9,413		7,758		1,655			21	%
Freight, delivery and warehousing		11,895		12,547		(652	)		-5	%
Subtotal	$	50,140	$	48,410	$	1,730			4	%	$	39,155	$	38,518	$	637			2	%

•

Selling expenses increased by ~~$1,700 to end at $14,162~~$483 for the ~~three-month period~~three months ended ~~September~~June 30, ~~2022,~~2023, as compared with the same period of the prior year. This included increased costs associated with employees and travel expenses ~~(as~~as the business ~~resumed in-person interaction~~continues to grow and return to normal face to face contact with ~~customers), inflation related increased wages, increased spending on advertising~~customers, and ~~promoting~~other costs supporting long term growth offset to a degree by the ~~Company’s products, and the cost of commissions associated with sales growth~~beneficial movements in ~~Brazil. These increased costs were somewhat offset by~~some key exchange ~~movement in key currencies.~~rates.

•

General and administrative expenses ~~decreased~~slightly increased by ~~$157 to end at $15,570~~$284 for the ~~three-month period~~three months ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period of ~~2021. The main drivers were the positive impacts on the foreign currency exchange rates, offset~~2022, primarily driven by increased ~~wages,~~reserves for potential doubtful debts in central America and some additional headcount and travel ~~expenses, legal and other administrative~~ costs in support of our ~~growing~~expanding business.

•

During the three-months ended June 30, 2022, the Company spent $1,785 in fees associated with its proxy activities. There were no similar expenses during the same three-month period this year.

•

Research, product development costs and regulatory expenses increased by ~~$839 to end at $8,513~~$1,655 for the ~~three-month period~~three months ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period of ~~2021.~~2022. The main drivers were increased ~~international regulatory~~costs associated with the commercialization of our SIMPAS delivery system and ~~registration~~ costs ~~as we invest in our strongly growing business.~~associated with product defense and product development activities.

•

Freight, delivery and warehousing costs for the three-month period ended September 30, 2022, were $11,895 or 7.8% of sales as compared to $12,547 or 8.5% of sales for the same period in 2021. The decrease can mainly be attributed to improved supply chain conditions and variations in delivery destinations.

On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. The Company recorded a negative fair value ~~adjustments~~adjustment in the amount of ~~$454 and $269 for~~$55 during the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021, respectively.~~$486 during the comparative three months of the prior year.

Interest costs net of capitalized interest were ~~$1,086~~$3,211 in the three-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$962~~$772 in the same period of ~~2021.~~2022. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense


	Three months ended September 30, 2022								Three months ended September 30, 2021								Three months ended June 30, 2023								Three months ended June 30, 2022
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	125,441	$	1,104			3.5	%	$	147,171	$	889			2.4	%	$	152,750	$	2,699			7.1	%	$	124,184	$	745			2.4	%
Amortization of deferred loan fees		—		61			—			—		70			—			—		55			—			—		69			—
Amortization of other deferred liabilities		—		10			—			—		2			—			—		—			—			—		11			—
Other interest expense		—		(1	)		—			—		52			—			—		571			—			—		12			—
Subtotal		125,441		1,174			3.7	%		147,171		1,013			2.8	%		152,750		3,325			8.7	%		124,184		837			2.7	%
Capitalized interest		—		(88	)		—			—		(51	)		—			—		(114	)		—			—		(65	)		—
Total	$	125,441	$	1,086			3.5	%	$	147,171	$	962			2.6	%	$	152,750	$	3,211			8.4	%	$	124,184	$	772			2.5	%

The Company’s average overall debt for the three-month period ended ~~September~~June 30, ~~2022~~2023 was ~~$125,441,~~$152,750, as compared to ~~$147,171~~$124,184 for the three-month period ended ~~September~~June 30, 2021. Our borrowings in the three-month period ended September 30, 2022, were lower mainly due to cash generated over the last 12 months used to pay down debt, partially offset by the acquisition activity over the same period and increases in working capital in support of business growth. As can be seen from the table above, the2022. The effective bank interest rate on our revolving line of credit was ~~3.5%~~7.1% and 2.4% ~~at each of~~for the three-month ~~period~~periods ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Income tax expense ~~increased~~decreased by ~~$1,446~~$1,184 to ~~$2,963~~$1,541 for the three-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$1,517~~$2,725 for the comparable period in ~~2021.~~2022. The effective tax rates for the three-month period ended ~~September~~June 30, 2023, and 2022, were 315.36% and ~~2021, were 30.5% and 20.7%~~28.5%, respectively. The increase in the effective tax rate for ~~all interim periods~~the three months ended June 30, 2023 compared to the same period in 2022 is ~~based~~primarily due to withholding tax charges, net of income tax credits, associated with interest on ~~the projected~~certain intercompany loans, and losses incurred at certain entities which did not result in a benefit for income tax purposes as these entities continue to maintain a valuation allowance against their net deferred tax assets.

We generated income before provision for income taxes of $489 and $9,555 for the ~~full year~~three months ended June 30, 2023 and ~~is subject to ongoing review and adjustment by management. The increase in effective tax rate was primarily driven by the mix of our domestic and international income.~~

2022, respectively. Our net loss (after income taxes) for the three-month period ended ~~September~~June 30, ~~2022,~~2023, was ~~$6,741~~$1,052 or ~~$0.23~~($0.04) per basic and diluted share, as compared to ~~$5,498~~a net income of $6,830 or ~~$0.18~~$0.23 per basic and diluted share in the same quarter of ~~2021.~~2022.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Overview of the Company’s Performance

