☒ 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 — 28,750,439 shares as of ~~October 26, 2017.~~November 2, 2023.

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


		September 30, 2017			December 31, 2016				September 30, 2023			December 31, 2022
Current assets:
Cash and cash equivalents		$	9,045		$	7,869			$	11,529		$	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 $6,274 and $5,136, respectively										185,619			156,492
Other			3,630			3,429				11,919			9,816
Total receivables, net			103,673			87,206				197,538			166,308
Inventories			123,315			120,576				247,932			184,190
Prepaid expenses			13,543			11,424				8,517			15,850
Income taxes receivable										6,071			1,891
Total current assets			249,576			227,075				471,587			388,567
Property, plant and equipment, net			49,495			50,295				73,205			70,912
Intangible assets, net of applicable amortization			141,127			121,433
Operating lease right-of-use assets										22,907			24,250
Intangible assets, net										174,918			184,664
Goodwill										47,426			47,010
Other assets			28,917			31,153				12,435			10,769
		$	469,115		$	429,956
Deferred income tax assets, net										366			141
Total assets									$	802,844		$	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			$	71,054		$	69,000
Deferred revenue			—			3,848
Customer prepayments										5,998			110,597
Accrued program costs			65,650			42,930				90,367			60,743
Accrued expenses and other payables			8,704			12,072				16,555			20,982
Income taxes payable			1,684			13,840
Current operating lease liabilities										5,553			5,279
Total current liabilities			105,492			97,074				189,527			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										218,000			51,477
Long-term operating lease liabilities										18,102			19,492
Other liabilities, net of current installments										4,805			4,167
Deferred income tax liabilities, net										13,709			14,597
Total liabilities			172,372			147,599				444,143			356,334
Commitments and contingent liabilities
Commitments and contingent liabilities (Note14)
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, $.10 par value per share; authorized 40,000,000 shares; issued 34,666,431 shares at September 30, 2023 and 34,446,194 shares at December 31, 2022										3,467			3,444
Additional paid-in capital			74,423			71,699				108,937			105,634
Accumulated other comprehensive loss			(3,881	)		(4,851	)			(9,254	)		(12,182	)
Retained earnings			230,962			220,428				326,752			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, 5,915,182 shares at September 30, 2023 and 5,029,892 shares at December 31, 2022										(71,201	)		(55,662	)
Total stockholders’ equity			296,743			282,357				358,701			369,979
		$	469,115		$	429,956
Total liabilities and stockholders' equity									$	802,844		$	726,313

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

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

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

~~As of September 30, 2017, we believe our inventories are valued at lower of cost or market.~~

~~In July 2015, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2015-11, Inventory (Topic 330)~~6. Topic 330 currently requires an entity to measure inventory at the lower of cost or market, where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. This ASU limits the scope to inventory that is measured using first-in, first-out (FIFO) or average cost and requires inventory be measured at the lower of costs or net realizable value. The new standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.Accrued Program Costs — The Company ~~adopted this new standard effective January 1, 2017. There was no impact~~offers various discounts to customers based on ~~this adoption.~~

~~4. Based on similar economic and operational characteristics,~~ the ~~Company’s business is aggregated into one reportable segment. Selective enterprise information is as follows:~~

5. ~~Accrued Program Costs—In accordance with FASB ASC 605, the Company classifies amounts expected to be paid to its customers as~~volume purchased within a reduction of sales revenues. The Company describes these payments as “Programs.” Programs are a critical part of doing business in both the US agricultural and non-crop chemicals market places. For accounting purposes, programs are recorded as a reduction in gross sales and include market discounts from gross sales,defined time period, other pricing adjustments, some grower volume incentives or other key performance indicator driven payments, which are usually made ~~to distributors, retailers or growers,~~ at the end of a growing ~~season.~~season, to distributors, retailers or growers. The Company describes these payments as “Programs”. Programs are a critical part of doing business in both the U.S. crop and non-crop chemicals marketplaces. These discount Programs represent variable consideration. Revenues from sales are recorded at the net sales price, which is the transaction price net of the impact of Programs and includes estimates of variable consideration. Variable consideration includes amounts expected to be paid to its customers estimated using the expected value method. Each quarter management ~~compares~~reviews individual sale transactions with ~~programs~~Programs to determine what, if any, estimated program ~~liability has~~liabilities have been incurred. Once this initial calculation is made for the specific quarter, sales and marketing management, along with ~~executive and~~support from financial ~~management, review~~analysts, reviews the accumulated ~~program~~Program balance and, for volume driven payments, make assessments of whether or not customers are tracking in a manner that indicates that they will meet the requirements set out in agreed upon terms and conditions attached to each Program. Following this assessment, management ~~will make~~makes adjustments to the accumulated accrual to properly reflect the Company’s best estimate of the liability at the balance sheet date. ~~The majority of adjustments~~Programs are ~~made at, or close to, the end of the crop season, at which time customer performance can be more fully assessed.~~then reviewed with executive management for final approval. Programs are paid out predominantly on an annual basis, usually in the final quarter of the financial year or the first quarter of the following year. No significant changes in estimates were made during the ~~three~~three- and ~~nine months~~nine-month periods ended September 30, ~~2017~~2023, and ~~2016, respectively.~~ 2022.

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

~~7. ASC 260~~ ~~Earnings~~ 8. Net Income (Loss) Per Share ~~(“EPS”)~~ requires dual presentation of basic EPS and diluted EPS on the face of the condensed consolidated statements of operations. Basic EPS is computed as net income divided by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects potential dilution that could occur if securities or other contracts, which, for the Company, consists of options to purchase shares of the Company’s common stock, are exercised.

— The components of basic and diluted ~~earnings~~net income (loss) per share were as follows:

~~For~~Due to a net loss for the ~~three and nine months~~three-month period ended September 30, ~~2017~~2023, stock options and ~~2016,~~ other grants were excluded from the computation of diluted net loss per share as the impact is anti dilutive. For the three-month ended September 30, 2022, and nine-month periods ended September 30, 2023, and 2022, no stock options were excluded from the computation of diluted ~~earnings~~income (loss) per share.

~~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.

13. Stock-Based Compensation — The following tables illustrate the Company’s ~~stock based~~stock-based compensation (included in operating expenses in the condensed consolidated statements of operations), unamortized stock-based compensation, and remaining weighted average ~~period for~~amortization period.


