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

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

~~(Former name, former address and former fiscal year, if changed since last report)~~

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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.

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—29,794,607~~Value — 29,297,022 shares as of ~~October 26, 2017.~~August 1, 2023.

See notes to the ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

~~11. Stock Based Compensation—The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Share-Based Payment,~~” which requires the measurement and recognition of compensation for all share-based payment awards made to employees and directors including shares of common stock granted for services, employee stock options, and employee stock purchases related to the Employee Stock Purchase Plan (“employee stock purchases”) based on estimated fair values.

14. Stock-Based Compensation — The following tables illustrate the Company’s ~~stock based~~stock-based compensation, unamortized stock-based compensation, and remaining weighted average ~~period for the three and nine months ended September 30, 2017 and 2016.~~amortization period.


	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)
June 30, 2023
Restricted Stock	$	1,211		$	2,410		$	9,147		2.2
Unrestricted Stock		130			260			477		0.9
Performance-Based Restricted Stock		(274	)		(129	)		3,238		2.2
Total	$	1,067		$	2,541		$	12,862

June 30, 2022
Restricted Stock	$	1,079		$	2,072		$	9,277		2.2
Unrestricted Stock		122			239			476		0.9
Performance-Based Restricted Stock		72			525			3,781		2.1
Total	$	1,273		$	2,836		$	13,534

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)

September 30, 2017

Incentive Stock Options

$
80

$
250

$
94

0.3

Restricted Stock

635

2,068

4,475

1.2

Performance Based Restricted Stock

299

920

1,901

2.0

Performance Based Options

249

347

69

0.3

Total

$
1,263

$
3,585

$
6,539

September 30, 2016

Incentive Stock Options

$
71

$
252

$
497

1.2

Restricted Stock

406

1,100

2,545

1.8

Performance Based Restricted Stock

100

240

857

1.4

Performance Based Options

11

64

173

1.2

Total

$
588

$
1,656

$
4,072

~~Stock Options—During the three and nine months ended September 30, 2017, the~~The Company ~~did not grant any employees options to acquire shares of common stock.~~

~~Option activity within each plan is as follows:~~

Incentive
Stock Option
Plans

Weighted
Average Price
Per Share

Exercisable
Weighted
Average Price
Per Share

Balance outstanding, December 31, 2016

541,905

$
9.33

$
7.97

Options exercised

(15,000
)

7.50

—

Options forfeited

(3,919
)

11.49

—

Balance outstanding, March 31, 2017

522,986

9.37

7.99

Options exercised

(21,300
)

7.50

—

Options forfeited

(3,183
)

11.49

—

Balance outstanding, June 30, 2017

498,503

9.43

8.03

Options exercised

(12,000
)

7.50

—

Options forfeited

(4,285
)

11.49

—

Balance outstanding, September 30, 2017

482,218

$
9.46

$
8.05

~~Information relating to~~also granted stock options ~~at September 30, 2017, summarized by exercise price is as follows:~~

Outstanding Weighted
Average

Exercisable Weighted
Average

Exercise Price Per Share

Shares

Remaining
Life
(Months)

Exercise
Price

Shares

Exercise
Price

Incentive Stock Option Plan:

$7.50

250,050

38

$
7.5

250,050

$
7.50

$11.32—$14.75

232,168

83

11.58

34,334

12.07

482,218

$
9.46

284,384

$
8.05

~~The weighted average exercise prices for~~in past periods. All outstanding stock options ~~granted,~~are fully vested and exercisable and no expense was recorded during the ~~weighted average remaining contractual life for options outstanding as of September~~three- and six-month periods ended June 30, ~~2017, were as follows:~~

2023, and 2022.

As of September 30, 2017

Number
of
Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life
(Months)

Intrinsic
Value
(thousands)

Incentive Stock Option Plan:

Outstanding

482,218

$
9.46

60

$
6,480

Expected to Vest

480,800

$
9.46

60

$
6,464

Exercisable

284,384

$
8.05

41

$
4,222

~~During the three months ended September 30, 2017~~Time-Based Restricted and 2016, the Company recognized stock-based compensation related to stock options of $80 and $71, respectively. During the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation related to stock options of $250 and $252, respectively.

As of September 30, 2017, the Company had approximately $94 of unamortized stock-based compensation related to unvested stock options outstanding. This amount will be recognized over the weighted-average period of 0.3 years. This projected expense will change if any stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

~~Common stock grants~~ Unrestricted Stock — A summary of non-vested shares as of, and for, the ~~nine months~~three- and six-month periods ended ~~September~~June 30, ~~2017~~2023, and ~~2016~~2022 is presented below:


	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

~~Common stock grants~~ Performance-Based Restricted Stock — During the nine months ended September 30, 2017, the Company issued a total of 290,977 shares of common stock to employees and directors. 24,312 shares vested immediately, 3,900 shares will vest in three equal tranches on the employee’s anniversary, 1,000 shares will cliff vest after one year of service, 2,500 shares will cliff vest after two years of service, and the remaining shares will cliff vest after three years of service. The shares granted in 2017 were average fair valued at $16.24 per share. The fair value was determined by using the publicly traded share price as of the date of grant. The Company will recognize as expense the value of restricted shares over the required service period.

During the nine months ended September 30, 2016, the Company issued a total of 142,209 shares of restricted common stock to employees. Of these, 21,139 shares vested immediately and the remaining 121,070 shares will cliff vest after three years of service. The shares granted in 2016 were average fair valued at $15.10 per share. The fair value was determined by using the publicly traded share price as of the date the grant was approved. The Company will recognize as expense the value of restricted shares over the required service period.

During the three months ended September 30, 2017 and 2016, the Company recognized stock-based compensation related to restricted shares of $635 and $406, respectively. During the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation related to restricted shares of $2,068 and $1,100, respectively.

As of September 30, 2017, the Company had approximately $4,475 of unamortized stock-based compensation related to unvested restricted shares. This amount will be recognized over the weighted-average period of 1.2 years. This projected expense will change if any restricted shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

~~Performance Based Shares~~—A summary of non-vested ~~performance based~~performance-based shares as of, and for, the ~~nine months~~three- and six-month periods ended ~~September~~June 30, ~~2017~~2023, and ~~2016,~~2022, respectively is presented below:

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:

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Number
of Shares

Weighted
Average
Grant
Date Fair
Value

Nonvested shares at December 31^st

119,022

$
14.18

104,403

$
17.05

Granted

121,194

15.40

—

—

Forfeited

—

—

(9,395
)

17.65

Nonvested shares at March 31^st

240,216

14.80

95,008

16.99

Granted

7,400

15.88

52,170

14.39

Vested

(48,046
)

14.92

—

—

Forfeited

(12,560
)

12.92

(19,612
)

28.25

Nonvested shares at June 30th

187,010

14.93

127,566

14.20

Forfeited

(953
)

15.21

(8,544
)

14.39

Nonvested shares at September 30th

186,057

$
14.93

119,022

$
14.18

Activity for the three- and six-month periods ended June 30, 2023:


	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

~~Performance Based Shares — During~~All the ~~nine months ended September~~incentive stock options outstanding as of June 30, ~~2017, the Company issued a total of 128,594 performance based shares to employees.~~ ~~The shares granted during the nine months of 2017~~2023, have an ~~average fair~~exercise price per share of $11.49, total intrinsic value of $15.43. The fair value was determined by using the publicly traded share price as of the date of grant. The Company will recognize as expense the value of the performance based shares over the required service period from grant date. The shares will cliff vest on February 8, 2020 with a measurement period commencing January 1, 2017 and ending December 31, 2019. Eighty percent of these performance based shares are based upon the financial performance of the Company, specifically, an earnings before income taxes (“EBIT”) goal weighted at 50%$422, and a ~~net sales goal weighted at 30%. The~~ remaining ~~20%~~life of performance based shares are based upon AVD stock price appreciation over the same performance measurement period. The EBIT and net sales goals measure the relative growth of the Company’s EBIT and net sales18 months.

As of September 30, 2017, performance based shares related to EBIT and net sales have an average fair value of $16.10 per share. The fair value was determined by using the publicly traded share price as of the date of grant. The performance based shares related to the Company’s stock price have an average fair value of $12.60 per share. The fair value was determined by using the Monte Carlo valuation method. For awards with performance conditions, the Company recognizes share-based compensation cost on a straight-line basis for each performance criteria over the implied service period.

During the three months ended September 30, 2017 and 2016, the Company recognized stock-based compensation related to performance based shares of $299 and $100, respectively. During the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation related to performance based shares of $920 and $240, respectively.

As of September 30, 2017, the Company had approximately $1,901 of unamortized stock-based compensation expense related to unvested performance based shares. This amount will be recognized over the weighted-average period of 2.0 years. This projected expense will change if any performance based shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

There was no activity for the ~~nine months~~three- and six-month periods ended ~~September~~June 30, ~~2017 and 2016, the Company did not grant any employees~~2023. There were 81,808 performance incentive stock options ~~to acquire shares~~outstanding as of ~~common stock.~~June 30, 2023, with an exercise price per share of $11.49 and a remaining life of 18 months.

As of September 30, 2017, the Company had approximately $69 of unamortized stock-based compensation expenses related to unvested performance incentive stock options outstanding. This amount will be recognized over the weighted-average period of 0.3 years. This projected expense will change if any performance incentive stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

~~In March 2016, FASB issued ASU 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718)~~. The new standard changes the accounting for certain aspects of share-based payments to employees. The standard requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital (“APIC”) pools. The standard also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. Cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity in the statement of cash flows. In addition, the standard allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The new standard is effective for fiscal years beginning after December 15, 2016 with early adoption permitted. The Company assessed the impact of the adoption of this new standard and determined there was no material impact on the 2016 consolidated financial statements. The Company has considered the different options for treatment of forfeitures in accounting for stock compensation and has elected to continue to account for such adjustments on the estimated basis. The Company adopted this new standard as of January 1, 2017 on a prospective basis. The impact of this adoption was not material.

~~12.~~ 15. Legal ~~Proceedings—~~Proceedings — During the reporting period, there have been no material developments in legal proceedings that ~~are pending or threatened against~~were reported in the ~~Company,~~Company’s Form 10-K for the year ended December 31, 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 ~~out of~~from the ~~U.S. District Court~~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 ~~which~~responding to the ~~U.S.~~subpoena and otherwise in defending the Company’s interests. AMVAC is cooperating in the investigation. After interviewing multiple witnesses (including three employees before a grand jury in February 2022) and making multiple document requests, the Department of Justice (“DoJ”) ~~sought production~~identified the Company and a manager-level employee as targets of ~~documents~~the government’s investigation. 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. In March 2022, the individual target entered into a plea agreement relating to provision of false information in a government proceeding. In July 2022, the DoJ sent correspondence to the Company’s counsel to the effect that it was focusing on potential RCRA violations relating to the ~~Company’s~~ reimportation of ~~depleted Thimet~~Australian containers ~~from Canada~~in 2015. Our defense counsel spoke with DoJ on the subject in early October 2022 and ~~Australia.~~then again in May 2023, at which times DoJ expressed an interest in resolving the matter. The Company has retained defense counsel and during 2017 year to date has substantially completed the production. During the third quarter, the Company received a request from DoJ to interview several individuals who may be knowledgeableanticipates further discussion on resolution of the matter. ~~Those interviews~~

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 ~~likely~~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 ~~take place~~the governmental authorities during the ~~fourth quarter. At~~investigation. As a result, the Company cannot yet anticipate the timing or predict the ultimate resolution of this ~~stage, DoJ has not made clear its intentions with regard to either its theory of the case~~investigation, financial or ~~potential criminal enforcement. Thus, it is too early to tell whether~~otherwise, which could have a ~~loss is probable or reasonably estimable.~~material adverse effect on our business prospects, operations, financial condition and cash flows. Accordingly, the Company has not recorded a loss contingency onfor this matter.

~~Harold Reed~~Pitre etc. v. ~~AMVAC~~Agrocentre Ladauniere et ~~al.~~ ~~During January 2017,~~al. 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~~most knowledgeable witness is scheduled to take place in November 2023. Information to date is not sufficient to form a ~~potato storage facility in Coaldale, Alberta on April 2, 2014. Plaintiffs allege, among other things, that Amvac was negligent and failed~~judgment as to ~~warn them~~either the probability or amount of the risks of such application. Reed seeks damages of $250 for alleged pain and suffering, while Jem Holdings seeks $60 in alleged lost equipment; both plaintiffs also seek unspecified damages as well. Also during January 2017, the Company received notice that four related actions relating to the same incident were filed with the same court: (i) ~~Van Giessen Growers, Inc. v Harold Reed et al~~ ~~(No. 160303906)(in which grower seeks $400 for alleged loss of potatoes); (ii)~~ ~~James Houweling et al. v. Harold Reed et al.~~ ~~(No. 160104421)(in which equipment owner seeks damages for alleged lost equipment); (iii)~~ ~~Chin Coulee Farms, etc. v. Harold Reed et al.~~ ~~(No. 150600545)(in which owner of potatoes and truck seeks $530 for alleged loss thereof); and (iv)~~ ~~Houweling Farms v. Harold Reed et al.~~ (No. 15060881)(in which owner of several Quonset huts seeks damages for alleged lost improvements, equipment and business income equal to $4,300). The Company was subsequently named as cross-defendant in those actions by Reed. During the third quarter, counsel for the Company filed a Statement of Defence (the Canadian equivalent of an answer), alleging that Reed was negligent in his application of the product and that the other cross-defendants were negligent for using highly flammable insulation and failing to maintain sparking electrical fixtures in the storage units affected by the fire. The Company believes that the claims against it in these matters are without merit and intends to defend them vigorously. At this stage in the proceedings, however, it is too early to determine whether a loss is probable or reasonably estimable; accordingly,loss; thus, the Company has not recorded a loss ~~contingency.~~contingency for this matter.

