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

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

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

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—~~30,186,844~~30,287,577 shares as of October 29, ~~2019.~~2020.

	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,
	2019		2018		2019		2018		2020		2019		2020		2019
Net sales	$	124,884	$	111,780	$	337,664	$	322,934	$	117,439	$	124,884	$	317,956	$	337,664
Cost of sales		77,421		66,480		206,846		193,286		74,174		77,421		196,004		206,846
Gross profit		47,463		45,300		130,818		129,648		43,265		47,463		121,952		130,818
Operating expenses		40,677		33,635		110,839		102,011		38,782		40,677		108,882		110,839
Operating income		6,786		11,665		19,979		27,637		4,483		6,786		13,070		19,979
Interest expense, net		2,070		1,116		5,606		2,961		1,022		2,070		3,804		5,606
Income before provision for income taxes and loss on equity method investments		4,716		10,549		14,373		24,676
Income before provision for income taxes and loss on equity method investment										3,461		4,716		9,266		14,373
Income tax expense		1,474		3,526		4,059		6,966		492		1,474		1,852		4,059
Income before loss on equity method investments		3,242		7,023		10,314		17,710
Loss from equity method investments		89		533		149		1,051
Net income		3,153		6,490		10,165		16,659
Net loss attributable to non-controlling interest		—		35		—		120
Income before loss on equity method investment										2,969		3,242		7,414		10,314
Loss from equity method investment										42		89		80		149
Net income attributable to American Vanguard	$	3,153	$	6,525	$	10,165	$	16,779	$	2,927	$	3,153	$	7,334	$	10,165
Earnings per common share—basic	$	.11	$	.22	$	.35	$	.57	$	.10	$	.11	$	.25	$	.35
Earnings per common share—assuming dilution	$	.11	$	.22	$	.34	$	.56	$	.10	$	.11	$	.25	$	.34
Weighted average shares outstanding—basic		29,057		29,399		29,013		29,340		29,501		29,057		29,401		29,013
Weighted average shares outstanding—assuming dilution		29,650		30,209		29,591		30,146		29,973		29,650		29,926		29,591

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

		September 30, 2019			December 31, 2018				September 30, 2020			December 31, 2019
Current assets:
Cash and cash equivalents		$	5,887		$	6,168			$	9,581		$	6,581
Receivables:
Trade, net of allowance for doubtful accounts of $1,988 and $1,263, respectively			140,220			123,320
Trade, net of allowance for doubtful accounts of $3,046 and $2,300, respectively										145,374			136,075
Other			13,783			10,709				9,064			16,949
Total receivables, net			154,003			134,029				154,438			153,024
Inventories, net			186,285			159,895				176,287			163,313
Prepaid expenses			10,731			10,096				10,738			10,457
Income tax receivable			88			—
Income taxes receivable										1,972			2,824
Total current assets			356,994			310,188				353,016			336,199
Property, plant and equipment, net			55,330			49,252				59,801			56,521
Operating lease right-of-use assets			12,186			—				12,128			11,258
Intangible assets, net of amortization			196,542			186,583				191,133			198,377
Goodwill			38,435			25,790				40,737			46,557
Other assets			21,810			21,774				18,926			21,186
Total assets		$	681,297		$	593,587			$	675,741		$	670,098