	Stock-Based Compensation for the Three months ended		Stock-Based Compensation for the Nine months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)
September 30, 2023
Restricted Stock	$	1,187	$	3,597	$	7,764		2.0
Unrestricted Stock		130		390		347		0.7
Performance-Based Restricted Stock		399		270		2,832		2.0
Total	$	1,716	$	4,257	$	10,943

September 30, 2022
Restricted Stock	$	1,184	$	3,257	$	8,010		2.0
Unrestricted Stock		130		369		347		0.7
Performance-Based Restricted Stock		246		770		3,093		1.9
Total	$	1,560	$	4,396	$	11,450

The Company also granted stock options in past periods. All outstanding stock options are fully vested and exercisable and no expense was recorded during the ~~three~~three- and ~~nine months~~nine-month periods ended September 30, ~~2017~~2023, and ~~2016.~~2022.

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

Time-Based Restricted and Unrestricted Stock ~~Options—During the three and nine months ended September 30, 2017, 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 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 options granted, and exercisable, and the weighted average remaining contractual life for options outstanding as of September 30, 2017, were as follows:~~

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


	Three and Nine Months Ended September 30, 2023					Three and Nine Months Ended September 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
Granted		9,745			13.63		13,600			18.94
Vested		(3,666	)		16.79		(1,262	)		19.39
Forfeited		(15,080	)		21.70		(15,945	)		20.09
Nonvested shares at September 30th		679,300		$	21.50		760,009		$	18.86

~~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 nine-month periods ended September 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:

~~Performance Based Shares — During~~Activity for the ~~nine months~~three- and nine-month periods ended September 30, ~~2017,~~2023:

All the ~~Company issued a total of 128,594 performance based shares to employees.~~ The shares granted during the nine months of 2017 have an average fair 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% and a net sales goal weighted at 30%. The remaining 20% 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 sales for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies, identified in the Company’s 2016 Proxy Statement. All parts of these awards vest in three years, but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

During the nine months ended September 30, 2016, the Company granted a total of 52,170 performance based shares that will cliff vest on January 6, 2019 with a measurement period commencing January 1, 2016 and ending December 31, 2018. Eighty percent of these performance based shares are based upon the financial performance of the Company, specifically, EBIT goal weighted at 50% and a net sales goal weighted at 30%. The remaining 20% 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 sales for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies, identified in the Company’s 2015 Proxy Statement. All parts of these awards vest in three years, but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

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.

~~Performance Incentive Stock Options—During the nine months ended September 30, 2017 and 2016, the Company did not grant any employees performance~~ incentive stock ~~options to acquire shares of common stock.~~

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

~~The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for~~ options outstanding as of September 30, ~~2017 are as follows:~~

2023, have an exercise price per share of $11.49, total intrinsic value of $0, and a remaining life of 15 months.

~~During~~Activity for the ~~three months~~three- and nine-month periods ended September 30, ~~2017~~2022:

All the ~~Company recognized stock-based compensation related to~~ performance incentive stock options of $347 and $64, respectively. As of September 30, 2017, the Company assessed the likelihood of achieving the performance measures based on peer group information currently available for the performance based options granted in 2014. Based on the performance thus far, the Company has concluded that it is likely that the performance measure based on EBIT and net sales will be met at 200% of targeted performance and have considered the related additional expenseoutstanding as of September 30, ~~2017. The performance options based on market~~2023, have an exercise price ~~will also be met at 200%~~per share of $11.49, ~~however, the market condition is reflected in the grant date fair~~total intrinsic value ~~valuation~~of $0, and ~~no additional expenses were recognized as~~a remaining life of ~~September 30, 2017.~~15 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.16

~~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.

~~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, 2019.17

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.~~ 16. 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:

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 September 30, 2023 and December 31, 2022.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers 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 August 22, 2017 (the date of acquisition).~~thousands)

21. Subsequent Events – On October 2, 2017, the Company’s subsidiary, AMVAC Chemical, completed 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.

~~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.

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 for~~10-Q.

~~Overall~~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 these 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 (loss) and net income (loss) per share. Please refer to Note 11 to the condensed consolidated financial statements for further details.

The third quarter ~~ended September 30, 2017 included sales~~ of ~~$89,975, which were up approximately 9%,~~2023 has been marked by the same factors that have lingered over the course of the full year to date, namely: destocking by customers that seek to avoid the high carrying costs of inventory; supply chain issues with a key herbicide; procurement of goods closer to time-of-use; the influence of low-cost generic products exported to multiple markets from China-based suppliers working within a strained economy; and a strong US Dollar with relatively stable commodity prices. These factors have tended to affect different markets somewhat disparately, as ~~compared to sales of $82,447~~will be noted from the discussion below.

Within this context, the Company’s financial performance for the third quarter of ~~2016. Our gross profit performance ended at $38,032 or 42% of sales,~~2023 declined as compared to ~~$32,986 or 40%~~the third quarter of 2022. Domestically, sales ~~for~~of both crop and non-crop products were nearly flat with those of the comparable quarter ~~last year. Operating costs increased~~in 2022. As a result of the conservative procurement trend, inventory of many of our crop products within the distribution channel was at historic lows, even though end customer demand was strong; this was true, for example of Aztec, our leading corn soil insecticide. Further, we experienced mixed results among other crop protection products. For example, sales of soil fumigants in the Pacific Northwest were strong (as this is the application season and weather was favorable), while sales of cotton products (primarily into the south and southwest) were affected by reduced planted acres and unfavorable weather. Within the domestic non-crop business, retailers continued to ~~35%~~demonstrate conservative stocking patterns. Nevertheless, we experienced steady demand for nursery, ornamental and professional pest control products. Within our international business, sales were down slightly, while some regions (e.g., Mexico) showed greater strength and others (e.g., Central America and Brazil) continued to experience market pressure from low-priced, generic goods from China-based suppliers.

Against this backdrop, on a consolidated basis, domestic sales declined by 1% while international sales declined by 3%, resulting in an overall net sales decline of 2%. Overall cost of sales ~~for the three months ended September 30, 2017~~increased by 4% and was 71% of sales in 2023, as compared to ~~34%~~67% for the same period of 2022. These factors, taken together with slightly higher net manufacturing costs resulted in ~~prior year. Overall net income~~a 13% decrease in gross profit (to $43,084 in 2023 from $49,638 in 2022), while overall gross margin percent declined to 29% from 33% quarter-over-quarter.

Operating expenses increased ~~by $1,212 or 42% at $0.14 per basic and diluted share as compared~~slightly to ~~$0.10 per basic and diluted share this time last year.~~

~~Overall financial performance~~$38,893 for the ~~nine month~~three-months period ended September 30, ~~2017 included improved~~2023 from $38,394 in the same quarter of the prior year; further, operating expenses as a percent of net sales rose to 26% in the third quarter of 2023 from 25% in the comparable period of 2022, largely due to higher research, product development costs, regulatory expenses costs and increased sales and marketing expenses.