~~13. Environmental—~~Notice of Intention to Suspend DCPA. On April 28, 2022, the USEPA published a notice of intent to suspend (“NOITS”) DCPA, the active ingredient of an herbicide marketed by the Company under the name Dacthal. The agency cited as the basis for the suspension that the Company did not take appropriate steps to provide data studies requested in support of the registration review. In fact, over the course of several years, the Company cooperated in performing the vast majority of the nearly 90 studies requested by USEPA and had been working in good faith to 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 respond to the data call-in), a hearing was held in January 2023 before the ALJ, 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, finding that the agency acted within its authority in issuing the NOITS. The company is in the midst of discussions with USEPA on the terms of a settlement, and, to date, the parties have agreed to extend the company’s deadline for filing an appeal. During the ~~reporting period, there~~course of these proceedings, AMVAC has been afree to make, sell and distribute both the technical grade material ~~development in respect of a pending environmental matter as follows:~~

~~Environmental Site Characterization. As reported in greater detail in~~and end-use product and may continue to do so unless and until there is an adverse ruling at both the ~~Company’s Form 10-K for the period ended December 31, 2016, soil~~trial and groundwater characterization commenced at our Los Angeles manufacturing facility in December 2002 in conjunction with a Site Investigation Plan that was approved by the Department of Toxic Substances Control (“DTSC”)appellate level (if any). Site investigation (including extensive soil, soil gas, groundwater and air testing) continued through 2014, at the conclusion of which the Company submitted a remedial action plan (“RAP”) to DTSC. Under the provisions of the RAP, the Company proposed not to disturb sub-surface contaminants, but to continue monitoring, maintain the cover above affected soil, enter into restrictive covenants regarding the potential use of the property in the future, and provide financial assurances relating to the requirements of the RAP. In January 2017, the RAP was circulated for public comment. DTSC responded to those comments and, on September 29, 2017, approved the RAP as submitted by the Company. The Company ~~intends to prepare an operation~~believes that a loss is neither probable nor estimable and, maintenance plan, to record covenants on certain affected parcels and to obtain further clarification on financial assurance obligations relating to the RAP. At this stage, the Company does not believe that costs to be incurred in connection with the RAP will be material andconsequently, has not recorded a loss contingency for ~~these activities.~~this matter.

~~14. Recently~~16.Recent Issued Accounting ~~Guidance— In November 2016, FASB~~Guidance — The Company reviewed all recently issued ~~ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230).~~ ~~The new standard requires~~accounting pronouncements and concluded that ~~a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash~~they were either not applicable or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. Based on the composition of the Company’s cash and cash equivalent, adoption of the new standard is not expected to have a ~~material~~significant impact ~~on our consolidated cash flows statements. The Company expects~~ to ~~adopt the standard for the financial year beginning January 1, 2018.~~

~~In August 2016, FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230)~~. The new standard addresses eight specific classification issues within the current practice regarding the manner in which certain cash receipts and cash payments are presented. The new standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company has reviewed the eight specific issues addressed and does not believe that the adoption of ASU 2016-15 will have a material impact on its ~~statement of cash flows. The Company expects to adopt the revised standard for the financial year beginning January 1, 2018.~~

~~In October 2016 FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740).~~ Current US GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new standard, an entity is to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard does not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The new standard is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual periods. The Company has considered its activities with regard to such intra-entity transfers, does not expect the adoption of ASU 2016-16 to have a material impact on ourcondensed consolidated financial ~~statements and will adopt the standard for the financial year beginning January 1, 2018.~~statements.

~~In February 2016, FASB issued ASU 2016-02,~~ ~~Leases~~. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. We will evaluate our operating lease arrangements to determine the impact of this amendment on the consolidated financial statements. The evaluation will include an extensive review of our leases, which are primarily related to our manufacturing sites, regional sales offices, lease vehicles, and office equipment. The ultimate impact will depend on the Company’s lease portfolio at the time the new standard is adopted. The Company expects to adopt ASU 2016-02 for the financial year beginning on January 1, 2019.

provided by the other party (that is, the entity is an agent). In April 2016, FASB issued another amendment to the standard, ASU 2016-10, to clarify identifying performance obligations and the licensing implementation guidance, which retaining the related principles for those areas. The standard and the amendments are effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). These amendments will be effective upon adoption of Topic 606. This standard also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows.

We have completed an initial scoping analysis of the effect of the standards to identify the revenue streams that may be affected by this ASU. The Company is currently completing detailed contract reviews to evaluate whether the adoption could result in a change in the timing or amount of revenue recognition. For certain products that are deemed to have no alternative use accompanied by an enforceable right to payment, recognition will change from point in time, to over time. The Company is also evaluating the impact on timing and amounts of revenue recognition on certain licenses granted for the use of its intellectual property, as well as other revenue transactions. The Company is in the process of determining what changes are needed to existing accounting policies and controls, as well as disclosures. As of November 2, 2017, the Company has not yet determined whether the impact of adoption of Topic 606 will have a material impact on the Company’s financial condition, results of operations or cash flows. The Company anticipates utilizing the modified retrospective method adoption for the financial year beginning January 1, 2018.

~~15.~~ 17. Fair Value of Financial ~~Instruments—~~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 ~~values~~amount of the Company’s financial instruments, which principally include cash ~~receivables~~ and cash equivalents, short-term investments, accounts receivable, accounts payable ~~approximate their~~and accrued expenses, approximates fair ~~values~~value because of the relatively short maturity of ~~these~~such instruments. The ~~fair value~~carrying amount of the Company’s ~~long-term debt payable to~~borrowings, which are considered Level 2 liabilities, approximates fair value as they bear interest at a variable rate that represents current 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 ~~bank is estimated based~~fair value hierarchy. The Company may use various valuation techniques depending on the ~~quoted market prices~~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 earn-out liability movements related to its business acquisitions as of, and for, the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. Such fair value approximates the respective carrying values of the Company’s long-term debt payable to bank.three-and six-month periods ended June 30, 2022:


	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

~~16.~~

18. Accumulated Other Comprehensive ~~Income~~Loss (“~~AOCI”~~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, 2016

$
(4,851
)
FX translation

757

Balance, March 31, 2017

(4,094
)
FX translation

280

Balance, June 30, 2017

(3,814
)
FX translation

(67
)
Balance, September 30, 2017

$
(3,881
)


	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	)

~~17.~~ 19. Equity ~~Method~~ Investments—TyraTech Inc. (“TyraTech”) is a Delaware corporation that specializes in developing, marketing and selling pesticide products containing natural oils. As of September 30, 2017, the Company’s ownership position in TyraTech was approximately 15.11%. The Company utilizes the equity method of accounting with respect to this investment. As a result, our net income includes losses from equity method investments, which represents our proportionate share of TyraTech’s estimated net losses for the current accounting period. For the three and nine months ended September 30, 2017, the Company recognized losses of $29 and $140, respectively, as a result of the Company’s ownership position in TyraTech. The Company recognized losses of $180 and $309, respectively, for the three and nine months ended September 30, 2016.

The Company’s investment in TyraTech is included in other assets on the condensed consolidated balance sheets. At September 30, 2017, the carrying value of the Company’s investment in TyraTech was $2,044 and the quoted market value of its shareholding was $1,210 based on the London Stock Exchange, Alternative Investment Market (“AIM”). At September 30, 2017, the Company performed an impairment review of its investment in TyraTech and concluded that the implied decrease in value was not other than temporary and no impairment charge was required.

On June 27, 2017, both Amvac Netherlands BV and Huifeng Agrochemical Company, Ltd (“Huifeng”) made individual capital contributions of $950 to the Huifeng Amvac Innovation Co. Ltd (“Hong Kong Joint Venture”). As of September 30, 2017, the Company’s ownership position in the Hong Kong Joint Venture was 50%. The Company utilizes the equity method of accounting with respect to this investment. On July 7, 2017, the Hong Kong Joint Venture purchased the shares of Profeng Australia, Pty Ltd.(“Profeng”), for a total consideration of $1,900. The purchase consists of Profeng Australia, Pty Ltd Trustee and Profeng Australia Unit Trust. Both Trust and Trustee were previously owned by Huifeng via its wholly owned subsidiary Shanghai Biological Focus center. For the three and nine months ended September 30, 2017, the Company recognized losses of $86 and $86, respectively, as a result of the Company’s ownership position in the Hong Kong Joint Venture. There were no similar losses recognized in the prior year comparative period.

~~18. Cost Method Investment–~~In February 2016, ~~the Company~~AMVAC Netherlands BV made an ~~equity~~ investment in Biological Products for Agriculture (“Bi-PA”) ~~through its Netherlands wholly-owned subsidiary.~~. 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, ~~2017,~~2023 and 2022, the Company’s ownership position in Bi-PA ~~is 15%~~was 15%. ~~At September 30, 2017,~~Since this investment does not have readily determinable fair value, the ~~carrying value~~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 ~~the Company’s investment in Bi-PA is $3,283.~~Bi-PA. The Company ~~utilizes the cost method of accounting with respect to this investment and~~ periodically ~~review~~reviews the investment for possible impairment. There was no impairment or observable price changes on the investment ~~as of September~~during the three and six months ended June 30, ~~2017.~~2023 and 2022. The investment is recorded within other assets on the condensed consolidated balance ~~sheets.~~sheets and amounted to $2,869 as of June 30, 2023 and December 31, 2022.

~~19. Income Taxes – Income tax expense increased by $576~~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 ~~end at an expense~~$708 and $784 as of ~~$1,954~~June 30, 2023 and December 31, 2022, respectively. The Company recorded a loss of $55 and $486 for the three months ended ~~September~~June 30, ~~2017,~~2023 and 2022, respectively.The Company recorded a loss of $77 and $403 for the six months ended June 30, 2023 and 2022, respectively. The investment is recorded within other assets on the condensed consolidated balance sheets.

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 $1,541 and $2,725 for the three-month period ended June 30, 2023, and 2022, respectively, and $1,181 and $7,224 for the six months ended June 30, 2023, and 2022, respectively. The effective income tax rate was 315.36% and 28.5% for the three-month periods ended June 30, 2023 and 2022, respectively, and 57.7% and 30.1% for the six months ended June 30, 2023 and 2022, respectively. For the three-month period ended June 30, 2023, the effective income tax rate increased compared to ~~$1,378~~the same period of 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 a benefit for income tax purposes as these entities continue to maintain a valuation allowance against their net deferred tax assets. In addition to these factors, the ~~comparable period~~increase in ~~2016. The~~the effective income tax rate for the ~~quarter was 32.1%,~~six months ended June 30, 2023, as compared to ~~31.3% in~~ 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 $1,814 of unrecognized tax benefits will be released within the next twelve months due to expiration of the ~~prior year. Income tax expense was $5,015~~statute of limitations.

21. Stock Re-purchase Programs — 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 ~~nine~~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 ~~September~~June 30, ~~2017, as compared to $3,672~~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 ~~nine~~number of shares of the Company’s common stock that were repurchased during the three and six months ended ~~September~~June 30, ~~2016. The effective tax rate for the nine months ended September~~2023 and 2022.


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

As of June 30, ~~2017 and 2016 was 29.2% and 27.9%, respectively. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.~~

~~During the first quarter of 2017,~~2023, the Company ~~adopted ASU 2016-09, “Improvement~~may yet purchase up to ~~Employee Share-Based Payment Accounting,” which simplifies several aspects~~$8,331 of the accounting for share-based payments, including treatment of excess tax benefits and forfeitures, as well as consideration of minimum statutory tax withholding requirements. Under the new standard, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement as discrete items in the reporting period in which they occur. For the nine months ended September 30, 2017, a discrete tax benefit of $333 was recognized as part of the income tax expense.

~~The Company has effectively settled~~ its examination with the Internal Revenue Service (“IRS”) for the tax years ended December 31, 2012 and 2014. As a result, the Company increased deferred tax assets and income taxes payable at December 31, 2016 by $12,598. The Company’s 2015 federal income tax return is still subject to IRS examination. The Company’s state income tax returns are subject to examination for the 2012 through 2015 tax years. On April 3, 2017, the Company paid the IRS $11,580.