~~During the first nine months of 2022,~~Within the global agricultural industry, ~~maintained~~the first six months of 2023 marked a plateau to the upcycle that ~~began~~had begun in 2021. Commodity prices ~~remained high, driven in part by~~were relatively stable, although corn and soybean prices showed vacillation. Wheat prices have risen and fallen with developments arising from the Russian invasion of ~~Ukraine, which has served~~Ukraine. However, rising interest rates have engendered a newfound sense of fiscal rectitude among farmers, retailers and distributors. In an effort to ~~reduce exports from both Russia and Ukraine, of corn, wheat, sunflower oil and fertilizer inputs into~~control the ~~global market, and a stronger farm economy in the U.S. Inflation in multiple countries has led to higher~~carrying costs of working capital, the distribution channel for crop products has tightened its procurement practices and consequently reduced demand. We have seen the same sudden shift within the non-crop markets, where big box stores, nurseries and garden centers have sharply curtailed inventory stocking. On the international side, while we have experienced consistent performance in certain markets (Mexico and Australia), LATAM markets have been flooded with low-priced generic goods ~~and transportation; however, the strength of the farm economy was able to absorb~~from China-based companies. Amidst these effects during the subject period. Following extraordinary activity in the first quarter, domestic distribution within our industry slowed procurement modestly during the second and third quarters. All told,market dynamics, the Company’s overall operating results for the first ~~nine~~six months of ~~2022 improved in most all respects~~2023 declined over those of the same period ~~of 2021.~~in 2022.

On a consolidated basis, with domestic sales ~~up 12%~~down 20% and international sales updown by ~~14%~~3%, overall net sales ~~increased~~decreased by 13% (to ~~$449,636~~$257,674 in 2023 from ~~$398,063)~~$297,797 in 2022). Cost of sales were ~~up 10%~~reduced by 11% on an absolute basis ~~but decreased~~and, as a consequence of the comparative declines between domestic and international business, increased as a percent of net sales to ~~59%~~68% from ~~61%~~66%. ~~Factory performance improved~~While factory activity during the first ~~nine months~~half of ~~2022,~~2023 was strong, increased factory overhead costs yielded a higher net factory cost, as compared to ~~that~~the first six months of ~~2021.~~2022. These factors, taken together, yielded ~~an increase~~a 19% decrease in gross profit ~~which was up $28,022 or 18% period-over-period~~(to $81,444 in 2023 from $100,727 in 2022) and ~~improved~~gross margin percentage declined to ~~41% of net sales, up~~32% from ~~39% during~~34% in the first ~~nine months~~half of ~~2021. Operating~~2022. In the first half of 2023, operating expenses ~~rose on an absolute basis by 10% but declined~~were down approximately 1%, as compared to those of the prior year period and increased as a ~~percent~~percentage of net sales to ~~32% as compared to 33% of net sales~~29% from 25% for the same period of the prior year.

Interest expense ~~declined slightly, while income~~increased significantly during the period due to lower cash receipts, primarily driven by the reduced sales of our Aztec product in the last three quarters driven by supply chain challenges. This has resulted in higher average borrowings, coupled with higher interest rates, resulting in significantly higher interest expense.

Income tax expense ~~increased to $10,187 from $5,324 during~~decreased as income before taxes was lower than the ~~comparable period last year, primarily as a result~~first half of ~~stronger financial performance and higher effective tax rate. Overall,~~ the prior year. The Company’s net income ~~for the period increased by 71%, ending~~ended at ~~$23,506,~~$865, as compared to ~~$13,713 during~~$16,765 in the first ~~nine months~~half of the prior year. Details on our financial performance are set forth below.

RESULTS OF OPERATIONS

~~Nine~~Six months ended ~~September~~June 30, ~~2022,~~2023, and ~~2021~~2022


	2022			2021			Change			% Change			2023			2022			Change			% Change
Net sales:
U.S. crop	$	220,503		$	184,052		$	36,451			20	%	$	118,105		$	151,349		$	(33,244	)		-22	%
U.S. non-crop		53,648			60,563			(6,915	)		-11	%		30,759			34,753			(3,994	)		-11	%
Total U.S.		274,151			244,615			29,536			12	%		148,864			186,102			(37,238	)		-20	%
International		175,485			153,448			22,037			14	%		108,810			111,695			(2,885	)		-3	%
Total net sales:	$	449,636		$	398,063		$	51,573			13	%	$	257,674		$	297,797		$	(40,123	)		-13	%
Cost of sales:
U.S. crop	$	115,904		$	105,739		$	10,165			10	%	$	(77,520	)	$	(95,163	)	$	17,643			-19	%
U.S. non-crop		28,822			32,516			(3,694	)		-11	%		(16,461	)		(18,023	)		1,562			-9	%
Total U.S.		144,726			138,255			6,471			5	%		(93,981	)		(113,186	)		19,205			-17	%
International		122,554			105,474			17,080			16	%		(82,249	)		(83,884	)		1,635			-2	%
Total cost of sales:	$	267,280		$	243,729		$	23,551			10	%	$	(176,230	)	$	(197,070	)	$	20,840			-11	%
Gross profit:
U.S. crop	$	104,599		$	78,313		$	26,286			34	%	$	40,585		$	56,186		$	(15,601	)		-28	%
U.S. non-crop		24,826			28,047			(3,221	)		-11	%		14,298			16,730			(2,432	)		-15	%
Total U.S.		129,425			106,360			23,065			22	%		54,883			72,916			(18,033	)		-25	%
International		52,931			47,974			4,957			10	%		26,561			27,811			(1,250	)		-4	%
Total gross profit	$	182,356		$	154,334		$	28,022			18	%	$	81,444		$	100,727		$	(19,283	)		-19	%
Gross margin:
U.S. crop		47	%		43	%								34	%		37	%
U.S. non-crop		46	%		46	%								46	%		48	%
Total U.S.		47	%		43	%								37	%		39	%
International		30	%		31	%								24	%		25	%
Total gross margin		41	%		39	%								32	%		34	%