Operating income for the period decreased to $4,191 from $11,244, driven by reduced sales, higher freight charges (an element of cost of sales), a decreased gross margin percentage and higher operating expenses. During the third quarter, the Company experienced significantly higher interest expenses, due to increased borrowing and significantly higher interest rates. Income before taxes ended at $560 including a profitable performance for most of the Company’s operating entities around the world, offset by losses in certain businesses, including Brazil. Losses at that entity generate a tax benefit, which was not realized as a result of maintaining a full valuation allowance. As a result, net tax expense exceeded income before taxes, resulting in a net loss for the quarter.

These factors yielded a net loss for the period of $325, as compared to net income of $6,741 in the third quarter of 2022. Details on our financial performance are set forth below.

Our domestic crop business recorded net sales that were 2% lower than those of the third quarter of 2022 ($67,749 as compared to $69,101). Our cotton products were negatively influenced by a year-over-year decline in US cotton acreage of up to 25% in key Southeast and Mississippi delta regions resulting in reduced sales of our foliar insecticide Bidrin. Further, late planting of cotton in 2023 led to some delayed applications of our Folex harvest defoliant from this year’s third quarter to the fourth quarter. In addition, we recorded no sales of our herbicide Dacthal, as the Company is awaiting reinstatement of the product registration after having submitted data study requirements. These declines were largely offset by significantly higher sales of our corn soil insecticide Aztec, as corn rootworm pressure intensified, while channel inventories are at historical lows. Sales of our Thimet insecticide for use against wireworm infestation in sugarcane were very strong in the third quarter. Similarly, our metam sodium soil fumigants also posted larger sales, as late summer and early autumn dry weather patterns facilitated increased third quarter application.

Our domestic non-crop business posted increased net sales in the third quarter of 2023, as compared to the same period in ~~2016. Sales for~~ the ~~period were up approximately 6% to $238,553, as compared to $224,645 for~~prior year ($19,250 versus $18,936). In 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% of net sales and net income improved 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~~quarter, demand for our ~~crop business~~OHP nursery and ornamental products remained relatively flat, as consumer spending on such products remained steady. Likewise, we saw a normal late summer/early fall demand for goods that we supply to professional pest control applicators and landscapers. Sales of mosquito control product were ~~up 2% in the quarter and 5% year to date, as compared to the same periods~~slightly lower than those 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. third quarter.

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.

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. Partially offsetting these year-over-year increases were lower 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~~international businesses declined by ~~approximately 4% to $32,717 from $34,242~~3% during the period ($62,517 in ~~the comparable period of 2016. Net sales~~2023 vs. $64,220 in 2022) and constituted 42% 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 in the Southeast U.S. by Hurricane Irma. In fungicides, we had steady sales of our PCNB product and posted additional sales of 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%, as compared to the third quarter of 2016. Significant~~consolidated quarterly sales of our Folex® cotton defoliant along with our growth regulator product NAA drove this positive performance. Offsetting these strong factors were somewhat lower sales of our Metaldehyde granules, our SmartBlock potato sprout inhibitor, and our toll manufacturing revenue which will be recognized in the fourth quarter of 2017.

Our non-crop sales ended the third quarter of 2017 at $15,201 up 62%, as compared to $9,399 for 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 quarter of the prior year. This performance was driven by strong sales of our Hyvar® and Krovar® herbicide brands, offset by lower Mocap and Nemacur insecticides.

Our cost of sales for the third quarter of 2017 was $51,943 or 58% of sales. This compared to $49,461 or 60% of sales for the same period of 2016. 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 as compared to this time last year. The third quarter was a strong manufacturing quarter with high output, as the Company prepares 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 30, ~~2017,~~2023 and 2022, respectively. These results arose from a number of factors, including the foreign exchange effect of a strong US Dollar, various supply-chain constraints, industry-wide channel inventory destocking and intensified competition of generic products from Asia. The business benefited from sales increases in several countries of our Mocap and Nemacur soil insecticides and our Counter nematicide in Brazil. Conversely, our Central American business, while maintaining a strong presence in the pineapple, banana, and citrus markets, posted lower sales attributed to significant drought conditions in the region and continued pricing pressure caused by a surge of imported generic products from China. In Mexico, our business recorded good performance driven by our Bromacil herbicide. We experienced relatively flat performance in Australia, as well as with respect to our growth regulators, biorational products and our Agrinos portfolio.

Operating expenses were flat at $38,893 for the three-month period ended September 30, 2023, as compared to ~~40%~~$38,394 for the same quarter of the prior year. The changes in operating expenses by nature are as follows:

•

General and ~~inventory cost adjustments based upon capacity use studies.~~

~~As discussed below in detail~~administrative expenses decreased by ~~department, operating expenses increased by $3,284 to $31,570~~$475 for the ~~three months~~three-month period ended September 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.~~2022. The main ~~driver for the decrease is~~drivers were lower legal expenses and incentive compensation expenses, partially offset by inflation related ~~to lower~~increases in wages and other costs, ~~associated with quality claims.~~

~~General~~ and ~~administrative expenses increased by $1,681 to end at $9,227 for the three months ended September 30, 2017,~~adverse movements in key currencies as compared to the same 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.

US Dollar.

•

Research, product development costs and regulatory expenses increased by ~~$2,124~~$567 for the three-month period ended September 30, 2023, as compared to ~~end at $7,324~~the same period of 2022. The main drivers were increased spending related to the development of our SIMPAS system and expanded registrations for our products in Brazil.

On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. The Company recorded negative fair value adjustments in the amount of $247 and $454 for the three months ended September 30, ~~2017,~~2023 and 2022, respectively.

Interest costs net of capitalized interest were $3,384 in the three-month period ended September 30, 2023, as compared to $1,086 in the same period of 2022. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense


	Three months ended September 30, 2023								Three months ended September 30, 2022
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	200,247	$	3,578			7.1	%	$	125,441	$	1,104			3.5	%
Amortization of deferred loan fees		—		56			—			—		61			—
Amortization of other deferred liabilities		—		—			—			—		10			—
Other interest (income)		—		(44	)		—			—		(1	)		—
Subtotal		200,247		3,590			7.2	%		125,441		1,174			3.7	%
Capitalized interest		—		(206	)		—			—		(88	)		—
Total	$	200,247	$	3,384			6.8	%	$	125,441	$	1,086			3.5	%

The Company’s average overall debt for the three-month period ended September 30, 2023 was $200,247, as compared to $125,441 for the three-month period ended September 30, 2022. Our borrowings in the three-month period ended September 30, 2023, were higher primarily as a result of customer decisions to slow down purchases from buying early to now buying as close to time of use as possible, resulting in increased working capital for the company as we work through this change in the market places in which we operate. As can be seen from the table above, the effective bank interest rate on our revolving line of credit was 7.1% and 3.5% at each of the three-month period ended September 30, 2023 and 2022, respectively.