20. Acquisitions – During the first nine months of 2017, the Company completed two acquisitions with a combined purchase consideration of $25,100. The preliminary allocation of the purchase price was $22,000 to product rights, $1,900 to trademarks, and $1,200 to customer lists.

The operating results of these acquisitions are immaterial to the accompanying condensed consolidated financial statements individually and in the aggregate. Therefore, pro forma financial data is not presented.

On June 6, 2017, the Company’s principal operating subsidiary, Amvac Chemical Corporation, completed an acquisition of certain assets relating to the abamectin, chlorothalonil and paraquat product lines from a group of companies, including Adama Agricultural Solutions, Ltd. The consideration for the acquired assets was paid in cash and has initially been allocated to inventory and intangible assets. ~~The acquired products were included in the Company’s results of operations from June 6, 2017 (the date of acquisition).~~

On August 22, 2017, the Company’s Netherlands-based subsidiary, AMVAC Netherlands BV, completed the acquisition of certain selective herbicides and contact fungicides including chlorothanonil, ametryn, and isopyrazam, sold in the Mexican agricultural market. The assets were purchased from Syngenta AG. The consideration for the acquired assets was paid in cash and has initially been allocated to inventory and intangible assets. T~~he acquired products were included in the Company’s results of operations from August 22, 2017 (the date of acquisition).~~

~~21. Subsequent Events – On October 2, 2017, the Company’s subsidiary, AMVAC Chemical, completed~~common stock under its acquisition of OHP, Inc., a US-based distribution company specializing in the greenhouse and nursery production markets throughout the United States and Puerto Rico. OHP will continue to operate in its horticultural markets using OHP brands. current 10b5-1 plan.

~~On October 27, 2017, the Company’s wholly-owned subsidiary, AMVAC Netherlands BV, completed its acquisition of Grupo Agricenter, a distribution company based in Central America.~~

The combined cash consideration was approximately $41,750, plus inventory and other deferred performance driven payments. These acquisitions were funded from the borrowings on our credit facility agreement.

22. Supplemental Cash Flow Information

~~Item 2.~~

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


	For the Six Months Ended June 30,
	2023		2022
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	2,556	$	1,100
Income taxes, net	$	5,641	$	10,749
Non-cash transactions:
Deferred consideration in connection with business acquisitions:	$	—	$	635
Cash dividends declared and included in accrued expenses	$	848	$	742

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 ~~1A., Risk factors and Item 7A.~~3., Quantitative and Qualitative Disclosures about Market Risk, and Part II, Item 1A., Risk Factors, in ~~the Company’s Annual~~this Quarterly Report on Form ~~10-K~~10-Q.

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 ~~year ended December 31, 2016.~~Company’s Performance

~~MANAGEMENT OVERVIEW~~

~~Overall~~The Company’s financial performance for the second quarter ~~ended September 30, 2017 included sales~~ of ~~$89,975, which were up approximately 9%,~~2023 declined as compared to ~~sales of $82,447 for~~ the ~~third~~second quarter of ~~2016. Our gross profit performance ended at $38,032~~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 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 ~~42%~~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 China-based suppliers that flooded the Central American markets with low-priced generic goods.

Against this backdrop, on a consolidated basis, domestic sales declined by 14% while international sales declined by 6%, resulting in an overall net sales decline of 10%. Overall cost of sales decreased by 9%. Cost of sales were 68% of sales in 2023, as compared to ~~$32,986 or 40%~~67% for the same period of 2022. These factors, taken together with slightly higher manufacturing costs (both labor and service-related), resulted in a 13% decrease in gross profit (to $42,909 in 2023 from $49,311 in the comparable quarter of 2022), while overall gross margin percent declined to 32% from 33% quarter-over-quarter.

Operating expenses 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 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 decreased to $3,755 from $10,813, driven by reduced sales, decreased gross margin percentage and proportionately higher operating expenses. During the second quarter, the Company experienced significantly higher interest expenses, due to comparatively higher interest rates. Income before taxes ended at $489 including a profitable performance for most of the Company’s operating entities around the world, offset by losses in a small number of 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 exceeded income before taxes, resulting in a net loss for the quarter. Additionally, a withholding tax charge was incurred on interest relating to intercompany debt.

These factors yielded a net loss for the period of $1,052, as compared to net income of $6,830 in the second quarter of 2022. Details on our financial performance are set forth below.

RESULTS OF OPERATIONS

Quarter Ended June 30, 2023 and 2022:


	2023			2022			Change			% Change
Net sales:
U.S. crop	$	56,212		$	63,513		$	(7,301	)		-11	%
U.S. non-crop		16,878			20,996			(4,118	)		-20	%
Total U.S.		73,090			84,509			(11,419	)		-14	%
International		59,700			63,694			(3,994	)		-6	%
Total net sales:	$	132,790		$	148,203		$	(15,413	)		-10	%
Cost of sales:
U.S. crop	$	(34,509	)	$	(39,600	)	$	5,091			-13	%
U.S. non-crop		(9,769	)		(11,752	)		1,983			-17	%
Total U.S.		(44,278	)		(51,352	)		7,074			-14	%
International		(45,603	)		(47,520	)		1,917			-4	%
Total cost of sales:	$	(89,881	)	$	(98,872	)	$	8,991			-9	%
Gross profit:
U.S. crop	$	21,703		$	23,913		$	(2,210	)		-9	%
U.S. non-crop		7,109			9,244			(2,135	)		-23	%
Total U.S.		28,812			33,157			(4,345	)		-13	%
International		14,097			16,174			(2,077	)		-13	%
Total gross profit	$	42,909		$	49,331		$	(6,422	)		-13	%
Gross margin:
U.S. crop		39	%		38	%
U.S. non-crop		42	%		44	%
Total U.S.		39	%		39	%
International		24	%		25	%
Total gross margin		32	%		33	%

Our domestic crop business recorded net sales during the second quarter of 2023 that were 11% lower than those of the second quarter of 2022 ($56,212 as compared to $63,513). 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 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 potential suspension. In our cotton products, we experienced an increase in sales of our foliar insecticide, Bidrin®, which were partially offset by a decline in sales of Folex®, our harvest defoliant – we expect that these sales will shift to later in 2023. The cotton market was also influenced by a decline in cotton commodity prices and 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 our soil fumigants with improved agricultural water allocation in the western region and stronger sales of our Thimet® granular insecticide for use in peanuts and sugar cane.

Cost of sales within the domestic crop business decreased by 13% (from $39,600 in 2022 to $34,509 in 2023) as a result of decreased volumes, lower in-bound freight costs and a change in the mix of products sold, as compared to the second quarter of 2022. Our net factory cost for the quarter rose, due largely to increased factory overhead costs. Domestic crop recorded a 9% decrease in gross profit (from $23,913 in 2022 to $21,703 in 2023) and an overall improvement in gross margin percentage to 39% versus 38% for the comparable quarter ~~last year. Operating costs increased to 35% of~~in 2022.

Our domestic non-crop business posted a 20 % decrease in net sales ~~for~~in the three months ended September 30, 2017 as compared to 34% for the same period in prior year. Overall net income increased by $1,212 or 42% at $0.14 per basic and diluted share as compared to $0.10 per basic and diluted share this time last year.

~~Overall financial performance for the nine month period ended September 30, 2017 included improved sales and net income,~~second quarter 2023, as compared to the same period in ~~2016. Sales~~the prior year ($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 reduce working capital carrying costs. Many such retailers are operating on a just-in-time approach toward stocking, which is a break from the period were up approximately 6% to $238,553, as compared to $224,645 for the first nine months of 2016. Under absorption of factory costs for the nine month period reduced from 4% of sales to 3% of sales. Our gross profit performance ended at $102,451 or 43% of sales, as compared to $91,884 or 41% of sales for the comparable prior period. Operating expenses remained flat at 35% ofhistorical norm. Additionally, our non-crop business recorded lower net sales from our OHP nursery and ~~net income improved~~ornamental businesses, which were similarly influenced by ~~$2,928 or 33% to $0.41 per basic share and $0.40 per diluted share, as compared to $0.31 per basic and $0.30 per diluted share.~~

~~Net sales for our crop business were up 2% in the quarter and 5% year to date, as compared to the same periods~~inventory reduction at point of the prior year. This included a benefit of approximately $7,150 in sales of products from acquisitions concluded earlier in 2017, partially offset by a reduction in the price of Impact in the form of a $2,100 program accruals against inventory in the channel Our non-crop business was up 62% in the three month period ended September 30, 2017 and 15% in the nine month period, as compared to this time last year due primarily to strong sales of our mosquito control insecticide Dibrom® in the aftermath of domestic hurricanes. Our international sales were up 8% for the three months ended September 30, 2017 and were up 3% for the nine months ended September 30, 2017. A more detailed discussion of general market conditions and sales performance by category of products appears below.

When considering the condensed consolidated balance sheet, as of September 30, 2017, net debt was increased by $12,891 and $16,428, as compared to September 30, 2016 and December 31, 2016, respectively. This increase is partly the result of funding product line acquisitions announced during the third quarter of 2017. Debt, net of deferred loan fees, at September 30, 2017 and at December 31, 2016 were $57,379 and $40,951, respectively. Inventory ended the quarter at $123,315 including the impact of newly acquired products and was $120,576 as of December 31, 2016. This compared to $141,678 as of September 30, 2016.

~~RESULTS OF OPERATIONS~~

~~Quarter Ended September 30:~~

2017

2016

Change

% Change

Net sales:

Insecticides

$
24,866

$
25,478

$
(612
)

-2
%
Herbicides/soil fumigants/fungicides

32,717

34,242

(1,525
)

-4
%
Other, including plant growth regulators

17,191

13,328

3,863

29
%
Total crop

74,774

73,048

1,726

2
%
Non-crop

15,201

9,399

5,802

62
%

$
89,975

$
82,447

$
7,528

9
%
Cost of sales:

Insecticides

$
16,141

$
17,029

$
(888
)

-5
%
Herbicides/soil fumigants/fungicides

19,551

18,146

1,405

8
%
Other, including plant growth regulators

10,230

9,609

621

6
%
Total crop

45,922

44,784

1,138

3
%
Non-crop

6,021

4,677

1,344

29
%

$
51,943

$
49,461

$
2,482

5
%
Gross profit:

Insecticides

$
8,725

$
8,449

$
276

3
%
Herbicides/soil fumigants/fungicides

13,166

16,096

(2,930
)

-18
%
Other, including plant growth regulators

6,961

3,719

3,242

87
%
Gross profit crop

28,852

28,264

588

2
%
Gross profit non-crop

9,180

4,722

4,458

94
%

$
38,032

$
32,986

$
5,046

15
%
Gross margin crop

39
%

39
%

Gross margin non-crop

60
%

50
%

Total gross margin

42
%

40
%

2017

2016

Change

% Change

Net sales:

US

$
65,842

$
60,033

$
5,809

10
%
International

24,133

22,414

1,719

8
%

$
89,975

$
82,447

$
7,528

9
%

The improved quarterly sales performance was driven by three primary factors. First, we experienced increased demand of our mosquito control product Dibrom® in the Gulf states following Hurricane Harvey and Hurricane Irma. Second, our cotton harvest defoliant Folex® generated strong sales arising from an increase in U.S. cotton acres planted (which were up about 20% over the prior year). Third, we posted incremental quarterly revenues as a result of three products acquired from Adama during the second quarter.sale. Partially offsetting these ~~year-over-year increases were lower~~decreases, our Dibrom® mosquito adulticide generated higher sales ~~of our corn herbicide in the Midwest market, slower sales of soil fumigants due primarily to weather-related factors, and a decline in one of our insecticides sold in international markets.~~

Across our crop business, net sales of our insecticides group were down approximately 2% to end at $24,866, as compared to $25,478 during the third quarter of 2016. Within this category, net sales of our granular insecticides were up approximately 4%, as compared to prior year, with some gains in Aztec, Counter and Thimet products, offset by timing declines in our Mocap and Nemacur products sold primarily in International markets. Net sales of our non-granular crop insecticides were down marginally, although this category did benefit from sales of the newly acquired Abamectin insecticide product, Abba Ultra®.

Within the group of herbicides/fungicides/fumigants used in crop applications, net sales for the third quarter of 2017 declined by approximately 4% to $32,717 from $34,242 in the comparable period of 2016. Net sales of our herbicide products increased approximately 20%, with the introduction of our newest paraquat herbicide, Parazone®, more than offsetting reduced sales of our post emergent corn herbicide, Impact®, which resulted from highly competitive market conditions this year in the Midwest region. During the three months ended September 30, 2017, we announced reduced Impact selling prices and accrued an appropriate rebate for channel inventory in response to anticipated competition in the post emergent herbicide market for the new growing season. This resulted in a charge to income (as a reduction in net sales) in the amount of approximately $2,100 during the period.

Sales of Dacthal® for use on a wide variety of high-valued vegetable crops held steady with the prior year and we enjoyed increased sales of our international herbicide products Hyvar® and Krovar®, up almost 100% compared to the same quarter of ~~2016. Our soil fumigants business declined from~~ the prior ~~year’s third quarter due to an application rate reduction by one of our customers, and significant disruptions in post-harvest applications caused~~year, as wet weather in the ~~Southeast U.S.~~western United States has engendered greater mosquito pressure and, with it, the upsurge of 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 last year.