Our domestic crop businessrecorded net sales that were ~~20% above~~22% below those of first ~~nine months~~half of ~~2021. Assisted by consistently high crop commodity prices and a strong domestic farm economy, the Company experienced strong demand across all product categories and was able~~2022 (to $118,105 from $151,349). After experiencing supply chain disruptions to ~~implement appropriate pricing actions to cover escalating material and transportation costs. Our Midwest~~our corn ~~business was exceptional, with Aztec~~ soil insecticide business during the first quarter of 2023, we experienced reduced demand during the second quarter caused by more stringent procurement patterns by the distribution channel, driven by their desire to control working capital carrying costs. This procurement slowdown translated into a significant decline in our first half sales of several herbicides and ~~Impact herbicide brands increasing 70% over the prior year nine-month period. Our domestic cotton~~key granular soil insecticides used in corn. The US crop business ~~led by~~benefited from improved sales performance of our Bidrin foliar insecticide for cotton and ~~Folex harvest defoliant grew by over 40% in the first three quarter of 2022, as compared to the same period of 2021. Domestic Crop also benefited from very strong sales increases in Dacthal~~our domestic soil fumigant business for ~~high valued vegetable crops, Assure II which is expanding sales significantly in the US~~potatoes and Envoke, a newly introduced herbicide used to address glyphosate resistant weeds. The only area of demand softness was in soil fumigants, which experienced lower unit volumes due to drought conditions in Western and Southwestern states where water allocation has been implemented. However, we were able to make pricing adjustment to cover inflationary material and transportation costs in order to retain our traditional profit margins. During the first nine months of 2022, customer procurement activity was exceptionally high in the first quarter and assumed more normalized levels in the second and third quarters.high-value crops.

Cost of sales within the domestic crop business ~~increased 10%~~decreased 19%, as compared to the first ~~nine~~six months of ~~2021,~~2022, primarily driven by ~~sales that increased by 20% including increased sales of higher margin products (many of which we manufacture in our domestic facilities) and benefitting from improved factory performance.~~lower sales. Gross profit decreased by 28% to $40,585 from $56,186, and gross profit margin ended at 34% for ~~domestic crop rose by 34% during~~ the ~~nine-month period~~first half of 2023 as compared to ~~$104,599 from $78,313.~~37% in 2022.

Our domestic non-crop business recorded an 11% decrease in net sales for the first ~~nine months~~half of the year (to ~~$53,648~~$30,759 from ~~$60,563)~~$34,753). ~~Revenue for our Envance technologies decreased when compared~~This decrease was largely due to the ~~same period~~purchasing slowdown in ~~2021, due primarily~~several markets, as retailers sharply reduced their procurement practices in an effort to ~~a one-time license fee received~~control their inventories. Sales in ~~2021, and the timing of recognizing revenue for recurring royalties. Additionally, we experienced a fall-off in consumer demand for~~ our OHP nursery and ornamental ~~products, which we attribute~~business and sales of our consumer-oriented pest strip business both suffered from this procurement shift, as distribution channels and consumer-facing retailers sought to ~~a pause in consumer spending caused by concerns over possible economic recession.~~work down inventory levels. Sales of our Dibrom® mosquito adulticide ~~remained nearly flat~~rose slightly as ~~did demand for commercial pest control products (pest strips~~rainy weather in the western United States prompted unexpected non-Gulf Coast purchasing. The non-crop business benefited from steady pharmaceutical product sales business and ~~bifenthrin).~~increased royalty payments relating to licenses of our Envance formulations.

Cost of sales within the domestic non-crop business decreased by ~~11%~~9%, (to ~~$28,822~~$16,461 in ~~2022~~2023 from ~~$32,516~~$18,023 in ~~2021) on net sales that were down by 11%~~2022). Gross profit for domestic non-crop decreased by ~~11% (to $24,826~~15% to $14,298 in ~~2022~~2023 from ~~$28,047~~$16,730 in ~~2021),~~2022, due largely to decreased sales and a higher volume of lower-margin products. Gross margin percentage for the ~~non-recurrence of a one-time, upfront license fee~~six months ended at 46%, as ~~described above.~~compared to 48% for the same period in 2022.

Net sales of our international businesses ~~increased~~decreased by ~~14%~~3% during the first ~~three quarters~~half of ~~2022~~2023 (to ~~$175,485~~$108,810 in ~~2022~~2023 from ~~$153,448~~$111,695 in ~~2021)~~2022). Central America, ~~and Mexico both delivered~~which had experienced double-digit growth ~~by satisfying continuing~~in the first quarter, struggled during the second quarter with declining sales in Panama due to drought and the increased competition throughout the region from generic products sourced in Asia. Mexico continued to generate strong results throughout the first half, with solid demand for soil fumigants (on high-value crops), Bromacil herbicides and various granular insecticides. ~~Brazil continued an upward trend (grew over 35%) fueled by further market penetration of our Counter granular insecticide/nematicide.~~Similarly, Australia ~~matched prior year~~enjoyed improved sales driven by ~~our expanded market footprint following~~favorable weather and the ~~integration~~benefits of integrating the ~~acquired~~ AgNova ~~business, partially offset~~business. Brazil continues to be challenged by ~~supply~~price erosion caused by channel inventory overstocking and ~~logistics challenges. Significant product sales improvements included Mocap and Nemacur insecticides (together growing over 40%) and Assure II herbicide growing approximately 250%.~~low-priced generic pricing.

Cost of sales in our international business ~~increased~~decreased by ~~16%~~2% (to ~~$122,544~~$82,249 in ~~2022~~2023 from ~~$105,474~~$83,884 in ~~2021)~~2022) primarily driven by ~~volume growth and impacted by increased prices from the strengthening US Dollar, and general inflation on materials and associated logistics costs.~~a decline in volume. Gross profit for the international businesses ~~increased~~decreased by ~~10%~~4% to ~~$52,931~~$26,561 in 2023 from $27,811 in 2022, and gross margin percentage ended at 24% down from 25% during the first ~~nine~~six months of ~~2022 from $47,974 during the same period in 2021.~~2022.