Income tax expense decreased by $2,078 to $885 for the three-month period ended September 30, 2023, as compared to $2,963 for the comparable period in 2022. The effective tax rates for the three-month period ended September 30, 2023 and 2022, were 158.0% and 30.5%, respectively. The increase in the effective tax rate for the three months ended September 30, 2023 as compared to the same period in 2022, is primarily attributable to an increase in losses incurred at certain entities which did not result in a benefit for income tax purposes as these entities continue to maintain valuation allowances against their net deferred tax assets.

Our net loss for the three-month period ended September 30, 2023, was $325 or ($0.01) per basic and diluted share, as compared to net income of $6,741 or $0.23 per basic and diluted share in the same quarter of 2022.

Nine Months Ended September 30, 2023 and 2022:

Overview of the Company’s Performance

During much of the year-to-date in 2023, the global agricultural industry has been influenced by a handful of dynamics. First, commodity prices have remained relatively stable; this has been so since the Russian invasion of Ukraine. Second, the US Dollar has been strong, while the Chinese economy has weakened. This, in turn, has created foreign exchange impacts for US-based businesses that serve international markets. In addition, China-based suppliers have oversupplied certain markets (e.g., Central America) with low-priced generic products. Third, the cost of money has risen to the point that customers have engaged in destocking activity to limit carrying costs for inventory. Finally, supply chain disruptions continued to arise from time to time, particularly among domestic companies that import goods from Asia and India. Against that backdrop, the Company’s overall operating results for the first nine months of 2023 declined as compared to those of the same period of 2022.

On a consolidated basis, with domestic sales down 14% and international down by 3%, overall net sales decreased by 10% (to $407,191 from $450,036). Cost of sales were down 9% on an absolute basis but increased as a percent of net sales to 69% from 67%. Factory performance was less cost efficient during the first nine months of 2023, as compared to that of 2022. These factors, taken together, yielded an decrease in gross profit margin to 31% of net sales from 33% during the first nine months of 2022. Operating expenses were flat on an absolute basis but increased as a percent of net sales to 28% as compared to 25% of net sales for the same period of the prior year.

Interest expense rose sharply due to higher interest rates and higher average borrowing, while income tax expense decreased significantly to $2,066 from $10,187 during the comparable period last year, primarily as a result of lower income before taxes. Overall, the Company’s net income for the period decreased to $540 from $23,506 during the first nine months of the prior year. Details on our financial performance are set forth below.

RESULTS OF OPERATIONS

Nine months ended September 30, 2023, and 2022


	2023			2022			Change			% Change
Net sales:
U.S. crop	$	185,823		$	220,303		$	(34,480	)		-16	%
U.S. non-crop		50,041			53,844			(3,803	)		-7	%
Total U.S.		235,864			274,147			(38,283	)		-14	%
International		171,327			175,916			(4,589	)		-3	%
Total net sales		407,191			450,063			(42,872	)		-10	%
Total cost of sales		(282,662	)		(299,698	)		17,036			-6	%
Total gross profit	$	124,529		$	150,365		$	(25,836	)		-17	%
Total gross margin		31	%		33	%

Our domestic crop business recorded net sales that were 16% lower than those of the first nine months of 2022. The main driver of this performance was in our herbicide product category. Dacthal, which is used on a wide variety of high-value crops was unavailable for sale this year, as the company awaits the reinstatement of its registration. Additionally, our Impact post-emergent corn herbicide posted lower sales this year due to an unexpected grower preference for low-priced non-selective herbicides. Offsetting this decline was our leading soil insecticide Aztec, which rebounded from earlier supply constraints and saw strong demand in light of heavy rootworm pressure throughout the Midwest region. Our domestic cotton business, led by Bidrin foliar insecticide and Folex harvest defoliant, declined during the first three quarters of 2023 due to lower cotton acreage, moderate pest pressure, and a delay in harvest defoliant applications. At the same time, we posted modest increases in our soil fumigant and sugarcane products. The US crop business continues to experience the effects of channel inventory destocking, driven by high interest rate carrying costs. This has led to very cautious purchasing patterns throughout the domestic business since the beginning of the second quarter.

Year-to-date, the Company’s domestic crop business was slowed by supply chain disruption of its premier corn soil insecticide Aztec and herbicide Dacthal during the first quarter. During the second quarter, both US crop and US non-crop experienced slowed sales resulting from global destocking on the part of our distribution channels. Crop sales declines were partially offset by stronger sales of soil fumigants. Within non-crop, big box stores and retailers slowed and reduced procurement activity and departed from the historical norm of maintaining about 6 months’ inventory to about 30 days’ inventory. Within our International business, Central America and Brazil were adversely affected by the export of low-priced generic product from China, partially offset by strong performances in Mexico and Australia.

Our domestic non-crop business recorded an 8% decrease in net sales for the first nine months of the year (to $49,791 from $53,844). We experienced a nine month reduction in consumer demand for our OHP nursery and ornamental products, most of which occurred earlier this year and now has normalized in the most recent quarter. Sales of our Dibrom® mosquito adulticide remained nearly flat while sales for commercial pest control products (pest strips and bifenthrin) declined, due in part to measures imposed by distribution to control inventory carrying costs. License revenue for our Envance technologies increased when compared to the same period in 2022, due to an increase in contractually guaranteed royalty fees.

Net sales of our international businesses declined by 3% during the first three quarters of 2023 (to $171,327 in 2023 from $175,916 in 2022). Central America experienced a rare multi-quarter sales decline due to continuing regional drought conditions and increased competitive pressure from Chinese imports. Brazil continued to gain further market penetration of our Counter granular insecticide/nematicide, but the overall business suffered otherwise from intense channel inventory destocking in the region. Mexico delivered solid performance by satisfying continuing strong demand for Bromacil herbicides and granular soil insecticides, offset somewhat by lower sales of our soil fumigant products. Australia posted higher sales with our expanded market footprint following full integration of the AgNova business, despite the recurrence of drought conditions in parts of the continent.

Operating expenses decreased by $242 to $113,317 for the nine-month period ended September 30, 2023, as compared to the same period in 2022. The changes in operating expenses by department are as follows:


	2023		2022		Change			% Change
Sales and marketing	$	41,288	$	38,271	$	3,017			8	%
General and administrative:
Other		44,125		50,262		(6,137	)		-12	%
Proxy contest activities		541		1,785		(1,244	)		-70	%
Research, product development and regulatory		27,363		23,241		4,122			18	%
	$	113,317	$	113,559	$	(242	)		0	%

•

Sales and marketing increased by $3,017 for the nine-month period ended September 30, 2023, as compared to the same period of ~~2016.~~2022. The main drivers were increased inflation related increased wages, higher travel expenses associated with more in-person interactions with customers and increase isexpenses related to ~~more regulatory activity defending our expanding portfolio of products~~changes in key currencies compared to the US Dollar, offset by lower marketing spending.