Cost of sales within the domestic non-crop business decreased by ~~Hurricane Irma. In fungicides, we had steady sales of our PCNB product and posted additional sales of~~about 17% in the ~~newly acquired chlorothalonil fungicide, Equus.~~

~~Within the group of other products (which includes plant growth regulators, molluscicides and tolling activity), net sales were up 29%,~~second quarter 2023, as compared to the ~~third~~same period in the prior year (from $11,752 to $9,769). This was driven by a different mix of products including some lower margin products. This, in turn, led to a decrease in gross profit for domestic non-crop of 23% (from $9,244 in 2022 to $7,109 in 2023) and yielded a gross margin percentage of 42% versus 44% for the comparable quarter ~~of 2016. Significant quarterly~~in 2022.

Net sales of our ~~Folex® cotton defoliant along~~international businesses declined by about 6% during the period ($59,700 in 2023 vs. $63,694 in 2022). Broadly speaking, we experienced sales decreases in herbicides and 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 ~~growth regulator product NAA drove this positive performance. Offsetting these strong factors were somewhat lower~~Assure II herbicide for soybeans in Canada lessened, following historically stronger sales in the first quarter. Net sales of our ~~Metaldehyde granules,~~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 ~~SmartBlock potato sprout inhibitor,~~Australian business delivered higher sales and steady gross profits versus the prior year, as the addition of AgNova products has enhanced our ~~toll~~market position. Similarly, our performance in Mexico remained solid, despite some temporary product manufacturing ~~revenue which will be recognized~~impediments.

Cost of sales in our international business decreased by 4% (from $47,520 in 2022 to $45,603 in 2023), and gross profit decreased by 13% (to $14,097 in 2023 from $16,174 in 2022). Gross margin percentage for the international business dropped to 24% from 25% quarter-over-quarter.

On a consolidated basis, gross profit for the second quarter of 2023 decreased by 13% (from $49,331 in 2022 to $42,909 in 2023). Taken together, the overall gross margin percentage ended at 32% in the ~~fourth~~second quarter of ~~2017.~~

~~Our non-crop sales ended the third quarter of 2017 at $15,201 up 62%,~~2023, as compared to ~~$9,399 for~~33% in the same period of the prior year. The main driver of this gain was the year-over-year increase in our aerial-applied mosquito adulticide Dibrom® due to the increased demand for insect control following the Hurricanes Harvey and Irma that struck Texas, Florida and other Southeastern states. We experienced slightly lower quarterly sales of our insecticide products for commercial pest control and our pharmaceutical products.

~~Our international sales increased 8% ending at $24,133, as compared to $22,414 for the third~~second quarter of the prior year. ~~This performance was driven~~

Operating expenses increased by ~~strong sales of our Hyvar® and Krovar® herbicide brands, offset by lower Mocap and Nemacur insecticides.~~

~~Our cost of sales~~$637 to $39,155 for the ~~third quarter of 2017 was $51,943 or 58% of sales. This~~three-month period ended June 30, 2023, as compared to ~~$49,461 or 60% of sales for~~ the same period ~~of 2016.~~in 2022. The ~~Company aggregates a number of key variable, semi-variable and fixed cost components within reported cost of sales. The raw materials element of our cost of sales remained approximately flat~~changes in operating expenses by department are as ~~compared to this time last year. The third quarter was a strong manufacturing quarter with high output, as the Company prepares~~follows:


	2023		2022		Change			% Change
Selling	$	13,200	$	12,717	$	483			4	%
General and administrative
Other		16,542		16,258		284			2	%
Proxy contest activities		—		1,785		(1,785	)		-100	%
Research, product development and regulatory		9,413		7,758		1,655			21	%
Subtotal	$	39,155	$	38,518	$	637			2	%

•

Selling expenses increased by $483 for the new US growing season which, commences on October 1. Factory performance in the third quarter of 2017 was slightly stronger than the prior year. As a result, the unrecovered element of factory costs decreased to 2% of sales as compared to a cost of 3% of sales in the same period of the prior year. Finally, the Company made more sales with higher margins in 2017 primarily driven by strong market performance in some of our key markets.

~~Gross profit for the third quarter of 2017 improved by $5,046, or 15%, to end at $38,032, as compared to $32,986 for the third quarter of 2016. Gross margin percentage ended at 42% in~~ the three months ended ~~September~~June 30, ~~2017,~~2023, as compared ~~to 40% in~~with the same period of the prior year. This ~~strong performance was primarily driven~~included increased costs associated with employees and travel expenses as the business continues to grow and return to normal face to face contact with customers, and other costs supporting long term growth offset to a degree by ~~sales of higher margin products, production planning,~~the beneficial movements in some key exchange rates.

•

General and ~~a $1,000 improvement in factory under absorption costs in light of strong factory utilization rates and inventory cost adjustments based upon capacity use studies.~~

~~As discussed below in detail by department, operating~~administrative expenses slightly increased by ~~$3,284 to $31,570~~$284 for the three months ended ~~September~~June 30, 2017, as compared to the same period in 2016. That increase arose as the Company incurred one-time costs (of approximately $800) related to multiple acquisitions. In addition, we incurred higher regulatory costs relating to re-registration requirements for several of our organophosphate active ingredients, which constitute an important part of the Company’s portfolio, and heightened investment in product development to help fill our pipeline with new products (of approximately $1,440). Further, we invested more heavily in SIMPAS (an increase of approximately $400), particularly in connection with the GPS integration effort, in order to bring that technology closer to commercialization. These expenditures should serve to generate a long term return on investment.

~~The differences in operating expenses by department are as follows:~~

2017

2016

Change

% Change

Selling

$
6,671

$
7,096

$
(425
)

-6
%
General and administrative

9,227

7,546

1,681

22
%
Research, product development and regulatory

7,324

5,200

2,124

41
%
Freight, delivery and warehousing

��
8,348

8,444

(96
)

-1
%

$
31,570

$
28,286

$
3,284

12
%

~~Selling expenses decreased by $425 to end at $6,671 for the three months ended September 30, 2017,~~2023, as compared to the same period of ~~2016. The main driver~~2022, primarily driven by increased reserves for potential doubtful debts in central America and some additional headcount and travel costs in support of our expanding business.

•

During the ~~decrease is related to lower costs~~three-months ended June 30, 2022, the Company spent $1,785 in fees associated with ~~quality claims.~~

~~General and administrative~~its proxy activities. There were no similar expenses ~~increased by $1,681 to end at $9,227 for the three months ended September 30, 2017, as compared to~~during the same three-month period of 2016. The increase in cost was driven primarily by financial and legal diligence related acquisition costs and to a lesser extent, intangible asset amortization associated with product acquisitions.

this year.

•

Research, product development costs and regulatory expenses increased by ~~$2,124 to end at $7,324~~$1,655 for the three months ended ~~September~~June 30, ~~2017,~~2023, as compared to the same period of ~~2016.~~2022. The ~~increase is related to more regulatory activity defending~~main drivers were increased costs associated with the commercialization of our ~~expanding portfolio of products~~SIMPAS delivery system and ~~additional~~costs associated with product defense and product development ~~studies, again driven by expanding portfolio and continued progress on our~~activities.

On April 1, 2020, the Company made a strategic investment in ~~developing SIMPAS technology.~~

~~Freight, delivery and warehousing costs for~~Clean Seed Inc., in the amount of $1,190. The Company recorded a negative fair value adjustment in the amount of $55 during the three months ended ~~September~~June 30, ~~2017 were $8,348 or 9.4% of sales as compared to $8,444 or 10.2% of sales for~~2023 and $486 during the same period in 2016. This improvement was primarily driven by reduced inventory levels driving overall lower warehouse costs and mix of sales, including lower sales of our high volume bulk fumigant products, in comparison to the same periodcomparative three months of the prior year.

Interest costs net of capitalized interest were ~~$375~~$3,211 in the ~~three months~~three-month period ended ~~September~~June 30, ~~2017,~~2023, as compared to ~~$301~~$772 in the same period of ~~2016.~~2022. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense

	Three months ended September 30, 2017								Three months ended September 30, 2016
��																	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)	$	44,897	$	320			2.9	%	$	44,617	$	241			2.2	%	$	152,750	$	2,699			7.1	%	$	124,184	$	745			2.4	%
Amortization of deferred loan fees		—		57			—			—		62			—			—		55			—			—		69			—
Subtotal		44,897		377			3.4	%		44,617		303			2.7	%
Notes payable		—		—			—			9		—			—
Amortization of other deferred liabilities		—		7			—			—		9			—			—		—			—			—		11			—
Other interest expense		—		7			—			—		11			—			—		571			—			—		12			—
Subtotal		44,897		391			3.5	%		44,626		323			2.9	%		152,750		3,325			8.7	%		124,184		837			2.7	%
Capitalized interest		—		(16	)		—			—		(22	)		—			—		(114	)		—			—		(65	)		—
Total	$	44,897	$	375			3.3	%	$	44,626	$	301			2.7	%	$	152,750	$	3,211			8.4	%	$	124,184	$	772			2.5	%

The Company’s average overall debt for the ~~three months~~three-month period ended ~~September~~June 30, ~~2017~~2023 was ~~approximately flat at $44,897,~~$152,750, as compared to ~~$44,626~~$124,184 for the ~~three months~~three-month period ended ~~September~~June 30, 2016. During the quarter, we continued to focus on managing our working capital and controlling our usage of revolving debt. Furthermore, we continued to follow our strategy in making product line acquisitions that fit our portfolio. As can be seen from the table above, our2022. The effective bank interest rate on our revolving line of credit was ~~3.4%~~7.1% and 2.4% for the three-month periods ended June 30, 2023 and 2022, respectively.

Income tax expense decreased by $1,184 to $1,541 for the three-month period ended June 30, 2023, as compared to $2,725 for the comparable period in 2022. The effective tax rates for the three-month period ended June 30, 2023, and 2022, were 315.36% and 28.5%, respectively. The increase in the effective tax rate for the three months ended ~~September~~June 30, ~~2017, as~~2023 compared to ~~2.7%~~the same period in ~~2016.~~2022 is 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 a benefit for income tax purposes as these entities continue to maintain a valuation allowance against their net deferred tax assets.

~~Income tax expense increased by $576 to end at an expense~~We generated income before provision for income taxes of ~~$1,954~~$489 and $9,555 for the three months ended ~~September~~June 30, ~~2017, as compared to $1,378~~2023 and 2022, respectively. Our net loss (after income taxes) for the ~~comparable~~three-month period ~~in 2016. The effective tax rate for the quarter~~ended June 30, 2023, was 32.1%, as compared to 31.3% in the same period of the prior year. Our effective tax rate increased due to a relatively stronger performance for our domestic business, which is in a higher tax rate jurisdiction, offset by an increase in excess tax benefits related to stock options. Furthermore, 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.

During the three months ended September 30, 2017 the Company recognized a loss of $29 on our investment in TyraTech based upon its forecasted financial performance for 2017. This compared to a loss of $180 recognized in the comparable period of 2016. The Company’s investment in TyraTech is included in other assets on the condensed consolidated balance sheets.

During the three months ended September 30, 2017, the Company recognized a loss of $86 through its Hong Kong Joint Venture on our investment in Profeng. No comparable loss was recognized in 2016. The Company’s investment in the Hong Kong Joint Venture is included in other assets on the condensed consolidated balance sheets.

Non-controlling interest amounted to a loss of $71 in the three months ended September 30, 2017, as compared to $36 in the same period of the prior year. Non-controlling interest represents the share of net income that is attributable to the minority stockholder of our majority owned subsidiary, Envance.

~~Our overall net income for the three months ended September 30, 2017 was $4,089~~$1,052 or ~~$0.14~~($0.04) per basic and diluted share, as compared to ~~$2,877~~a net income of $6,830 or ~~$0.10~~$0.23 per basic and diluted share in the same ~~period~~quarter of ~~2016.~~2022.