On a consolidated basis, ~~net sales~~gross profit for the ~~first nine~~six months of ~~2022 increased 13%,~~2023 decreased by 19% (to $81,444 in 2023 from $100,727 in 2022). This decrease was due largely to reduced sales and ~~gross profit increased by 18%. Our gross profit~~a change in ~~the first nine months~~mix of ~~2022 increased in part as a result of improved~~ sales ~~volumes~~between domestic and ~~pricing, and improved factory performance.~~international customers. Gross margin performance, when expressed as a percentage of sales, ~~rose~~decreased to ~~41%~~32% from ~~39% year-over-year.~~34%.

Operating expenses ~~increased~~decreased by ~~$12,616~~$742 to ~~$145,550~~$74,423 for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period in ~~2021.~~2022. The changes in operating expenses by department are as follows:


	2022		2021		Change		% Change			2023		2022		Change			% Change
Selling	$	37,844	$	35,184	$	2,660		8	%	$	26,571	$	23,961	$	2,610			11	%
General and administrative:
Other		50,262		46,859		3,403		7	%		29,028		34,691		(5,663	)		-16	%
Proxy contest activities		1,785		—		1,785		100	%		541		1,785		(1,244	)		-70	%
Research, product development and regulatory		23,241		21,221		2,020		10	%		18,283		14,728		3,555			24	%
Freight, delivery and warehousing		32,418		29,670		2,748		9	%
	$	145,550	$	132,934	$	12,616		9	%	$	74,423	$	75,165	$	(742	)		-1	%

•

Selling expenses increased by ~~$2,660~~$2,610 to end at ~~$37,844~~$26,571 for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period of ~~2021.~~2022. The main drivers were increased costs associated with ~~commissions in Brazil,~~additional headcount and travel expenses (as the business resumed in-person interaction with customers)~~, inflation related increased wages~~ and ~~product complaints as a result of sales growth in Mid-west offset by positive~~ movements in some key exchange rates.

•

General and administrative expenses ~~- other increased~~decreased by ~~$3,403~~$5,663 to end at ~~$50,262~~$29,028 for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period of ~~2021.~~2022. The main drivers were ~~increased wages, travel expenses and other administrative costs in support~~the impact of ~~our growing business, increased legal costs,~~ the ~~settlement of deferred consideration related to the Australian business acquired~~movements in the ~~final quarter of 2020,~~foreign currency exchange rates and ~~increased short- and long-term~~the decrease in incentive ~~compensation as a result of our improved business performance. These costs were partly offset by some positive moves of exchange rates.~~compensation.

•

~~The~~During the six-months ended June 30, 2023 and 2022, the Company spent $541, and $1,785, respectively, in fees associated with ~~our~~ Proxy ~~defense activities; there were no such fees in the comparative period of the prior year.~~activities.

•

Research, product development costs and regulatory expenses increased by ~~$2,020~~$3,555 to end at ~~$23,241~~$18,283 for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to the same period of ~~2021.~~2022. The main drivers were increased costs associated with in-field activities in support of our various molecules and our SIMPAS proprietary delivery ~~systems, and international product defense and registration expenses supporting strong sales growth.~~

•

Freight, delivery and warehousing costs for the nine-month period ended September 30, 2022 were $32,418 or 7.2% of sales as compared to $29,670 or 7.5% of sales for the same period in 2021. This increased expense is primarily driven by strong sales growth and variations in final delivery destinations, partially offset by improved supply chain conditions.systems.

During the ~~nine-month~~six-month period ended ~~September~~June 30, 2023 and 2022, the Company recorded a decrease in the fair value of our equity investment in Clean Seed in the amount of ~~$857 and recorded an increase in the amount~~$77, as compared to a decrease of ~~$103~~$403 during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. These changes in fair value of our investment directly reflect changes in the stock’s quoted market price.

2725

During the nine-month period ended September 30, 2021, a Paycheck Protection Program loan assumed on the acquisition of Agrinos in the fourth quarter of 2020 was fully extinguished with the majority of the balance forgiven and recorded as other income in the Company’s condensed consolidated statements of operations in the amount of $672.

Interest costs net of capitalized interest were ~~$2,256~~$4,898 in the first ~~nine-month~~six-month period of ~~2022,~~2023, as compared to ~~$2,921~~$1,170 in the same period of ~~2021.~~2022. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense


	Nine months ended September 30, 2022								Nine months ended September 30, 2021								Six months ended June 30, 2023								Six months ended June 30, 2022
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	111,939	$	2,250			2.7	%	$	144,405	$	2,733			2.5	%	$	123,248	$	4,241			6.9	%	$	105,076	$	1,146			2.2	%
Amortization of deferred loan fees		—		199			—			—		230			—			—		118			—			—		138			—
Amortization of other deferred liabilities		—		27			—			—		(6	)		—			—		—			—			—		17			—
Other interest expense		—		20			—			—		140			—			—		700			—			—		21			—
Subtotal		111,939		2,496			3.0	%		144,405		3,097			2.9	%		123,248		5,059			8.2	%		105,076		1,322			2.5	%
Capitalized interest		—		(240	)		—			—		(176	)		—			—		(161	)		—			—		(152	)		—
Total	$	111,939	$	2,256			2.7	%	$	144,405	$	2,921			2.7	%	$	123,248	$	4,898			7.9	%	$	105,076	$	1,170			2.2	%

The Company’s average overall debt for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, was ~~$111,939,~~$123,248, as compared to ~~$144,405~~$105,076 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2021. During the period, we continued to focus on our use of revolving debt, while funding working capital for the growing business. As can be seen from the table above, our~~2022. Our effective bank interest rate on our revolving line of credit was ~~2.7%~~6.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~2.5% for the same period of 2021.~~2.2% in 2022.