•

General and ~~additional product development studies, again driven~~administrative expenses - other decreased by ~~expanding portfolio and continued progress on our investment in developing SIMPAS technology.~~

~~Freight, delivery and warehousing costs~~$6,137 for the ~~three months~~nine-month period ended September 30, ~~2017 were $8,348 or 9.4% of sales~~2023, as compared to $8,444 or 10.2% of sales for 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 period of 2022. The main drivers were decreased incentive compensation expenses related to our financial performance, lower legal costs and beneficial movements in some key currencies as compared to the US Dollar, partially offset by inflation related increases in wages.

•

The Company spent $541 in fees associated with our Proxy defense activities, as compared to $1,785 in the comparative period of the prior year.

•

Research, product development costs and regulatory expenses increased by $4,122 for the nine-month period ended September 30, 2023, as compared to the same period of 2022. The main drivers were increased costs associated with in-field activities in support of our proprietary delivery systems, and international product defense and registration expenses supporting strong sales growth.

During the nine-month period ended September 30, 2023, the Company recorded a decrease in the fair value of our equity investment in Clean Seed in the amount of $324 compared to $857 during the nine months ended September 30, 2022. These changes in fair value of our investment directly reflect changes in the stock’s quoted market price.

Interest costs net of capitalized interest were ~~$375~~$8,282 in the ~~three months ended September 30, 2017,~~first nine-month period of 2023, as compared to ~~$301~~$2,256 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								Nine months ended September 30, 2023								Nine months ended September 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	%	$	149,009	$	7,819			7.0	%	$	111,939	$	2,250			2.7	%
Amortization of deferred loan fees		—		57			—			—		62			—			—		174			—			—		199			—
Subtotal		44,897		377			3.4	%		44,617		303			2.7	%
Notes payable		—		—			—			9		—			—
Amortization of other deferred liabilities		—		7			—			—		9			—			—		—			—			—		27			—
Other interest expense		—		7			—			—		11			—			—		657			—			—		20			—
Subtotal		44,897		391			3.5	%		44,626		323			2.9	%		149,009		8,650			7.7	%		111,939		2,496			3.0	%
Capitalized interest		—		(16	)		—			—		(22	)		—			—		(368	)		—			—		(240	)		—
Total	$	44,897	$	375			3.3	%	$	44,626	$	301			2.7	%	$	149,009	$	8,282			7.4	%	$	111,939	$	2,256			2.7	%

The Company’s average overall debt for the ~~three~~nine-month period ended September 30, 2023, was $149,009, as compared to $111,939 for the nine months ended September 30, ~~2017 was approximately flat at $44,897, as compared to $44,626 for the three months ended September 30, 2016.~~2022. During the ~~quarter, we continued~~period, our average borrowings increased due to ~~focus on managing our working capital~~share repurchase programs and ~~controlling our usage~~an increase in inventory due to a slowdown in sales as a result of ~~revolving debt. Furthermore, we continued to follow our strategy in making product line acquisitions that fit our portfolio.~~channel destocking. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was ~~3.4% for the three months ended September 30, 2017, as compared to 2.7% in 2016.~~

Income tax expense increased by $576 to end at an expense of $1,954 for the three months ended September 30, 2017, as compared to $1,378 for the comparable period in 2016. The effective tax rate for the quarter 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 or $0.14 per basic and diluted share, as compared to $2,877 or $0.10 per basic and diluted share in the same period of 2016.

~~Nine Months Ended September 30:~~

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
%

~~Sales~~7.0% for the nine months ended September 30, ~~2017 improved by nearly 6% to end at $238,553,~~2023, 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, net sales of our insecticides group were up approximately 14% to end at $102,249, as compared to $89,496 during the nine months ended September 30, 2016. Within this category, 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%, as compared to the first half of 2016. This improvement was driven by both significantly higher sales 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 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, as compared to $31,992~~2.7% for the same period of 2022.

Income tax expense decreased by $8,121 to $2,066 for the prior year. This category benefitted from much higher sales of our aerial-applied mosquito adulticide Dibrom® resulting from hurricane Harvey (Texas) and Hurricane Irma (Florida & Georgia). These positive factors were partially offset by lower sales of our pharmaceutical products and a lower royalty payment received on our Envance consumer pest control products.

~~Our international sales~~nine-month period ended ~~up 3% at $64,676,~~September 30, 2023, as compared to $62,984 for the first nine month of the prior year. This was a result of increase in sales in our Counter and Aztec products that is somewhat offset by 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 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 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 offset by better manufacturing output as we have continued 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 for the nine months ended September 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, 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).

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

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 to end at $19,833 for the nine months ended September 30, 2017, as compared to the same period of 2016. The main drivers were an increase in advertising and marketing activities in both our domestic and international regions offset by lower quality complaints.

General and administrative expenses increased by $3,874 to end at $27,137 for the nine months ended September 30, 2017, as compared to the same period of 2016. The main drivers for the increase are primarily driven by increased legal costs (including approximately $2,246 in costs of defending discovery in connection with a criminal investigation), both legal and financial acquisitions related diligence costs, and intangible asset amortization associated with product acquisitions.

Research, product development costs and regulatory expenses increased by $3,018 to end at $19,013 for the nine months ended September 30, 2017, as compared to the same period of 2016. The main drivers were additional regulatory studies, increased staffing as we drive product development across our expanding portfolio and business development activities, primarily focused on our new SIMPAS technology.

Freight, delivery and warehousing costs for the nine months ended September 30, 2017 were $18,192 or 7.6% of sales as compared to $18,574 or 8.2% of sales for the same period in 2016. This improvement was primarily driven by reduced inventory levels driving overall carrying costs and the mix of sales and customer destinations in 2017 year to date, as compared to the same period of the prior year.

~~Interest costs net of capitalized interest were $1,073 in the first nine months of 2017, as compared to $1,304 in the same period of 2016. 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

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
%
Amortization of deferred loan fees

—

182

—

—

187

—

Subtotal

44,706

1,052

3.1
%

63,949

1,285

2.7
%
Notes payable

—

—

—

27

1

—

Amortization of other deferred liabilities

—

23

—

—

28

—

Other interest expense

—

63

—

—

35

—

Subtotal

44,706

1,138

3.4
%

63,976

1,349

2.8
%
Capitalized interest

—

(65
)

—

—

(45
)

—

Total

$
44,706

$
1,073

3.2
%

$
63,976

$
1,304

2.7
%

The Company’s average overall debt for the nine months ended September 30, 2017 was $44,706, as compared to $63,976 for the nine months ended September 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 effective bank interest rate on our revolving line of credit was 3.1% for the nine months ended September 30, 2017, as compared to 2.7% in 2016.