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

2017

2016

Change

% Change

Net sales:

Insecticides

$
102,249

$
89,496

$
12,753

14
%
Herbicides/soil fumigants/fungicides

68,783

80,009

(11,226
)

-14
%
Other, including plant growth regulators

30,680

23,148

7,532

33
%
Total crop

201,712

192,653

9,059

5
%
Non-crop

36,841

31,992

4,849

15
%
Total net sales

$
238,553

$
224,645

$
13,908

6
%
Cost of sales:

Insecticides

$
64,495

$
59,244

$
5,251

9
%
Herbicides/soil fumigants/fungicides

38,221

42,907

(4,686
)

-11
%
Other, including plant growth regulators

17,418

15,184

2,234

15
%
Total crop

120,134

117,335

2,799

2
%
Non-crop

15,968

15,426

542

4
%
Total cost of sales

$
136,102

$
132,761

$
3,341

3
%
Gross profit:

Insecticides

$
37,754

$
30,252

$
7,502

25
%
Herbicides/soil fumigants/fungicides

30,562

37,102

(6,540
)

-18
%
Other, including plant growth regulators
��

13,262

7,964

5,298

67
%
Gross profit crop

81,578

75,318

6,260

8
%
Gross profit non-crop

20,873

16,566

4,307

26
%
Total gross profit

$
102,451

$
91,884

$
10,567

12
%
Gross margin crop

40
%

39
%

Gross margin non-crop

57
%

52
%

Total gross margin

43
%

41
%

2017

2016

Change

% Change

Net sales:

US

$
173,877

$
161,661

$
12,216

8
%
International

64,676

62,984

1,692

3
%
Total net sales

$
238,553

$
224,645

$
13,908

6
%

Overview of the Company’s Performance

~~Sales~~Within the global agricultural industry, the first six months of 2023 marked a plateau to the upcycle that had begun in 2021. Commodity prices 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. However, rising interest rates have engendered a newfound sense of fiscal rectitude among farmers, retailers and distributors. In an effort to control the 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 from China-based companies. Amidst these market dynamics, the Company’s overall operating results for the ~~nine~~first six months ~~ended September 30, 2017 improved~~of 2023 declined over those of the same period in 2022.

On a consolidated basis, with domestic sales down 20% and international sales down by nearly 6% to end at $238,553, as compared to $224,645, this time last year. This year-over-year improvement was driven by three major factors: first, our cotton products generated strong sales arising from an increase in U.S. cotton acres planted; second, we experienced incremental sales attributable to the acquisition of three new products; and third, increased post-hurricane demand for our mosquito adulticide. Partially offsetting these year-over-year increases were lower sales of our corn herbicide into the Midwest market and slower sales of soil fumigants primarily due to several weather-related application interruptions.

~~Across our crop business,~~3%, overall net sales decreased by 13% (to $257,674 in 2023 from $297,797 in 2022). Cost of ~~our insecticides group~~sales were ~~up approximately 14%~~reduced by 11% on an absolute basis and, as a consequence of the comparative declines between domestic and international business, increased as a percent of net sales to ~~end at $102,249, as compared to $89,496~~68% from 66%. While factory activity during the ~~nine months ended September 30, 2016. Within this category,~~first half of 2023 was strong, increased factory overhead costs yielded a higher net ~~sales of our non-granular insecticides increased by 38% driven by our cotton insecticide Bidrin~~^® which posted significantly increased sales due to the increase in 2017 U.S. cotton acres and an increase in foliar pest pressure, as compared to extremely low infestation levels of 2016. Further, net sales of our granular soil insecticides were up 9%. This increase was due to the strong performance of our granular products including corn insecticides Aztec® and SmartChoice; Thimet^® (used primarily in peanuts and sugar cane) and Counter®, which is largely used for nematode control in corn and sugar beets. We also recorded additional sales with our newly acquired insecticide Abba Ultra®. Offsetting these increases, in our International business, sales of Mocap were relatively flat, and we experienced softer sales of our Nemacur® brand.

Within the group of herbicides/fungicides/fumigants used in crop applications, net sales for the nine months ended September 30, 2017 declined by approximately 14% to $68,783 from $80,009 in the comparable period of 2016. During the period, we saw significantly weaker sales of our corn herbicide, Impact® in the Midwest region caused by wide-spread generic price reductions on competitive post-emergent herbicide products. Further, as mentioned above, our soil fumigants business declined by approximately 14% from the prior year due to excessively wet weather in several regions of the United States which inhibited the application of these liquid products. We experienced a modest decline in sales of our Scepter® soybean herbicide, sold in the U.S. market, and our Hyvar® and Krovar® herbicides, which are sold in international markets. Offsetting these declines were a slight increase in sales of Dacthal®, for use on a wide variety of high valued vegetable crops, and incremental sales of the newly acquired chlorothalonil fungicide, Equus® and paraquat herbicide, Parazone®.

~~Within the group of other products (which includes plant growth regulators, molluscicides and tolling activity), net sales were up about 33%,~~factory cost, as compared to the first six months of 2022. These factors, taken together, yielded a 19% decrease in gross profit (to $81,444 in 2023 from $100,727 in 2022) and gross margin percentage declined to 32% from 34% in the first half of ~~2016. This improvement was driven by both significantly higher sales~~2022. In the first half of ~~our Folex® cotton defoliant, due to increased harvested cotton acres in 2017, and stronger sales of our growth regulator product NAA. Offsetting these upside performances, our tolling revenues~~2023, operating expenses were ~~lower as a result of timing and will catch up in the final quarter of the year.~~

~~Our year-to-date non-crop sales ended up about 15% at $36,841,~~down approximately 1%, as compared to ~~$31,992~~those of the prior year period and increased as a percentage of net sales to 29% from 25% for the same period of the prior year. ~~This category benefitted from much higher~~

Interest expense increased significantly during the period due to lower cash receipts, primarily driven by the reduced sales of our ~~aerial-applied mosquito adulticide Dibrom®~~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 ~~from hurricane Harvey (Texas) and Hurricane Irma (Florida & Georgia). These positive factors were partially offset by~~in significantly higher interest expense.

Income tax expense decreased as income before taxes was lower ~~sales of our pharmaceutical products and a lower royalty payment received on our Envance consumer pest control products.~~

~~Our international sales ended up 3% at $64,676, as compared to $62,984 for~~than the first ~~nine month~~half of the prior year. The Company’s net income ended at $865, as compared to $16,765 in the first half of the prior year. Details on our financial performance are set forth below.

RESULTS OF OPERATIONS

Six months ended June 30, 2023, and 2022


	2023			2022			Change			% Change
Net sales:
U.S. crop	$	118,105		$	151,349		$	(33,244	)		-22	%
U.S. non-crop		30,759			34,753			(3,994	)		-11	%
Total U.S.		148,864			186,102			(37,238	)		-20	%
International		108,810			111,695			(2,885	)		-3	%
Total net sales:	$	257,674		$	297,797		$	(40,123	)		-13	%
Cost of sales:
U.S. crop	$	(77,520	)	$	(95,163	)	$	17,643			-19	%
U.S. non-crop		(16,461	)		(18,023	)		1,562			-9	%
Total U.S.		(93,981	)		(113,186	)		19,205			-17	%
International		(82,249	)		(83,884	)		1,635			-2	%
Total cost of sales:	$	(176,230	)	$	(197,070	)	$	20,840			-11	%
Gross profit:
U.S. crop	$	40,585		$	56,186		$	(15,601	)		-28	%
U.S. non-crop		14,298			16,730			(2,432	)		-15	%
Total U.S.		54,883			72,916			(18,033	)		-25	%
International		26,561			27,811			(1,250	)		-4	%
Total gross profit	$	81,444		$	100,727		$	(19,283	)		-19	%
Gross margin:
U.S. crop		34	%		37	%
U.S. non-crop		46	%		48	%
Total U.S.		37	%		39	%
International		24	%		25	%
Total gross margin		32	%		34	%

Our domestic crop business recorded net sales that were 22% below those of first half of 2022 (to $118,105 from $151,349). After experiencing supply chain disruptions to our corn 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 key granular soil insecticides used in corn. The US crop business benefited from improved sales performance of our Bidrin foliar insecticide for cotton and our domestic soil fumigant business for potatoes and high-value crops.

Cost of sales within the domestic crop business decreased 19%, as compared to the first six months of 2022, primarily driven by lower sales. Gross profit decreased by 28% to $40,585 from $56,186, and gross profit margin ended at 34% for the first half of 2023 as compared to 37% in 2022.

Our domestic non-crop business recorded an 11% decrease in net sales for the first half of the year (to $30,759 from $34,753). This decrease was largely due to the purchasing slowdown in several markets, as retailers sharply reduced their procurement practices in an effort to control their inventories. Sales in our OHP nursery and ornamental 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 work down inventory levels. Sales of our Dibrom® mosquito adulticide rose slightly as 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 increased royalty payments relating to licenses of our Envance formulations.

Cost of sales within the domestic non-crop business decreased by 9%, (to $16,461 in 2023 from $18,023 in 2022). Gross profit for domestic non-crop decreased by 15% to $14,298 in 2023 from $16,730 in 2022, due largely to decreased sales and a ~~result~~higher volume of ~~increase~~lower-margin products. Gross margin percentage for the six months ended at 46%, as compared to 48% for the same period in 2022.

Net sales of our international businesses decreased by 3% during the first half of 2023 (to $108,810 in 2023 from $111,695 in 2022). Central America, which had experienced double-digit growth 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. Similarly, Australia enjoyed improved sales driven by favorable weather and the benefits of integrating the AgNova business. Brazil continues to be challenged by price erosion caused by channel inventory overstocking and low-priced generic pricing.

Cost of sales in our ~~Counter~~international business decreased by 2% (to $82,249 in 2023 from $83,884 in 2022) primarily driven by a decline in volume. Gross profit for the international businesses decreased by 4% to $26,561 in 2023 from $27,811 in 2022, and ~~Aztec products that is somewhat offset~~gross margin percentage ended at 24% down from 25% during the first six months of 2022.

On a consolidated basis, gross profit for the six months of 2023 decreased by 19% (to $81,444 in 2023 from $100,727 in 2022). This decrease was due largely to reduced sales ~~of our Hyvar® and Krovar® herbicides, our Nemacur insecticide, and relatively flat sales of our Mocap insecticide~~ and a ~~variety of other products.~~

~~Our cost~~change in mix of sales ~~for the nine months ended at $136,102 or 57% of net sales. This compares to $132,761 or 59% of net sales in the same period of 2016. The decrease in cost of sales~~between domestic and international customers. Gross margin performance, when expressed as a percentage of ~~net~~ sales, in 2017 was primarily the result of three drivers: first, our purchasing team has contained raw material prices; second, our manufacturing performance has improved including some minor inflation in manufacturing costs more than offsetdecreased to 32% from 34%.

Operating expenses decreased by ~~better manufacturing output as we have continued~~$742 to ~~manage inventory and output levels in our plants; and third, the Company made more sales with higher margins in 2017 primarily driven by strong market performance in some of our key markets.~~

~~Gross profit~~$74,423 for the ~~nine months~~six-month period ended ~~September~~June 30, 2017 improved by $10,567, or 12%, to end at $102,451, as compared to $91,884 for the nine months of 2016. Gross margin percentage ended at 43% in the first nine months of 2017, as compared to 41% in the same period of the prior year. This strong performance was primarily driven by containing raw material pricing, effective production planning and favorable sales mix performance.

~~As discussed below in detail by department, operating expenses increased by $6,746 to $84,175 for the nine months ended September 30, 2017,~~2023, as compared to the same period in 2016. That increase arose from one-time charges for outside services related to acquisition diligence activities (of approximately $936), legal defense of the criminal investigation related to the importation of Thimet containers (of approximately $1,900), regulatory costs for re-registration of several organophosphate patents and field trials for development uses and products (of approximately $1,600), and further investment in business development personnel, SIMPAS technology and support for Smartbox systems in the field (of approximately $1,200).

2022. The changes in operating expenses by department are as follows:


	2023		2022		Change			% Change
Selling	$	26,571	$	23,961	$	2,610			11	%
General and administrative:
Other		29,028		34,691		(5,663	)		-16	%
Proxy contest activities		541		1,785		(1,244	)		-70	%
Research, product development and regulatory		18,283		14,728		3,555			24	%
	$	74,423	$	75,165	$	(742	)		-1	%

2017

2016

Change

% Change

Selling

$
19,833

$
19,597

$
236

1
%
General and administrative

27,137

23,263

3,874

17
%
Research, product development and regulatory

19,013

15,995

3,018

19
%
Freight, delivery and warehousing

18,192

18,574

(382
)

-2
%

$
84,175

$
77,429

$
6,746

9
%

•

Selling expenses increased by ~~$236~~$2,610 to end at ~~$19,833~~$26,571 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017,~~2023, as compared to the same period of ~~2016.~~2022. The main drivers were ~~an increase~~increased costs associated with additional headcount and travel expenses (as the business resumed in-person interaction with customers) and movements in ~~advertising and marketing activities in both our domestic and international regions offset by lower quality complaints.~~

some key exchange rates.

•

General and administrative expenses ~~increased~~decreased by ~~$3,874~~$5,663 to end at ~~$27,137~~$29,028 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017,~~2023, as compared to the same period of ~~2016.~~2022. The main drivers ~~for~~were the ~~increase are primarily driven by increased legal costs (including approximately $2,246~~impact of the movements in ~~costs of defending discovery~~the foreign currency exchange rates and the decrease in ~~connection with a criminal investigation), both legal~~incentive compensation.

•

During the six-months ended June 30, 2023 and ~~financial acquisitions related diligence costs,~~2022, the Company spent $541, and ~~intangible asset amortization~~$1,785, respectively, in fees associated with ~~product acquisitions.~~

Proxy activities.

•

Research, product development costs and regulatory expenses increased by ~~$3,018~~$3,555 to end at ~~$19,013~~$18,283 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017,~~2023, as compared to the same period of ~~2016.~~2022. The main drivers were ~~additional regulatory studies,~~ increased ~~staffing as we drive product development across~~costs associated with in-field activities in support of our ~~expanding portfolio~~various molecules and ~~business development activities, primarily focused on~~ our ~~new~~ SIMPAS ~~technology.~~

proprietary delivery systems.