Income tax expense ~~increased~~decreased by ~~$4,863~~$6,043 to end at ~~$10,187~~$1,181 for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to income tax expense of ~~$5,324~~$7,224 for the comparable period in ~~2021.~~2022. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, was ~~30.2%~~57.7% as compared to ~~27.4%~~30.11% for the same period last year. The increase in effective income tax rate ~~has increased~~in 2023 compared to the prior year ~~reflecting a mix~~is primarily due to withholding tax charges, net of income tax credits, associated with interest on certain intercompany loans, losses incurred at certain entities which did not result in ~~different~~a benefit for income tax purposes as these entities continue to maintain a valuation allowance against their net deferred tax assets, and establishing liabilities for uncertain tax positions in certain jurisdictions. ~~For tax years beginning after December 31, 2021,~~These factors were partially offset by a benefit from the ~~Tax Cuts~~remeasurement of certain U.S. federal and Jobs Act (“TCJA”) of 2017 amends Internal Revenue Code Section 174 wherein research and development expenditures will no longer be deducted in the tax year that such costs are incurred but must now be capitalized and amortized over either a five- or fifteen-year period, depending on the location of the activities performed. The effective tax rate for all interim periods is based on the projected income for the full year and is subject to ongoing review and adjustment by management.state deferred taxes.

We generated income before provision before income taxes of $2,046 and $23,989 for the six months ended June 30, 2023 and 2022, respectively. Our net income (after income taxes) for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022~~2023 was ~~$23,506~~$865 or ~~$0.80~~$0.03 per basic and ~~$0.78 per~~ diluted share, as compared to ~~$13,713~~$16,765 or ~~$0.46~~$0.57 per basic and ~~$0.45~~$0.55 per diluted share in the same period of ~~2021.~~2022.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s operating activities utilized net cash of ~~$45,678~~$96,602 during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$174~~$27,230 during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Included in the ~~$45,678~~$96,602 are net income of ~~$23,506,~~$865, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of ~~$19,305, loss on disposal of property, plant and equipment of $265, amortization of deferred loan fees of $174~~$12,146, and provision for bad debts in the amount of ~~$597.~~$902, change in deferred income taxes of $1,015 and changes in liabilities for uncertain tax positions or unrecognized tax benefits of $419. Also included are stock-based compensation of ~~$4,396, adjustment to contingent consideration in the amount of $621, increase in deferred income taxes of $64,~~$2,541, change in fair value of an equity investment of ~~$857,~~$77, and net foreign currency adjustments of ~~$218.~~$382. These together provided net cash inflows of ~~$49,903,~~$15,670, as compared to ~~$39,606~~$34,353 for the same period of ~~2021.~~2022.

During the ~~nine-month~~six-month period of ~~2022,~~2023, the Company increased working capital by ~~$97,986,~~$110,845, as compared to an increase of ~~$37,611~~$68,187 during the same period of the prior year. Included in this change: inventories increased by ~~$38,987,~~$50,900, as compared to ~~$4,325~~$27,774 for the same period of ~~2021.~~2022. While increases in inventory are normal for the Company’s annual cycle, this year the Company ~~decided this year~~has seen distinct changes in buying patterns across its global markets as customers are pushing back purchase close to ~~bring in raw materials earlier than in prior seasons in order to secure our needs~~time of ~~key materials for the balance of the year~~use as they manage working capital and ~~the start of the next growing season.~~interest expense.

Customer prepayments decreased by ~~$62,831,~~$83,225, as compared to ~~$38,272~~$62,789 in the same period of ~~2021,~~2022, driven by customer decisions regarding demand, payment timing and our cash incentive programs. The $83,225 also includes a repayment to a customer in the amount of $17,500 due to the lack of product availability caused by supply chain disruptions. Our accounts payable balances increased by ~~$14,418,~~$9,105, as compared to $19,439 in the same period of 2022, as we work to manage inventory growth. Accounts receivables decreased by $6,092, as compared to an increase of ~~$7,769~~$18,645 in the same period of ~~2021,~~2022. This is primarily driven by ~~increased factory activity levels. Accounts receivables~~a decrease in sales. Prepaid expenses increased by ~~$46,289,~~$1,749, as compared to ~~an increase of $42,979~~$3,652 in the same period of ~~2021. This is primarily driven~~2022. Income tax receivable changed by ~~increased group sales and strong international growth. Prepaid expenses increased by $4,272,~~$3,510, as compared to ~~$2,194 in the same period of 2021. Income tax receivable increased by $5,201, as compared to a decrease of $2,031~~$3,526 in the prior year. Accrued programs increased by ~~$45,016, (as~~$19,607, as compared to ~~$33,982~~$35,987 in the prior ~~year), which is normal at this point in the growing season.~~year, driven by lower sales activity. Finally, other payables and accrued expenses ~~increased~~decreased by ~~$2,555,~~$7,824, as compared to ~~$4,025~~an increase of $602 in the prior year.

~~With regard to our~~

Accrued program ~~accrual, the increase (as noted above) primarily reflects our volume and mix of sales (certain products~~costs are ~~marketed with higher levels of program accruals), and mix of customers in the first nine months of 2022, as compared to the prior year. The Company accrues programs~~recorded in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30th of each year. During the first ~~nine~~six months of ~~2022,~~2023, the Company made accruals for programs in the amount of ~~$78,640~~$44,714 and payments in the amount of ~~$33,869.~~$25,124, resulting in a net increase in accrued program costs of $19,607. During the first ~~nine~~six months of the prior year, the Company made accruals in the amount of ~~$59,267~~$67,274 and made payments in the amount of ~~$25,353.~~$31,367, resulting in a net increase of accrued program costs of $35,987. The ~~increase~~decrease in accruals for programs in the first ~~nine~~six months of ~~2022,~~2023, compared to the same period in ~~2021,~~2022, is a direct result of ~~an increase in~~lower sales of qualifying products.