~~Income tax expense increased by $1,343 to end at an expense of $5,015 for the nine months ended September 30, 2017, as compared to $3,672~~$10,187 for the comparable period in ~~2016.~~2022. The effective tax rates for the nine-month period ended September 30, 2023 and 2022, were 79.3% and 30.2%, respectively.

The increase in the effective tax rate for the nine months ended September 30, ~~2017 was 29.2%,~~2023, as compared to ~~27.9% in~~ the same period ~~of the prior year. Our effective tax rate increased due~~in 2022, is primarily attributable to ~~a relatively stronger performance for our domestic business, which is in a higher tax rate jurisdiction, offset by~~ an increase in ~~excess~~losses incurred at certain entities which did not result in a benefit for income tax ~~benefits related~~purposes as these entities continue to ~~stock options. Furthermore, the effective~~maintain a valuation allowance against their net deferred 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 nine months ended September 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 2017 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,~~assets. Additionally, the Company ~~recognized~~recorded withholding tax charges (net of income tax credits) associated with interest on certain intercompany loans and the establishment of liabilities for uncertain tax positions in certain jurisdictions. These factors are partially offset by a ~~loss~~benefit from the remeasurement 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. certain U.S. federal and state deferred taxes.

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 of net income that is attributable to the minority stockholder of our majority owned subsidiary, Envance.

Our ~~overall~~ net income for the ~~nine months~~nine-month period ended September 30, ~~2017~~2023 was ~~$11,845~~$540 or ~~$.41~~$0.02 per basic and ~~$0.40 per~~ diluted share, as compared to ~~$8,917~~$23,506 or ~~$0.31~~$0.80 per basic and ~~$0.30~~$0.78 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 $145,854 during the nine-month period ended September 30, 2023, as compared to $45,678 during the nine months ended September 30, ~~2017 increased by $2,792 as compared to~~2022. Included in the ~~same period 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~~$145,854 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:~~$540, plus non-cash depreciation, amortization of intangibles and other ~~long term~~ assets and discounted future liabilities, ~~generated $16,373,~~in the amount of $17,850, loss on disposal of property, plant and equipment of $7, amortization of deferred loan fees of $174 and provision for bad debts in the amount of $952. Also included are stock-based compensation of $4,257, increase in deferred income taxes of $977, changes in liabilities for uncertain tax positions or unrecognized tax benefits of $467, change in fair value of an equity investment of $324, and net foreign currency adjustments of $199. These together provided net cash inflows of $23,793, as compared to ~~$16,330 in~~$49,903 for the ~~prior year; stock based compensation~~same period of ~~$3,585~~2022.

During the nine-month period of 2023, the Company increased working capital by $160,094, as compared to ~~$1,656 for~~an increase of $59,659 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 $58,163, as compared to ~~$27,383~~$38,987 for the same period of 2022. While increases in inventory are normal for the Company’s annual cycle, the increase was bigger due to slowed sales resulting from global destocking on the part of our distribution channels.

Customer prepayments decreased by $104,590, as compared to $62,831 in the same period of ~~2016.~~

~~As of September 30, 2017,~~2022, driven by customer decisions regarding demand, payment timing and our ~~working capital~~cash incentive programs. Our accounts payable balances increased ~~to $144,084,~~by $1,240, as compared to ~~$130,001 at December 31, 2016. This change was mainly driven by the~~an increase ~~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~~$14,418 in the same period of ~~2016. At September 30, 2017 accounts receivable~~2022, driven by decreased factory activity levels. Accounts receivables increased by ~~9%,~~$29,055, as compared to an increase of $46,289 in the ~~balance as~~same period of ~~September 30, 2016. During the nine months ended September 30, 2017 the level of accounts receivable~~2022. This is primarily driven by lower overall sales. Prepaid expenses increased by ~~$15,746,~~$633, as compared to ~~December 31, 2016. This change is driven by timing and by the mix of sales of products, customers and regions~~$4,272 in the same 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~~2022. Income tax receivable changed by $4,046, as compared to ~~December 31, 2016. It~~$5,201 in the prior year. Accrued programs increased by $29,779, (as compared to $45,016 in the prior year), which is normal at this point in the ~~agricultural~~growing season and is related to ~~see our inventories~~sales volume. Finally, other payables and accrued expenses decreased by $4,406 compared to an increase ~~as we work to supply grower demand~~of $2,555 in ~~a timely manner. This year we continued to control inventory levels to focus on managing our working capital levels. As of September 30, 2017, we believe our inventories are valued at~~ the ~~lower of cost or market.~~prior year.

The Company accrues ~~product specific~~ programs ~~based on agreements~~in line 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 in the previous period. The level of the accrual at any point is also affected by 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 first nine months ~~ended September 30, 2017,~~of 2023, the Company made accruals for programs in the amount of $62,248 and payments in the amount of $32,469. During the first nine 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~~$78,885 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~~$33,869. The decrease in accruals for programs in the ~~second~~first nine months of 2023, compared to the same period in 2022, is a direct result of an decrease in sales of qualifying products.

Cash used for investing activities for the nine-month period ended September 30, 2023, and ~~third quarters~~2022 was $9,148 and $9,978, respectively. In 2023, the Company spent $8,589 on purchases of ~~each fiscal~~fixed assets primarily focused on continuing to invest in manufacturing infrastructure, as compared to $8,946 for the same period of prior year. The Company spent $759 on patents and other intangible assets in 2023 as compared to $1,078 in 2022. In addition, the Company received proceeds from disposal of property, plant and equipment in the amount of $200, as compared to $46 in prior year.

During the nine months ended September 30, ~~2016, the Company accrued $45,456 and made payments in the amount of $14,920.~~

~~Prepaid expenses at September 30, 2017 amounted to $13,543 ($12,270 at September 30, 2016),~~2023, financing activities provided $146,680, as compared to ~~$ 11,424 at December 31, 2016. As~~$59,797 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $165,700 during the nine-month period ended September 30, ~~2017, accounts payable amounted to $29,355 ($23,268 at September 30, 2016),~~2023, 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~~$96,000 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~~same period of the ~~third quarter and planning for the start of the final quarter of the~~prior year.