~~Freight, delivery~~During the six-month period ended June 30, 2023 and ~~warehousing costs for~~2022, the ~~nine months ended September 30, 2017 were $18,192 or 7.6%~~Company recorded a decrease in the fair value of ~~sales~~our equity investment in Clean Seed in the amount of $77, as compared to ~~$18,574 or 8.2%~~a decrease of ~~sales for~~$403 during the ~~same period~~six months ended June 30, 2022. These changes in ~~2016. This improvement was primarily driven by reduced inventory levels driving overall carrying costs and~~fair value of our investment directly reflect changes in the ~~mix of sales and customer destinations in 2017 year to date, as compared to the same period of the prior year.~~stock’s quoted market price.

Interest costs net of capitalized interest were ~~$1,073~~$4,898 in the first ~~nine months~~six-month period of ~~2017,~~2023, as compared to ~~$1,304~~$1,170 in the same period of ~~2016.~~2022. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense


	Nine months ended September 30, 2017								Nine months ended September 30, 2016								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)	$	44,706	$	870			2.6	%	$	63,949	$	1,098			2.3	%	$	123,248	$	4,241			6.9	%	$	105,076	$	1,146			2.2	%
Amortization of deferred loan fees		—		182			—			—		187			—			—		118			—			—		138			—
Subtotal		44,706		1,052			3.1	%		63,949		1,285			2.7	%
Notes payable		—		—			—			27		1			—
Amortization of other deferred liabilities		—		23			—			—		28			—			—		—			—			—		17			—
Other interest expense		—		63			—			—		35			—			—		700			—			—		21			—
Subtotal		44,706		1,138			3.4	%		63,976		1,349			2.8	%		123,248		5,059			8.2	%		105,076		1,322			2.5	%
Capitalized interest		—		(65	)		—			—		(45	)		—			—		(161	)		—			—		(152	)		—
Total	$	44,706	$	1,073			3.2	%	$	63,976	$	1,304			2.7	%	$	123,248	$	4,898			7.9	%	$	105,076	$	1,170			2.2	%

The Company’s average overall debt for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017~~2023, was ~~$44,706,~~$123,248, as compared to ~~$63,976~~$105,076 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2016. During the period, we continued to focus on managing our working capital and controlling our usage of revolving debt. As can be seen from the table above, our~~2022. Our effective bank interest rate on our revolving line of credit was ~~3.1%~~6.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, as compared to ~~2.7%~~2.2% in ~~2016.~~2022.

Income tax expense ~~increased~~decreased by ~~$1,343~~$6,043 to end at ~~an expense of $5,015~~$1,181 for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017,~~2023, as compared to ~~$3,672~~income tax expense of $7,224 for the comparable period in ~~2016.~~2022. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, was ~~29.2%,~~57.7% as compared to ~~27.9% in~~30.11% for the same period oflast year. The increase in effective income tax rate in 2023 compared to the prior ~~year. Our effective tax rate increased~~year is primarily due to ~~a relatively stronger performance for our domestic business,~~withholding tax charges, net of income tax credits, associated with interest on certain intercompany loans, losses incurred at certain entities which isdid not result in a ~~higher~~benefit for income tax ~~rate jurisdiction,~~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. These factors were partially offset by ~~an increase in excess tax benefits related to stock options. Furthermore,~~a benefit from the ~~effective tax rate for all interim periods is based on the projected~~remeasurement of certain U.S. federal and state deferred taxes.

We generated income before provision before income taxes of $2,046 and $23,989 for the ~~full year and is subject to ongoing review and adjustment by management.~~

~~During the nine~~six months ended ~~September~~June 30, 2017 we recognized a loss of $140 on our investment in TyraTech. This compared to a loss of $309 recognized in the comparable period of 2016. This reflected their forecast financial performance for 20172023 and ~~a true up of their 2016 performance, which improved in comparison to 2015. The Company’s investment in TyraTech is included in other assets on the condensed consolidated balance sheets.~~

During the nine months ended September 30, 2017, the Company recognized a loss of $86 through our Hong Kong Joint Venture on its investment in Profeng. No comparable loss was recognized in 2016. The Company’s investment in the Hong Kong Joint Venture is included in other assets on the condensed consolidated balance sheets.

Non-controlling interest amounted to an income of $117 in the nine months ended September 30, 2017, as compared to $253 in the same period of the prior year. Non-controlling interest represents the share of2022, respectively. Our net income ~~that is attributable to the minority stockholder of our majority owned subsidiary, Envance.~~

~~Our overall net~~(after income taxes) for the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017~~2023 was ~~$11,845~~$865 or ~~$.41~~$0.03 per basic and ~~$0.40 per~~ diluted share, as compared to ~~$8,917~~$16,765 or ~~$0.31~~$0.57 per basic and ~~$0.30~~$0.55 per diluted share in the same period of ~~2016.~~2022.

LIQUIDITY AND CAPITAL RESOURCES

~~Although our~~The Company’s operating activities utilized net ~~income for~~cash of $96,602 during the ~~nine months~~six-month period ended ~~September~~June 30, ~~2017 increased by $2,792~~2023, as compared to $27,230 during the ~~same period~~six months ended June 30, 2022. Included in ~~2016, cash generated by operating activities decreased by $17,956. This was principally due to a tax payment to~~ the ~~IRS for back taxes~~$96,602 are net income of ~~$11,580 and a net decrease of $557 to other tax liability activities. Other items that changed cash generated by operating activities are as described:~~$865, plus non-cash depreciation, amortization of intangibles and other ~~long term~~ assets and discounted future liabilities, ~~generated $16,373,~~in the amount of $12,146, and provision for bad debts in the amount of $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 $2,541, change in fair value of an equity investment of $77, and net foreign currency adjustments of $382. These together provided net cash inflows of $15,670, as compared to ~~$16,330 in~~$34,353 for the ~~prior year; stock based compensation~~same period of ~~$3,585~~2022.

During the six-month period of 2023, the Company increased working capital by $110,845, as compared to ~~$1,656 for~~an increase of $68,187 during the ~~nine months ended September 30, 2016; and other non-cash adjustments including loss from equity method investment provided a net cash inflow~~same period of ~~$32,152,~~the prior year. Included in this change: inventories increased by $50,900, as compared to ~~$27,383~~$27,774 for the same period of 2022. While increases in inventory are normal for the Company’s annual cycle, this year the Company has seen distinct changes in buying patterns across its global markets as customers are pushing back purchase close to time of use as they manage working capital and interest expense.

Customer prepayments decreased by $83,225, as compared to $62,789 in the same period of ~~2016.~~

As2022, 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 ~~September 30, 2017, our working capital~~$17,500 due to the lack of product availability caused by supply chain disruptions. Our accounts payable balances increased ~~to $144,084,~~by $9,105, as compared to ~~$130,001 at December 31, 2016. This change was mainly driven by the increase~~$19,439 in accounts receivable. This time last year our working capital amounted to $153,466. The cash generated as a result of this reduction as of September 30, 2017 has been used to make product line acquisitions and to pay down debt.

~~During the nine months ended September 30, 2017, net sales ended up 6% at $238,553, as compared to~~ the same period of 2016. At September 30, 2017 accounts receivable increased by 9%, as compared to the balance as of September 30, 2016. During the nine months ended September 30, 2017 the level of accounts receivable increased by $15,746, as compared to December 31, 2016. This change is driven by timing and by the mix of sales of products, customers and regions in the period to September 30, 2017.

Inventories at September 30, 2017 ended at $123,315 ($141,678 at September 30, 2016), which was an increase of $2,213 as compared to December 31, 2016. It is normal at this point in the agricultural season to see our inventories increase2022, as we work to ~~supply grower demand in a timely manner. This year we continued~~manage inventory growth. Accounts receivables decreased by $6,092, as compared to ~~control inventory levels to focus on managing our working capital levels. As~~an increase of ~~September 30, 2017, we believe our inventories are valued at the lower of cost or market.~~

The Company accrues product specific programs based on agreements with customers and calculated as a percentage of sales. Program accruals at any balance sheet date depend on the mix of customers and products sold$18,645 in the ~~previous period. The level~~same period of 2022. This is primarily driven by a decrease in sales. Prepaid expenses increased by $1,749, as compared to $3,652 in the ~~accrual at any point is also affected~~same period of 2022. Income tax receivable changed by $3,510, as compared to $3,526 in the prior year. Accrued programs increased by $19,607, as compared to $35,987 in the prior year, driven by lower sales activity. Finally, other payables and accrued expenses decreased by $7,824, as compared to an increase of $602 in the prior year.

Accrued program costs are recorded in line with the growing season ~~that is the focus of the product and the agreed periodicity of payments.~~upon which specific products are targeted. Typically crop products have a growing season that ends on September 30thof each year. During the ~~nine~~first six months ~~ended September 30, 2017,~~of 2023, the Company made accruals for programs in the amount of $44,714 and payments in the amount of $25,124, resulting in a net increase in accrued program costs of $19,607. During the first six months of the prior year, the Company made accruals in the amount of $37,738. Programs are primarily paid out to customers either in the final quarter of the fiscal year or the first quarter of the next fiscal year. However, some programs for some products and markets are paid either more frequently or at different times in the calendar year. During the first nine months of 2017, the Company made payments in the amount of $15,018. Payments are not generally significant in the second and third quarters of each fiscal year. During the nine months ended September 30, 2016, the Company accrued $45,456$67,274 and made payments in the amount of ~~$14,920.~~$31,367, resulting in a net increase of accrued program costs of $35,987. The decrease in accruals for programs in the first six months of 2023, compared to the same period in 2022, is a direct result of lower sales of qualifying products.

~~Prepaid expenses at September~~Cash used for investing activities for the six-month period ended June 30, ~~2017 amounted~~2023, and 2022 was $7,172 and $6,671, respectively. In 2023, the Company spent $6,498 on purchases of fixed assets primarily focused on continuing to ~~$13,543 ($12,270 at September 30, 2016),~~invest in manufacturing infrastructure, as compared to $ 11,424 at December 31, 2016. As of September 30, 2017, accounts payable amounted to $29,355 ($23,268 at September 30, 2016), as compared to $24,358 at December 31, 2016. In 2017, we have continued to focus on improving our demand forecasting, planning for production and management of inventories. The increase in accounts payables as of September 30, 2017, as compared to September 30, 2016 and December 31, 2016, is primarily due to demand driven higher raw material purchases towards the end of the third quarter and planning for the start of the final quarter of the year.

The Company utilized $32,187 for investing activities during the nine months ended September 30, 2017, as compared to $9,629 during the same period of 2016. The Company made investments in capital expenditures in the current year, primarily focused on expanding plant capabilities. Furthermore, during the nine month period, the Company paid a total of $25,904 to complete four product line acquisitions and, furthermore, made a $950 capital contribution to the Hong Kong Joint Venture. That capital contribution was then used to invest in Profeng, a business in Australia. During the same period of the prior year the Company made a $3,283 investment in a Belgian Company that develops biological plant protection products that can be used for the control of pests and disease of agricultural crops and a small level of capital spending on our the manufacturing plants.

During the nine months ended September 30, 2017 financing activities provided $14,966, principally from the borrowings on the Company’s senior credit facility, as compared to utilizing $24,544 for the nine months ended September 30, 2016. This included a net borrowing of $16,975 against our facility, as compared to a net repayment of $24,000 for the same period last year. This overall performance for 2017 year to date was driven by generating cash from operations, managing our working capital while spending on fixed assets to ensure our manufacturing facilities are well maintained and fit for purpose. Further, the Company received $820 from the sale of common stock under its Employee Stock Purchase Plan and issuance of stock options, as compared to providing $204$5,654 for the same period of ~~last~~prior year. ~~Finally, during~~The Company made a payment of $650 for a product acquisition and spent $68 on patents for the ~~nine months to September 30, 2017 we paid dividends to investors~~Envance business. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of ~~$1,161~~$44, as compared to ~~$289 for~~$27 in prior year.