Cash used for investing activities for the ~~nine-month~~six-month period ended ~~September~~June 30, 2023, and 2022 was $7,172 and ~~2021 was $9,978 and $18,431,~~$6,671, respectively. ~~The $18,431 in 2021 includes a product acquisition in the amount of $10,000. No such acquisition took place in the current year.~~ In ~~2022,~~2023, the Company spent ~~$8,946~~$6,498 on purchases of fixed assets primarily focused on continuing to invest in manufacturing ~~infrastructure. In addition,~~infrastructure, as compared to $5,654 for the same period of prior year. The Company made a payment of ~~$1,000 to Clean Seed to amend~~$650 for a ~~license agreement under which royalty-bearing license rights were converted to fully paid-up, royalty-free, perpetual license rights,~~product acquisition and spent ~~$78~~$68 on patents for the Envance ~~technology~~ business. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of $44, as compared to $27 in prior year.

During the ~~nine-month period~~six months ended ~~September~~June 30, ~~2022,~~2023, financing activities provided ~~$59,797,~~$98,086, as compared to ~~$19,974~~$40,027 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to ~~$96,000~~$108,450 during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$28,592~~$48,400 in the same period of the prior year. The Company paid dividends to stockholders amounting to ~~$2,072~~$1,702 during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$1,789~~$1,330 in the same period of ~~2021.~~2022. The Company paid ~~$13,731~~$7,226 for the repurchase of ~~720,350~~408,201 shares of its common stock during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022 and $20,000 in connection with an accelerated share repurchase program. There were no such purchases~~2023, as compared to $6,232 for 333,010 shares during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2021.~~2022. The Company received ~~$837~~$512 for the issuance of ESPP shares ~~under ESPP during~~and exercise of stock options for the ~~nine-month period~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$743~~$1,202 for the same period ~~last~~in prior year. ~~The Company also received $783 from the exercise of stock options during the nine-month period ended September 30, 2022, as compared to $172 in the prior period.~~ Lastly, in exchange for shares of common stock returned by employees, the Company paid ~~$2,020~~$1,948 and ~~$2,915~~$2,012 for tax withholding on stock-based compensation awards during the ~~nine-months~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. These are summarized in the following table:


Long-term indebtedness ($000's)	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Revolving line of credit	$	149,300		$	53,300		$	160,750		$	52,300
Deferred loan fees		(886	)		(1,060	)		(863	)		(823	)
Net long-term debt	$	148,414		$	52,240		$	159,887		$	51,477

~~At September~~As of June 30, ~~2022,~~2023, the Company was ~~compliant~~in compliance with ~~all covenants to its credit agreement. Also, at September 30, 2022,~~ the ~~Company’s total~~Consolidated Funded Debt ~~amounted~~Ratio but noncompliant with respect to ~~$149,300. At that date~~ the ~~Company’s rolling four quarter~~Fixed Charge Covenant ratio (“FCCR”). The noncompliance was driven by a reduction in the Consolidated EBITDA ~~(as defined~~(in the numerator of the FCCR calculation) during the twelve months ended June 30, 2023, coupled with higher-than-normal distributions (in the denominator of the FCCR calculation) arising from share repurchases made by the Company during the same period. On August 3, 2023, the Company obtained a waiver for the FCCR noncompliance. The impact of most of the share repurchases will be eliminated from the denominator in the FCCR calculation in the third quarter of 2023.

At June 30, 2023, according to the terms of the Credit Agreement, ~~see Note 10) amounted to $77,167, which results in a leverage ratio of 1.93,~~ as ~~compared to a maximum leverage ratio permitted under~~amended, and based on our performance against the ~~Credit Agreement of 3.5. At September 30, 2022,~~most restrictive covenant listed above, the Company ~~has~~had the capacity to increase its borrowings by up to ~~$120,783, according~~$22,858, compared to ~~the terms thereof. This compares to an available borrowing capacity of $94,973~~$200,372 as of ~~September 30, 2021. At~~ December 31, 2021, the Company had borrowing capacity of $178,705. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing twelve-month period and proforma basis arising from acquisitions, (2) net borrowings, and (3) the leverage covenant (the TL Ratio).2022.

We believe that anticipated cash flow from operations, existing cash balances and available borrowings under our amended senior credit facility will be sufficient to provide us with liquidity necessary to fund our working capital and cash requirements for the next twelve months.

2927

RECENTLY ISSUED ACCOUNTING GUIDANCE

Please refer to Note 1516 in the accompanying ~~Notes~~notes to the condensed consolidated financial statements for recently issued accounting standards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company’s Form 10-K filed with the SEC for the year ended December 31, ~~2021,~~2022, the Company provided a comprehensive statement of critical accounting policies. These policies have been reviewed in detail as part of the preparation work for this Form 10-Q. After our review of these matters, we have determined that, during the subject reporting period, there has been no material change to the critical accounting policies that are listed in the Company’s Form 10-K for the year ended December 31, ~~2021.~~2022.

Certain of the Company’s policies require the application of judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on historical experience, terms of existing contracts, commonly accepted industry practices and other assumptions that the Company believes are reasonable under the circumstances. These estimates and assumptions are reviewed periodically, and the effects of updates to estimates and assumptions are reflected in the condensed consolidated financial statements in the period that these updates are determined to be necessary. Actual results may differ from these estimates under different outcomes or conditions. Our estimates did not change materially during the ~~three-~~three and ~~nine-months~~six months ended ~~September~~June 30, ~~2022.~~2023.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to changes in interest rates, primarily from its borrowing activities. The Company’s indebtedness to its primary lender is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate. For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, ~~2021~~2022, and ~~note~~Note 10 in the accompanying notes to the condensed consolidated financial statements.