The Company ~~utilized $32,187 for investing activities~~paid dividends to stockholders amounting to $2,550 during the nine months ended September 30, ~~2017,~~2023, as compared to ~~$9,629 during~~$2,072 in the same period of ~~2016.~~2022. The Company ~~made investments in capital expenditures in~~paid $15,539 for the ~~current year, primarily focused on expanding plant capabilities. Furthermore,~~repurchase of 885,290 shares of its common stock during the ~~nine month~~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,~~2023, as compared to ~~utilizing $24,544~~$13,731 for 720,350 shares and $20,000 related to an accelerated share repurchase agreement during the nine-month period ended September 30, 2022. The Company received $1,026 for the issuance of ESPP shares and exercise of stock options for the nine months ended September 30, ~~2016. This included a net borrowing of $16,975 against our facility,~~2023, as compared to ~~a net repayment of $24,000~~$1,620 for the same period ~~last~~in prior year. ~~This overall performance~~Lastly, in exchange 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 saleshares of common stock ~~under its Employee Stock Purchase Plan~~returned by employees, the Company paid $1,957 and ~~issuance of stock options, as compared to providing $204~~$2,020 for ~~the same period of last year. Finally,~~tax withholding on stock-based compensation awards during the nine months toended September 30, ~~2017 we paid dividends to investors in the amount of $1,161 as compared to $289 for the same period of the prior year.~~ 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 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						September 30, 2023		December 31, 2022
	Long-term			Total			Long-term			Total
Revolving line of credit	$	58,375		$	58,375		$	41,400		$	41,400		$	218,000	$	52,300
Deferred loan fees		(996	)		(996	)		(449	)		(449	)
Net long-term debt	$	57,379		$	57,379		$	40,951		$	40,951

As of ~~June~~September 30, ~~2017, AMVAC Chemical Corporation (“AMVAC”),~~2023, by virtue of Amendment Number Six to the ~~Company’s principal operating subsidiary, as borrower,~~Third Amended Loan and ~~affiliates (including~~Security Agreement, the Company ~~AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment~~is deemed to Second Amended and Restated Credit Agreement (the “Credit Agreement”) 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 variesbe in compliance with its financial ~~performance, measured in terms of EBITDA,~~covenants (refer to Note 9 to the condensed consolidated financial statements 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) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month LIBOR Rate plus 1.00%, plus, in the case of (x), (y) or (z) the Applicable Rate (“Alternate Base Rate Loan”)further details). Interest payments for Eurocurrency Rate Loans are payable on the last day of each interest period (either one, two, three or six months, as selected by the borrower) and the maturity date, while interest payments for Alternate Base Rate Loans are payable on the last business day of each month and the maturity date.

At September 30, ~~2017,~~2023, according to the terms of the Credit Agreement, ~~and based on its~~as amended, including 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~~$28,760, 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 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 15 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.

~~Item 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

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 nine-months ended September 30, 2023.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to changes in interest rates, primarily from its borrowing activities. The Company’s indebtedness to its primary lender is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate. For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, ~~2016~~2022 and Note 9 to the ~~Company’s Form 8-K filed with 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 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 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 14 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 risk factors included in that document and find that there~~16, 2023. There are no material changes to ~~those~~the risk ~~factors.~~factors as so stated, except as follows:

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 domestic 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 months ended September 30, 2023.


Month ended	Total number of shares purchased		Average price paid per share		Total amount paid
July 31, 2023		325,224	$	17.80	$	5,788
August 31, 2023		151,865	$	16.63	$	2,525
Total		477,089	$	17.42	$	8,313

Pursuant to Amendment Number Six to the Third Amended Loan and Security Agreement, effective November 7, 2023, the Company is currently prevented from making stock repurchases.

Item 3. Defaults Upon Senior Securities

N/A

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

N/A

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 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 September 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~~8, 2023	By:	/s/ ericg. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: November ~~2, 2017~~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	☐

	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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023		2022
Net income (loss)	$	(325	)	$	6,741		$	540	$	23,506
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax effects		(3,123	)		(2,764	)		2,928		(1,748	)
Comprehensive income (loss)	$	(3,448	)	$	3,977		$	3,468	$	21,758


	For the Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net income	$	540		$	23,506
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment		6,396			6,207
Amortization of intangibles assets		10,009			10,442
Amortization of other long-term assets		1,445			2,656
Loss on disposal of property, plant and equipment		7			265
Accretion of discounted liabilities		—			28
Amortization of deferred loan fees		174			174
Provision for bad debts		952			597
Fair value adjustment to contingent consideration		—			621
Stock-based compensation		4,257			4,396
Change in deferred income taxes		(977	)		(64	)
Changes in liabilities for uncertain tax positions or unrecognized tax benefits		467			—
Change in fair value of equity investments		324			857
Net foreign currency adjustments		199			218
Changes in assets and liabilities associated with operations:
Increase in net receivables		(29,055	)		(46,289	)
Increase in inventories		(58,163	)		(38,987	)
Increase in prepaid expenses and other assets		(633	)		(4,272	)
Increase in income tax receivable/payable, net		(4,046	)		(5,201	)
Increase in net operating lease liability		227			10
Increase in accounts payable		1,240			14,418
Decrease in customer prepayments		(104,590	)		(62,831	)
Increase in accrued program costs		29,779			45,016
(Decrease) increase in other payables and accrued expenses		(4,406	)		2,555
Net cash used in operating activities		(145,854	)		(45,678	)
Cash flows from investing activities:
Capital expenditures		(8,589	)		(8,946	)
Proceeds from disposal of property, plant and equipment		200			46
Intangible assets		(759	)		(1,078	)
Net cash used in investing activities		(9,148	)		(9,978	)
Cash flows from financing activities:
Payments under line of credit agreement		(62,800	)		(64,000	)
Borrowings under line of credit agreement		228,500			160,000
Net receipt from the issuance of common stock under ESPP		980			837
Net receipt from the exercise of stock options		46			783
Payment for tax withholding on stock-based compensation awards		(1,957	)		(2,020	)
Repurchase of common stock		(15,539	)		(33,731	)
Payment of cash dividends		(2,550	)		(2,072	)
Net cash provided by financing activities		146,680			59,797
Net (decrease) increase in cash and cash equivalents		(8,322	)		4,141
Effect of exchange rate changes on cash and cash equivalents		(477	)		382
Cash and cash equivalents at beginning of period		20,328			16,285
Cash and cash equivalents at end of period	$	11,529		$	20,808


		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~~(Loss)	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	1922

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II—OTHER INFORMATION		30

Item 1.	Legal Proceedings	30

Item 6.1A.	~~Exhibits~~Risks Factors	3230
Item 2.	Purchases of Equity Securities by the Issuer	31
Item 6.	Exhibits	31