During the six months ended June 30, 2023, financing activities provided $98,086, as compared to $40,027 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $108,450 during the six-month period ended June 30, 2023, as compared to $48,400 in the same period of the prior year. The Company paid dividends to stockholders amounting to $1,702 during the six months ended June 30, 2023, as compared to $1,330 in the same period of 2022. The Company paid $7,226 for the repurchase of 408,201 shares of its common stock during the six-month period ended June 30, 2023, as compared to $6,232 for 333,010 shares during the six-month period ended June 30, 2022. The Company received $512 for the issuance of ESPP shares and exercise of stock options for the six months ended June 30, 2023, as compared to $1,202 for the same period in prior year. Lastly, in exchange for shares of common stock returned by employees, the Company paid $1,948 and $2,012 for tax withholding on stock-based compensation awards during the six months ended June 30, 2023 and 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, ~~2017~~2023 and December 31, ~~2016.~~2022. These are summarized in the following table:


Long-term indebtedness ($000's)	September 30, 2017						December 31, 2016						June 30, 2023			December 31, 2022
	Long-term			Total			Long-term			Total
Revolving line of credit	$	58,375		$	58,375		$	41,400		$	41,400		$	160,750		$	52,300
Deferred loan fees		(996	)		(996	)		(449	)		(449	)		(863	)		(823	)
Net long-term debt	$	57,379		$	57,379		$	40,951		$	40,951		$	159,887		$	51,477

As of June 30, ~~2017, AMVAC Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliates (including~~2023, the Company ~~AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment to Second Amended and Restated Credit Agreement (the “Credit Agreement”)~~was in compliance with a group of commercial lenders led by Bank of the West (AMVAC’s primary bank) as agent, swing line lender and Letter of Credit (“L/C”) issuer. The Credit Agreement is a senior secured lending facility, consisting of a line of credit of up to $250 million, an accordion feature of up to $100 million and a maturity date of June 30, 2022. The Credit Agreement contains two key financial covenants; namely, borrowers are required to maintain a Consolidated Funded Debt Ratio of no more than 3.25-to-1 and a Consolidated Fixed Charge Covenant Ratio of at least 1.25-to-1. The Company’s borrowing capacity varies with its financial performance, measured in terms of EBITDA, 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 Rate” which is based upon the Consolidated Funded Debt Ratio ~~(“Eurocurrency Rate Loan”) or (ii)~~but noncompliant with respect to 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,~~Fixed Charge Covenant ratio (“FCCR”). The noncompliance was driven by a reduction in the ~~case~~Consolidated EBITDA (in the numerator of ~~(x), (y) or (z)~~ the ~~Applicable Rate (“Alternate Base Rate Loan”). Interest payments for Eurocurrency Rate Loans are payable on~~FCCR calculation) during the ~~last day~~twelve months ended June 30, 2023, coupled with higher-than-normal distributions (in the denominator of ~~each interest period (either one, two, three or six months, as selected~~the FCCR calculation) arising from share repurchases made by the ~~borrower) and~~Company during the ~~maturity date, while interest payments~~same period. On August 3, 2023, the Company obtained a waiver for ~~Alternate Base Rate Loans are payable on~~ the ~~last business day~~FCCR noncompliance. The impact of ~~each month and~~most of the ~~maturity date.~~share repurchases will be eliminated from the denominator in the FCCR calculation in the third quarter of 2023.

At ~~September~~June 30, ~~2017,~~2023, according to the terms of the Credit Agreement, as amended, and based on ~~its~~our performance against the most restrictive ~~covenants~~covenant listed above, the Company had the capacity to increase its borrowings by up to ~~$124,724. This compares~~$22,858, compared to ~~an available borrowing capacity of $95,985~~$200,372 as of September 30, 2016. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for trailing twelve month period, which has improved, (2) net borrowings, which have decreased and (3) the leverage covenant (being the number of times EBITDA the Company may borrow under its credit facility agreement).December 31, 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.

RECENTLY ISSUED ACCOUNTING GUIDANCE

~~In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18,~~ ~~Statement of Cash Flows (Topic 230). The new standard requires that a statement of cash flows explain the change during the period~~Please refer to Note 16 in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconcilingaccompanying notes to the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. Based on the composition of the Company’s cash and cash equivalent, adoption of the new standard is not expected to have a material impact on our consolidated cash flows statements. The Company expects to adopt the standard for the financial year beginning January 1, 2018.

~~In August 2016, FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230)~~. The new standard addresses eight specific classification issues within the current practice regarding the manner in which certain cash receipts and cash payments are presented. The new standard is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company has reviewed the eight specific issues addressed and does not believe that the adoption of ASU 2016-15 will have a material impact on its statement of cash flows. The Company expects to adopt the revised standard for the financial year beginning January 1, 2018.

~~In October 2016, FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740)~~. Current US GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new standard, an entity is to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard does not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The new standard is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual periods. The Company has considered its activities with regard to such intra-entity transfers, does not expect the adoption of ASU 2016-16 to have a material impact on ourcondensed consolidated financial statements ~~and will adopt the standard~~ for ~~the financial year beginning January 1, 2018.~~recently issued accounting standards.

~~In May 2014, FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (Topic 606). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In March 2016, FASB issued an amendment to the standard, ASU 2016-08, to clarify the implementation guidance on principal versus agent considerations. Under the amendment, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). In April 2016, FASB issued another amendment to the standard, ASU 2016-10, to clarify identifying performance obligations and the licensing implementation guidance, which retaining the related principles for those areas. The standard and the amendments are effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). These amendments will be effective upon adoption of Topic 606. This standard also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows.

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, ~~2016,~~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, ~~2016.~~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 and six months ended June 30, 2023.

~~Item 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

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, ~~2016~~2022, and Note 10 in the ~~Company’s Form 8-K filed with~~accompanying notes to the ~~SEC on or about July 6, 2017.~~condensed consolidated financial statements.

The Company ~~conducts business in various foreign currencies, primarily in Europe, Mexico, Central and South America. Therefore~~faces market risk to the extent that changes in ~~the value of the currencies of such countries or regions~~foreign currency exchange rates affect ~~the Company’s financial position~~our non-U.S. dollar functional currency as to foreign subsidiaries’ revenues, expenses, assets and ~~cash flows when translated into U.S. Dollars.~~liabilities. The Company ~~has mitigated~~currently does not engage in hedging activities with respect to such exchange rate risks.

Assets and ~~will continue to mitigate a portion of its currency exchange exposure through natural hedges based on~~liabilities outside the ~~operation of decentralized foreign operating companies~~U.S. are located in ~~which the majority of all costs are local-currency based. Furthermore,~~regions where the Company has ~~established~~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 ~~procedure for covering forward exchange rates on specific purchase orders when appropriate. A 10% change in~~functional currency other than the ~~value of all foreign currencies would have an immaterial effect on~~U.S. dollar are generally considered long-term. Accordingly, the ~~Company’s financial position and cash flows.~~Company does not hedge these net investments.

~~Item 4.~~

~~CONTROLS AND PROCEDURES~~

Item 4. CONTROLS AND PROCEDURES

As of ~~September~~June 30, ~~2017,~~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, ~~2017,~~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.

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~~

~~During~~Item 1. Legal Proceedings

Please refer to Note 15 in the ~~reporting period, there have been no material developments in legal proceedings that are pending or threatened against the Company, except as described below.~~

~~EPA FIFRA/RCRA Matter.~~ On November 10, 2016, the Company was served with a grand jury subpoena out of the U.S. District Court for the Southern District of Alabama in which the U.S. Department of Justice (“DoJ”) sought production of documents relatingaccompanying notes to the Company’s reimportation of depleted Thimet containers from Canada and Australia. The Company has retained defense counsel and during 2017 year to date has substantially completed the production. During the third quarter, the Company received a request from DoJ to interview several individuals who may be knowledgeable of the matter. Those interviews are likely to take place during the fourth quarter. At this stage, DoJ has not made clear its intentions with regard to either its theory of the case or potential criminal enforcement. Thus, it is too early to tell whether a loss is probable or reasonably estimable. Accordingly, the Company has not recorded a loss contingency on this matter.condensed consolidated financial statements for legal updates.

~~Harold Reed v. AMVAC et al.~~ During January 2017, the Company was served with two Statements of Claim that had been filed on March 29, 2016 with the Court 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, arising from a fire that occurred during an application of the Company’s potato sprout inhibitor, SmartBlock, at a potato storage facility in Coaldale, Alberta on April 2, 2014. Plaintiffs allege, among other things, that Amvac was negligent and failed to warn them of the risks of such application. Reed seeks damages of $250 for alleged pain and suffering, while Jem Holdings seeks $60 in alleged lost equipment; both plaintiffs also seek unspecified damages as well. Also during January 2017, the Company received notice that four related actions relating to the same incident were filed with the same court: (i) ~~Van Giessen Growers, Inc. v Harold Reed et al~~ ~~(No. 160303906)(in which grower seeks $400 for alleged loss of potatoes); (ii)~~ ~~James Houweling et al. v. Harold Reed et al.~~ ~~(No. 160104421)(in which equipment owner seeks damages for alleged lost equipment); (iii)~~ ~~Chin Coulee Farms, etc. v. Harold Reed et al.~~ ~~(No. 150600545)(in which owner of potatoes and truck seeks $530 for alleged loss thereof); and (iv)~~ ~~Houweling Farms v. Harold Reed et al.~~ (No. 15060881)(in which owner of several Quonset huts seeks damages for alleged lost improvements, equipment and business income equal to $4,300). The Company was subsequently named as cross-defendant in those actions by Reed. During the third quarter, counsel for the Company filed a Statement of Defence (the Canadian equivalent of an answer), alleging that Reed was negligent in his application of the product and that the other cross-defendants were negligent for using highly flammable insulation and failing to maintain sparking electrical fixtures in the storage units affected by the fire. The Company believes that the claims against it in these matters are without merit and intends to defend them vigorously. At this stage in the proceedings, however, it is too early to determine whether a loss is probable or reasonably estimable; accordingly, the Company has not recorded a loss contingency.

~~13. Environmental— During the reporting period, there has been a material development in respect of a pending environmental matter as follows:~~

~~Environmental Site Characterization~~. As reported in greater detail in the Company’s Form 10-K for the period ended December 31, 2016, soil and groundwater characterization commenced at our Los Angeles manufacturing facility in December 2002 in conjunction with a Site Investigation Plan that was approved by the Department of Toxic Substances Control (“DTSC”). Site investigation (including extensive soil, soil gas, groundwater and air testing) continued through 2014, at the conclusion of which the Company submitted a remedial action plan (“RAP”) to DTSC. Under the provisions of the RAP, the Company proposed not to disturb sub-surface contaminants, but to continue monitoring, maintain the cover above affected soil, enter into restrictive covenants regarding the potential use of the property in the future, and provide financial assurances relating to the requirements of the RAP. In January 2017, the RAP was circulated for public comment. DTSC responded to those comments and, on September 29, 2017, approved the RAP as submitted by the Company. The Company intends to prepare an operation and maintenance plan, to record covenants on certain affected parcels and to obtain further clarification on financial assurance obligations relating to the RAP. At this stage, the Company does not believe that costs to be incurred in connection with the RAP will be material and has not recorded a loss contingency for these activities.

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, ~~2016,~~2022, filed on March ~~7, 2017. In preparing this document, we have reviewed all the~~16, 2023. The following disclosure amends and supplements those risk factors ~~included in that document~~ and, ~~find that~~except to the extent restated below, there are no material changes to ~~those~~the risk ~~factors.~~factors as so stated.

Disruption in the global supply chain is creating delays, unavailability and adverse conditions for our industry—Despite improvement in container availability and freight costs, the global supply chain continues to present risk. Industry consolidation, coupled with longer-term production commitments, has materially affected the Company’s supply of raw materials and intermediates in the past. There is no guarantee that the supply chain condition will materially improve any time soon or that the Company will avoid material disruption. Such disruption could have a material adverse effect on the Company’s operations, financial condition or cash flows.

~~Item 6.~~

~~Exhibits~~

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 chain disruptions in 2022 phosphorus and related compounds were increasingly difficult to source for our entire industry; ensuring a continuous supply required extraordinary efforts both with respect to sourcing and production planning. Similarly, in the first half of 2023, DCPA, the active ingredient in one of the Company’s 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 Company reliably, continuously and at the levels anticipated by the Company or required by the market. If these sources prove to be unreliable and the Company is not able to supplant or 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 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 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 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

On May 25, 2023, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase up to $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 the Company’s common stock that were repurchased during the three and six months ended June 30, 2023 and 2022.


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

As of June 30, 2023, the Company may yet purchase up to $8,331 of its common stock under its current 10b5-1 plan.

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, ~~2017,~~2023, formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) Condensed ~~consolidated~~Consolidated Statements of Operations; (ii) Condensed ~~consolidated~~Consolidated Statements of Comprehensive Income; (iii) Condensed ~~consolidated~~Consolidated Balance Sheets; (iv) Condensed ~~consolidated Statements~~Consolidated Statement of Stockholders’ Equity; (v) Condensed ~~consolidated~~Consolidated Statements of Cash Flows; and (vi) Notes to Condensed ~~consolidated~~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 June 30, 2023, has been formatted in Inline XBRL.