The Company faces market risk to the extent that changes in foreign currency exchange rates affect our non-U.S. dollar functional currency as to foreign subsidiaries’ revenues, expenses, assets and liabilities. The Company currently does not engage in hedging activities with respect to such exchange rate risks.

Assets and liabilities outside the U.S. are located in regions where the Company has subsidiaries or joint ventures: Central America, South America, North America, Europe, Asia, and Australia. The Company’s investments in foreign subsidiaries and joint ventures with a functional currency other than the U.S. dollar are generally considered long-term. Accordingly, the Company does not hedge these net investments.

Item 4. CONTROLS AND PROCEDURES

As of ~~September~~June 30, ~~2022,~~2023, the Company has a comprehensive set of disclosure controls and procedures designed to ensure that all information required to be disclosed in our filings under the Securities Exchange Act (1934) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of ~~September~~June 30, ~~2022,~~2023, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective to provide reasonable assurance of the achievement of the objectives described above.

There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

3028

PART II. OTHER INFORMATION

The Company was not required to report any matters or changes for any items of Part II except as disclosed below.

Item 1. Legal Proceedings

Please refer to Note 1415 in the accompanying ~~Notes~~notes to the condensed consolidated financial statements for legal updates.

Item 1A. Risk Factors

The Company continually re-assesses the business risks, and as part of that process detailed a range of risk factors in the disclosures in American Vanguard’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, filed on March ~~14, 2022. There~~16, 2023. The following disclosure amends and supplements those risk factors and, except to the extent restated below, there are no material changes to the risk factors as so stated.

~~Domestic~~Disruption in the global supply chain is creating delays, unavailability and ~~regional inflation trends, increased interest rates~~adverse conditions for our industry—Despite improvement in container availability and ~~other factors could lead~~freight costs, the global supply chain continues to present risk. Industry consolidation, coupled with longer-term production commitments, has materially affected the ~~erosion~~Company’s supply of ~~economies~~raw materials and ~~adversely impact~~intermediates in the ~~Company.~~ Both the US and many other countries are experiencing inflation, which, in turn, is leading to increase costs in multiple industry segments, including agriculture and related industries. The persistence of inflation has led central bankers to increase interest rates within their regions.past. There is no guarantee that ~~these measures~~the supply chain condition will ~~arrest~~materially improve any time soon or that the ~~inflationary trend. Further, these factors, taken together with reduced productivity and constraints~~Company will avoid material disruption. Such disruption could have a material adverse effect on the ~~labor~~Company’s operations, financial condition or cash flows.

The Company is dependent upon sole source or a limited number of suppliers for certain of its raw materials and active ingredients—There are a limited number of suppliers of certain important raw materials used by the Company in a number of its products. Certain of these raw materials are available solely from single or very few sources either domestically or overseas. In connection with supply ~~could lead~~chain disruptions in 2022 phosphorus and related compounds were increasingly difficult to ~~recessionary periods~~source for our entire industry; ensuring a continuous supply required extraordinary efforts both with respect to sourcing and production planning. Similarly, in the ~~regions~~first half of 2023, DCPA, the active ingredient in ~~which the Company does business. While the Company takes measures within its control to manage the effects of inflation, higher interest rates and other factors, ultimately, they are outside~~one of the Company’s ~~control. Further,~~high-margin herbicides, was unavailable from its overseas supplier. That said, there is no guarantee that any of our suppliers will be willing or able to supply products to the ~~persistence and/~~Company reliably, continuously and at the levels anticipated by the Company or ~~severity of one~~required by the market. If these sources prove to be unreliable and the Company is not able to supplant or ~~more of them~~otherwise second source these products, it is possible that the Company will not achieve its projected sales which, in turn, could adversely affect the Company's consolidated financial ~~performance~~statements.

The Company benefits from customer early pay in meeting its working capital needs—As is the case with other companies in this industry, the Company receives cash from certain major customers at year-end in exchange for granting discounts on the Company’s products during the first half of the following year. The Company typically uses this cash to pay down secured debt and for other working capital needs. This flow of cash obviates the need for additional borrowing, which, in turn, preserves borrowing capacity used in part for paying customer programs in the middle of the calendar year and, consequently, reduces interest expense. There is no guarantee that the Company’s customers will continue to support the early pay program at current levels. Further a material change in this program could have an adverse effect upon the Company’s liquidity and its ability to meet working capital demands.

Public statements made by USEPA regarding their preliminary findings in connection with the registration review of the Company’s products could adversely affect product sales and/or ~~operations~~commercial viability. Registrations for the Company’s products are subject to registration review by the USEPA from time to time. In the course of the ~~Company.~~review, the Company submits, and the USEPA reviews, data studies. At any stage in the course of the review, USEPA may reach preliminary findings that could impair the commercial viability of a product. For example, in connection with USEPA’s review of the DCPA registration, based upon a comparative thyroid assay study (which is comparatively rare and quite complex), based upon limited data points, the USEPA found an adverse effect upon neonate rodents. Consequently, in June 2023, the agency published preliminary findings, noting its concern that based upon current, permitted use patterns, the product could have an adverse effect upon human health and, in particular, pregnant women. At the same time, the agency invited the Company to examine mitigation measures to allay their concerns, which the Company is doing. There is no guarantee that mitigation measures or additional data proffered by the Company will be sufficient to overcome USEPA’s conclusions. Further, it is possible that the agency could take more drastic measures to either reduce the use or cancel the registration of the product. Regulatory activities of this nature, whether in connection with DCPA or other products of significance, could have a material adverse effect upon the Company’s financial performance.