SIGNATURES		3332


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017		2016		2017			2016			2023			2022			2023			2022
Net sales	$	89,975	$	82,447	$	238,553		$	224,645		$	149,516		$	152,267		$	407,191		$	450,063
Cost of sales		51,943		49,461		136,102			132,761			(106,432	)		(102,629	)		(282,662	)		(299,698	)
Gross profit		38,032		32,986		102,451			91,884			43,084			49,638			124,529			150,365
Operating expenses		31,570		28,286		84,175			77,429			(38,893	)		(38,394	)		(113,317	)		(113,559	)
Operating income		6,462		4,700		18,276			14,455			4,191			11,244			11,212			36,806
Change in fair value of equity investments												(247	)		(454	)		(324	)		(857	)
Interest expense, net		375		301		1,073			1,304			(3,384	)		(1,086	)		(8,282	)		(2,256	)
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												560			9,704			2,606			33,693
Income tax expense		1,954		1,378		5,015			3,672			(885	)		(2,963	)		(2,066	)		(10,187	)
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)											$	(325	)	$	6,741		$	540		$	23,506
Net income (loss) per common share—basic											$	(.01	)	$	.23		$	.02		$	.80
Net income (loss) per common share—assuming dilution											$	(.01	)	$	.23		$	.02		$	.78
Weighted average shares outstanding—basic		29,193		28,957		29,064			28,886			27,919			29,214			28,236			29,496
Weighted average shares outstanding—assuming dilution		29,783		29,496		29,648			29,385			27,919			29,805			28,656			30,128

	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 September 30, 2023		Three months ended September 30, 2022		Nine months ended September 30, 2023		Nine months ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities	$	1,601	$	1,613	$	4,788	$	4,846
ROU assets obtained in exchange for new lease liabilities	$	643	$	2,378	$	3,220	$	4,202


Weighted-average remaining lease term (in years)	5.29
Weighted-average discount rate	4.37	%


2023 (excluding nine-months ended September 30, 2023)	$	1,682
2024		6,113
2025		5,538
2026		4,251
2027		2,736
Thereafter		6,200
Total lease payments		26,520
Less: imputed interest		(2,865	)
Total	$	23,655
Amounts recognized in the condensed consolidated balance sheets:
Operating lease liabilities, current	$	5,553
Operating lease liabilities, long-term	$	18,102


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales:
U.S. crop	$	67,749	$	69,101	$	185,823	$	220,303
U.S. non-crop		19,250		18,946		50,041		53,844
Total U.S.		86,999		88,047		235,864		274,147
International		62,517		64,220		171,327		175,916
Total net sales:	$	149,516	$	152,267	$	407,191	$	450,063


	September 30, 2023			December 31, 2022
Land	$	2,762		$	2,757
Buildings and improvements		21,009			20,794
Machinery and equipment		147,376			142,980
Office furniture, fixtures and equipment		10,846			13,231
Automotive equipment		1,205			1,584
Construction in progress		8,805			5,897
Total gross value		192,003			187,243
Less accumulated depreciation		(118,798	)		(116,331	)
Total net value	$	73,205		$	70,912


	September 30, 2023		December 31, 2022
Finished products	$	216,767	$	155,128
Raw materials		31,165		29,062
	$	247,932	$	184,190


Declaration Date	Record Date	Distribution Date	Dividend Per Share		Total Paid
September 12, 2023	September 22, 2023	October 6, 2023	$	0.030	$	834
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
September 12, 2022	September 23, 2022	October 7, 2022	$	0.025	$	715
June 6, 2022	June 24, 2022	July 8, 2022	$	0.025	$	742
March 14, 2022	March 25, 2022	April 15, 2022	$	0.025	$	736
December 13, 2021	December 27, 2021	January 10, 2022	$	0.020	$	594

	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						Classification prior to adoption of accounting change
	For the three months ended September 30,						For the three months ended September 30,
	2023			2022			2023			2022
Net sales	$	149,516		$	152,267		$	149,516			152,267
Cost of sales		(106,432	)		(102,629	)		(91,938	)		(90,733	)
Gross profit		43,084			49,638			57,578			61,534
Operating expenses		(38,893	)		(38,394	)		(53,387	)		(50,290	)
Operating income	$	4,191		$	11,244		$	4,191		$	11,244


	Classification after adoption of accounting change						Classification prior to adoption of accounting change
	For the nine months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
Net sales	$	407,191		$	450,063		$	407,191			450,063
Cost of sales		(282,662	)		(299,698	)		(249,294	)		(267,280	)
Gross profit		124,529			150,365			157,897			182,783
Operating expenses		(113,317	)		(113,559	)		(146,685	)		(145,977	)
Operating income	$	11,212		$	36,806		$	11,212		$	36,806

	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 Exercise 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
Options exercised		(1,200	)		11.49
Balance outstanding, September 30, 2023		64,872		$	11.49


	Number of Shares			Weighted Average Exercise Price Per Share
Balance outstanding, December 31, 2021 and March 31, 2022		108,036		$	11.49
Options exercised		(33,745	)		11.49
Balance outstanding, June 30, 2022		74,291		$	11.49
Options exercised		(1,541	)		11.49
Balance outstanding, September 30, 2022		72,750		$	11.49


	Three months ended September 30, 2022			Nine months ended September 30, 2022
Balance, June 30, 2022 and December 31, 2021, respectively	$	1,367		$	786
Fair value adjustment		—			635
Payments on existing obligations		(1,292	)		(1,292	)
Accretion of discounted liabilities		10			28
Foreign exchange effect		(85	)		(157	)
Balance, September 30, 2022	$	—		$	—


	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	)
Foreign currency translation adjustment, net of tax effects of $133		(3,123	)
Balance, September 30, 2023	$	(9,254	)

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


Three months ended	Total number of shares purchased		Average price paid per share		Total amount paid
September 30, 2023		477,089	$	17.42	$	8,313
September 30, 2022		387,340	$	19.36	$	7,499

Nine months ended	Total number of shares purchased		Average price paid per share		Total amount paid
September 30, 2023		885,290	$	17.55	$	15,539
September 30, 2022		720,350	$	19.06	$	13,731


Three months ended	Total number of shares purchased		Average price paid per share		Total amount paid
September 30, 2022		802,810	$	19.93	$	16,000

	Nine months ended September 30, 2017								Nine months ended September 30, 2016
	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	%
Amortization of deferred loan fees		—		182			—			—		187			—
Subtotal		44,706		1,052			3.1	%		63,949		1,285			2.7	%
Notes payable		—		—			—			27		1			—
Amortization of other deferred liabilities		—		23			—			—		28			—
Other interest expense		—		63			—			—		35			—
Subtotal		44,706		1,138			3.4	%		63,976		1,349			2.8	%
Capitalized interest		—		(65	)		—			—		(45	)		—
Total	$	44,706	$	1,073			3.2	%	$	63,976	$	1,304			2.7	%