~~SIGNATURES~~

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.


	americanvanguardcorporation

Dated: ~~November 2, 2017~~August 8, 2023	By:	/s/ ericg. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: ~~November 2, 2017~~August 8, 2023	By:	/s/ davidt. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer


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)


Large Accelerated Filer	☐		Accelerated Filer	☒
Non-Accelerated Filer	☐	~~(Do not check if a small reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐


		Page Number
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations ~~for the three months and nine months ended September 30, 2017 and 2016~~	3

	Condensed Consolidated Statements of Comprehensive Income ~~for the three months and nine months ended September 30, 2017 and 2016~~	4

	Condensed Consolidated Balance Sheets ~~as of September 30, 2017 and December 31, 2016~~	5

	Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity ~~for the three months and nine months ended September 30, 2017~~	6

	Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2017 and 2016~~	78

	Notes to Condensed Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2928

Item 4.	Controls and Procedures	2928

PART II—OTHER INFORMATION		3029

Item 1.	Legal Proceedings	3029

Item 6.1A.	~~Exhibits~~Risks Factors	3229
Item 2.	Purchases of Equity Securities by the Issuer	30
Item 6.	Exhibits	31

SIGNATURES		3332

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
Net income	$	4,018		$	2,841		$	11,962		$	9,170
Comprehensive income:
Foreign currency translation adjustment		(67	)		(436	)		970			(888	)
Comprehensive income		3,951			2,405			12,932			8,282
Income (loss) attributable to non-controlling interest		71			36			(117	)		(253	)
Comprehensive income attributable to American Vanguard	$	4,022		$	2,441		$	12,815		$	8,029


		September 30, 2017			December 31, 2016				June 30, 2023			December 31, 2022
Current assets:
Cash and cash equivalents		$	9,045		$	7,869			$	14,632		$	20,328
Receivables:
Trade, net of allowance for doubtful accounts of $45 and $42, respectively			100,043			83,777
Trade, net of allowance for doubtful accounts of $6,135 and $5,136, respectively										151,479			156,492
Other			3,630			3,429				11,473			9,816
Total receivables, net			103,673			87,206				162,952			166,308
Inventories			123,315			120,576				237,587			184,190
Prepaid expenses			13,543			11,424				17,546			15,850
Income taxes receivable										5,436			1,891
Total current assets			249,576			227,075				438,153			388,567
Property, plant and equipment, net			49,495			50,295				73,452			70,912
Intangible assets, net of applicable amortization			141,127			121,433
Operating lease right-of-use assets										23,724			24,250
Intangible assets, net										178,624			184,664
Goodwill										48,219			47,010
Other assets			28,917			31,153				10,193			10,769
		$	469,115		$	429,956
Deferred income tax assets, net										293			141
Total assets									$	772,658		$	726,313

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	99		$	26
Accounts payable			29,355			24,358			$	78,876		$	69,000
Deferred revenue			—			3,848
Customer prepayments										27,368			110,597
Accrued program costs			65,650			42,930				80,333			60,743
Accrued expenses and other payables			8,704			12,072				13,273			20,982
Income taxes payable			1,684			13,840
Current operating lease liabilities										5,493			5,279
Total current liabilities			105,492			97,074				205,343			266,601
Long-term debt, net of deferred loan fees			57,379			40,951
Other liabilities, excluding current installments			2,789			2,868
Deferred income tax liabilities			6,712			6,706
Long-term debt, net										160,750			51,477
Long-term operating lease liabilities										18,884			19,492
Other liabilities, net of current installments										4,923			4,167
Deferred income tax liabilities, net										13,683			14,597
Total liabilities			172,372			147,599				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 32,236,629 shares at September 30, 2017 and 31,819,695 shares at December 31, 2016			3,224			3,183
Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued										—			—
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			74,423			71,699				106,719			105,634
Accumulated other comprehensive loss			(3,881	)		(4,851	)			(6,131	)		(12,182	)
Retained earnings			230,962			220,428				327,911			328,745
			304,728			290,459
Less treasury stock at cost, 2,450,634 shares at September 30, 2017 and December 31, 2016			(8,269	)		(8,269	)
American Vanguard Corporation stockholders’ equity			296,459			282,190
Non-controlling interest			284			167
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			296,743			282,357				369,075			369,979
		$	469,115		$	429,956
Total liabilities and stockholders' equity									$	772,658		$	726,313


	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,
	2017		2016		2017			2016			2023			2022			2023			2022
Net sales	$	89,975	$	82,447	$	238,553		$	224,645		$	132,790		$	148,203		$	257,674		$	297,797
Cost of sales		51,943		49,461		136,102			132,761			(89,881	)		(98,872	)		(176,230	)		(197,070	)
Gross profit		38,032		32,986		102,451			91,884			42,909			49,331			81,444			100,727
Operating expenses		31,570		28,286		84,175			77,429			(39,155	)		(38,518	)		(74,423	)		(75,165	)
Operating income		6,462		4,700		18,276			14,455			3,754			10,813			7,021			25,562
Change in fair value of equity investment												(55	)		(486	)		(77	)		(403	)
Interest expense, net		375		301		1,073			1,304			(3,211	)		(772	)		(4,898	)		(1,170	)
Income before provision for income taxes and loss on equity method investments		6,087		4,399		17,203			13,151
Income before provision for income taxes												488			9,555			2,046			23,989
Income tax expense		1,954		1,378		5,015			3,672			(1,541	)		(2,725	)		(1,181	)		(7,224	)
Income before loss on equity method investments		4,133		3,021		12,188			9,479
Loss from equity method investments		115		180		226			309
Net income		4,018		2,841		11,962			9,170
Income (loss) attributable to non-controlling interest		71		36		(117	)		(253	)
Net income attributable to American Vanguard	$	4,089	$	2,877	$	11,845		$	8,917
Earnings per common share—basic	$	.14	$	.10	$	.41		$	.31
Earnings per common share—assuming dilution	$	.14	$	.10	$	.40		$	.30
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		29,193		28,957		29,064			28,886			28,428			29,602			28,397			29,639
Weighted average shares outstanding—assuming dilution		29,783		29,496		29,648			29,385			28,428			30,225			28,985			30,289

	Common Stock					Additional			Accumulated Other						Treasury Stock								Non-
	Shares			Amount		Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			AVD Total			Controlling Interest			Total
Balance, December 31, 2016		31,819,695		$	3,183	$	71,699		$	(4,851	)	$	220,428			2,450,634	$	(8,269	)	$	282,190		$	167		$	282,357
Stocks issued under ESPP		16,349			2		248			—			—			—		—			250			—			250
Cash dividends on common stock ($0.015 per share)		—			—		—			—			(435	)		—		—			(435	)		—			(435	)
Foreign currency translation adjustment, net		—			—		—			757			—			—		—			757			—			757
Stock based compensation		—			—		1,080			—			—			—		—			1,080			—			1,080
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		377,916			37		16			—			—			—		—			53			—			53
Net income		—			—		—			—			3,452			—		—			3,452			(39	)		3,413
Balance, March 31, 2017		32,213,960			3,222		73,043			(4,094	)		223,445			2,450,634		(8,269	)		287,347			128			287,475
Cash dividends on common stock ($0.015 per share)		—			—		—			—			(437	)		—		—			(437	)		—			(437	)
Foreign currency translation adjustment, net		—			—		—			280			—			—		—			280			—			280
Stock based compensation		—			—		1,242			—						—		—			1,242			—			1,242
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(1,836	)		—		(1,517	)		—			—			—		—			(1,517	)		—			(1,517	)
Net income		—			—		—			—			4,304			—		—			4,304			227			4,531
Balance, June 30, 2017		32,212,124			3,222		72,768			(3,814	)		227,312			2,450,634		(8,269	)		291,219			355			291,574
Stocks issued under ESPP		17,667			2		303			—			—			—		—			305			—			305
Cash dividends on common stock ($0.015 per share)		—			—		—			—			(439	)		—		—			(439	)		—			(439	)
Foreign currency translation adjustment, net		—			—		—			(67	)		—			—		—			(67	)		—			(67	)
Stock based compensation		—			—		1,263			—			—			—		—			1,263			—			1,263
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		6,838			—		89			—			—			—		—			89			—			89
Net income		—			—		—			—			4,089			—		—			4,089			(71	)		4,018
Balance, September 30, 2017		32,236,629		$	3,224	$	74,423		$	(3,881	)	$	230,962			2,450,634	$	(8,269	)	$	296,459		$	284		$	296,743


	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	1,544	$	1,559	$	3,187	$	3,233
ROU assets obtained in exchange for new liabilities	$	693	$	898	$	2,576	$	1,825


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


2023 (excluding six months ended June 30, 2023)	$	3,235
2024		5,880
2025		5,330
2026		4,077
2027		2,700
Thereafter		6,200
Total lease payments		27,422
Less: imputed interest		(3,045	)
Total	$	24,377


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


	June 30, 2023			December 31, 2022
Land	$	2,764		$	2,757
Buildings and improvements		21,062			20,794
Machinery and equipment		146,476			142,980
Office furniture, fixtures and equipment		11,304			13,231
Automotive equipment		1,506			1,584
Construction in progress		7,811			5,897
Total gross value		190,923			187,243
Less accumulated depreciation		(117,471	)		(116,331	)
Total net value	$	73,452		$	70,912

	September 30, 2017		December 31, 2016
Finished products	$	107,966	$	103,832
Raw materials		15,349		16,744
	$	123,315	$	120,576

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net sales:
Insecticides	$	24,866	$	25,478	$	102,249	$	89,496
Herbicides/soil fumigants/fungicides		32,717		34,242		68,783		80,009
Other, including plant growth regulators		17,191		13,328		30,680		23,148
Net sales:		74,774		73,048		201,712		192,653
Non-crop		15,201		9,399		36,841		31,992
Total net sales:	$	89,975	$	82,447	$	238,553	$	224,645
Net sales:
US	$	65,842	$	60,033	$	173,877	$	161,661
International		24,133		22,414		64,676		62,984
Total net sales:	$	89,975	$	82,447	$	238,553	$	224,645


	For the six months ended June 30,
	2023		2022		Change			% Change
Net sales:
U.S. crop	$	118,105	$	151,349	$	(33,244	)		-22	%
U.S. non-crop		30,759		34,753		(3,994	)		-11	%
U.S. total		148,864		186,102		(37,238	)		-20	%
International		108,810		111,695		(2,885	)		-3	%
Net sales:	$	257,674	$	297,797	$	(40,123	)		-13	%
Gross profit:
U.S. crop	$	40,585	$	56,186	$	(15,601	)		-28	%
U.S. non-crop		14,298		16,730		(2,432	)		-15	%
U.S. total		54,883		72,916		(18,033	)		-25	%
International		26,561		27,811		(1,250	)		-4	%
Total gross profit:	$	81,444	$	100,727	$	(19,283	)		-19	%


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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Numerator:
Net income attributable to AVD	$	4,089	$	2,877	$	11,845	$	8,917
Denominator: (in thousands)
Weighted average shares outstanding-basic		29,193		28,957		29,064		28,886
Dilutive effect of stock options and grants		590		539		584		499
		29,783		29,496		29,648		29,385


	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

	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)
September 30, 2017
Incentive Stock Options	$	80	$	250	$	94		0.3
Restricted Stock		635		2,068		4,475		1.2
Performance Based Restricted Stock		299		920		1,901		2.0
Performance Based Options		249		347		69		0.3
Total	$	1,263	$	3,585	$	6,539
September 30, 2016
Incentive Stock Options	$	71	$	252	$	497		1.2
Restricted Stock		406		1,100		2,545		1.8
Performance Based Restricted Stock		100		240		857		1.4
Performance Based Options		11		64		173		1.2
Total	$	588	$	1,656	$	4,072

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2016		541,905		$	9.33	$	7.97
Options exercised		(15,000	)		7.50		—
Options forfeited		(3,919	)		11.49		—
Balance outstanding, March 31, 2017		522,986			9.37		7.99
Options exercised		(21,300	)		7.50		—
Options forfeited		(3,183	)		11.49		—
Balance outstanding, June 30, 2017		498,503			9.43		8.03
Options exercised		(12,000	)		7.50		—
Options forfeited		(4,285	)		11.49		—
Balance outstanding, September 30, 2017		482,218		$	9.46	$	8.05

	Outstanding Weighted Average						Exercisable Weighted Average
Exercise Price Per Share	Shares		Remaining Life (Months)		Exercise Price		Shares		Exercise Price
Incentive Stock Option Plan:
$7.50		250,050		38	$	7.5		250,050	$	7.50
$11.32—$14.75		232,168		83		11.58		34,334		12.07
		482,218			$	9.46		284,384	$	8.05

As of September 30, 2017	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
Incentive Stock Option Plan:
Outstanding		482,218	$	9.46		60	$	6,480
Expected to Vest		480,800	$	9.46		60	$	6,464
Exercisable		284,384	$	8.05		41	$	4,222

	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		324,756		$	14.75		362,841		$	20.43
Granted		251,475			16.10		—			—
Vested		(10,100	)		12.95		(127,274	)		31.29
Forfeited		(6,544	)		15.26		(16,008	)		23.67
Nonvested shares at March 31^st		559,587			15.38		219,559			14.59
Granted		38,502			17.08		140,541			15.08
Vested		(188,400	)		15.22		(22,639	)		15.63
Forfeited		(6,593	)		15.55		(6,457	)		14.98
Nonvested shares at June 30th		403,096			15.61		331,004			14.72
Granted		1,000			19.90		1,668			16.75
Vested		(1,065	)		12.88		(2,566	)		19.18
Forfeited		(5,209	)		15.80		(12,822	)		14.98
Nonvested shares at September 30th		397,822		$	15.63		317,284		$	14.69


	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


	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