Item 2. Purchases of Equity Securities by the Issuer

The Company periodically repurchases shares of its common stock under a board-authorized repurchase program through a combination of open market transactions, and accelerated share repurchase (ASR) arrangements.

On ~~March 8, 2022,~~May 25, 2023, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase ~~an aggregate number of~~ up to ~~1,000,000 shares~~$15 million of its common stock under a 10b5-1 plan, par value $0.10 per share, in the open market over the succeeding one year, subject to limitations and restrictions under applicable securities laws.

The table below summarizes the number of shares of our common stock that were repurchased during the three- and nine-month periods ended September 30, 2022. There were no such purchases during the three- and nine-month periods ended September 30, 2021. The shares and respective amount are recorded as treasury shares on the Company’s condensed consolidated balance sheet.

On August 22, 2022, pursuant to a Board of Directors resolution, the Company entered into an accelerated share repurchase arrangement to repurchase $20,000 of its common stock. Under the agreement, the Company paid $20,000 and immediately received an initial delivery of 802,810 shares in the amount of $16,000, which the Company recorded as treasury shares. The Company recorded the remaining $4,000 as a reduction to additional paid-in capital pending final settlement in the fourth quarter of 2022. The final number of shares that the Company ultimately receives under the agreement will be determined based on the average of the Rule 10b-18 volume-weighted average prices of the Company’s common stock during the term of the agreement, less and agreed discount, and subject to adjustments pursuant to the terms of the agreement.

The table below summarizes the number of shares of the Company’s common stock that were ~~received under the accelerated share repurchase arrangement~~repurchased during the ~~three-~~three and ~~nine-month periods~~six months ended ~~September~~June 30, ~~2022. There were no such transactions during the three-~~2023 and ~~nine-month periods ended September 30, 2021.~~2022.

Month ended

Total number of
shares received

Average price
paid per share

Total amount paid

August 31, 2022

802,810

$
19.93

$
16,000


Three months ended	Total number of shares purchased		Average price paid per share		Total amount paid
June 30, 2023		380,366	$	17.51	$	6,669
June 30, 2022		606	$	19.99	$	13

Six months ended	Total number of shares purchased		Average price paid per share		Total amount paid
June 30, 2023		408,201	$	17.88	$	7,226
June 30, 2022		333,010	$	18.71	$	6,232

~~In summary,~~

As of June 30, 2023, the Company ~~added a total~~may yet purchase up to $8,331 of ~~1,190,150 and 1,523,160 of treasury shares of the Company’s~~its common stock ~~during the three- and nine-month periods ended September 30, 2022.~~under its current 10b5-1 plan.

3230

Item 6. Exhibits

Exhibits required to be filed by Item 601 of Regulation S-K:


Exhibit No.		Description

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

32.1		Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

101		The following materials from American Vanguard Corp’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2022,~~2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2022,~~2023, has been formatted in Inline XBRL.

3331

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	american vanguard corporation

Dated: ~~November~~August 8, ~~2022~~2023	By:	/s/ eric g. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: ~~November~~August 8, ~~2022~~2023	By:	/s/ david t. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer

3432


		Page Number
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)


	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2220

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3028

Item 4.	Controls and Procedures	3028

PART II—OTHER INFORMATION		3129

Item 1.	Legal Proceedings	3129

Item 1A.	Risks Factors	3129
Item 2.	Purchases of Equity Securities by the Issuer	3130
Item 6.	Exhibits	3331

SIGNATURES		3432


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net income attributable to AVD	$	6,741	$	5,498	$	23,506	$	13,713
Denominator: (in thousands)
Weighted average shares outstanding-basic		29,214		29,892		29,496		29,854
Dilutive effect of stock options and grants		591		498		632		616
Weighted average shares outstanding-diluted		29,805		30,390		30,128		30,470


	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2020		123,087		$	11.48
Options exercised		(5,838	)		11.49
Balance outstanding, March 31, 2021		117,249			11.48
Options exercised		(8,826	)		11.35
Balance outstanding, June 30, 2021		108,423			11.49
Options exercised		(387	)		11.49
Balance outstanding, September 30, 2021		108,036		$	11.49


	Three months ended September 30, 2022			Three months ended September 30, 2021
Balance, June 30	$	1,367		$	2,116
Fair value adjustment		—			(493	)
Payments on existing obligations		(1,292	)		—
Accretion of discounted liabilities		10			(1	)
Foreign exchange effect		(85	)		(57	)
Balance, September 30	$	—		$	1,565

	Nine months ended September 30, 2022			Nine months ended September 30, 2021
Balance, December 31	$	786		$	2,468
Purchase price adjustment		—			(955	)
Fair value adjustment		635			520
Payments on existing obligations		(1,292	)		(250	)
Accretion of discounted liabilities		28			(10	)
Foreign exchange effect		(157	)		(208	)
Balance, September 30	$	—		$	1,565


Month ended	Total number of shares purchased		Average price paid per share		Total amount paid		Maximum number of shares that may yet be purchased under the plan
March 31, 2022		332,404	$	18.71	$	6,219		667,596
Balance at March 31, 2022		332,404			$	6,219		667,596

April 30, 2022		100	$	19.99	$	2		667,496
May 31, 2022		506	$	19.99	$	11		666,990
Balance at June 30, 2022		606	$	19.99	$	13		666,990

August 31, 2022		165,039	$	19.59	$	3,234		501,951
September 30, 2022		222,301	$	19.19	$	4,265		279,650
Balance at September 30, 2022		387,340	$	19.36	$	7,499		279,650

Total number of shares repurchased		720,350	$	19.06	$	13,731		279,650


Month ended	Total number of shares received		Average price paid per share		Total amount paid
August 31, 2022		802,810	$	19.93	$	16,000