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	1,305		$	1,609			$	210		$	1,513
Accounts payable			67,188			66,535				61,283			64,881
Deferred revenue			368			20,043				5,689			6,826
Accrued program costs			57,512			37,349				67,745			47,699
Accrued expenses and other payables			11,912			15,962				11,266			12,815
Operating lease liabilities, current			4,889			—				4,312			4,904
Income taxes payable			—			4,030
Total current liabilities			143,174			145,528				150,505			138,638
Long-term debt, net of deferred loan fees			165,008			96,671				149,362			148,766
Operating lease liabilities, long-term										7,979			6,503
Other liabilities, excluding current installments			9,808			6,795				9,087			12,890
Operating lease liabilities, long-term			7,414			—
Deferred income tax liabilities			17,907			15,363				14,014			19,145
Total liabilities			343,311			264,357				330,947			325,942
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued			—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,235,938 shares at September 30, 2019 and 32,752,827 shares at December 31, 2018			3,325			3,276
Preferred stock, $.10 par value per share; authorized 400,000 shares; 0ne issued										—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,337,075 shares at September 30, 2020 and 33,233,614 shares at December 31, 2019										3,335			3,324
Additional paid-in capital			88,257			83,177				93,273			90,572
Accumulated other comprehensive loss			(6,699	)		(4,507	)			(14,520	)		(5,698	)
Retained earnings			271,263			262,840				280,866			274,118
			356,146			344,786				362,954			362,316
Less treasury stock at cost, 3,061,040 shares at September 30, 2019 and 2,902,992 shares at December 31, 2018			(18,160	)		(15,556	)
Less treasury stock at cost, 3,061,040 shares at September 30, 2020 and December 31, 2019										(18,160	)		(18,160	)
Total stockholders’ equity			337,986			329,230				344,794			344,156
Total liabilities and stockholders' equity		$	681,297		$	593,587			$	675,741		$	670,098

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, 2018

32,752,827

$
3,276

$
83,177

$
(4,507
)

$
262,840

2,902,992

$
(15,556
)

$
329,230

$
—

$
329,230

Common stock issued under ESPP

22,441

2

336

—

—

—

—

338

—

338

Cash dividends on common stock
   ($0.02 per share)

—

—

—

—

(580
)

—

—

(580
)

—

(580
)
Foreign currency translation adjustment,
   net

—

—

—

(1,769
)

—

—

—

(1,769
)

—

(1,769
)
Stock based compensation

—

—

1,485

—

—

—

—

1,485

—

1,485

Stock options exercised; grants,
   termination and vesting of
   restricted stock units (net of
   shares in lieu of taxes)

419,295

42

(930
)

—

—

—

—

(888
)

—

(888
)
Shares repurchased

—

—

—

—

—

158,048

(2,604
)

(2,604
)

—

(2,604
)
Net income

—

—

—

—

3,906

—

—

3,906

—

3,906

Balance, March 31, 2019

33,194,563

3,320

84,068

(6,276
)

266,166

3,061,040

(18,160
)

329,118

—

329,118

Cash dividends on common stock
   ($0.02 per share)

—

—

—

—

(580
)

—

—

(580
)

—

(580
)
Foreign currency translation
   adjustment, net

—

—

—

657

—

—

—

657

—

657

Stock based compensation

—

—

1,510

—

—

—

—

1,510

—

1,510

Stock options exercised; grants,
   termination and vesting of
   restricted stock units (net of
   shares in lieu of taxes)

9,628

1

36

—

—

—

—

37

—

37

Net income

—

—

—

—

3,106

—

—

3,106

—

3,106

Balance, June 30, 2019

33,204,191

3,321

85,614

(5,619
)

268,692

3,061,040

(18,160
)

333,848

—

333,848

Common stock issued under ESPP

24,788

3

375

—

—

—

—

378

—

378

Cash dividends on common stock
   ($0.02 per share)

—

—

—

—

(582
)

—

—

(582
)

—

(582
)
Foreign currency translation
   adjustment, net

—

—

—

(1,080
)

—

—

—

(1,080
)

—

(1,080
)
Stock based compensation

—

—

2,164

—

—

—

—

2,164

—

2,164

Stock options exercised; grants,
   termination and vesting of
   restricted stock units (net of
   shares in lieu of taxes)

6,959

1

104

—

—

—

—

105

—

105

Net income

—

—

—

—

3,153

—

—

3,153

—

3,153

Balance, September 30, 2019

33,235,938

$
3,325

$
88,257

$
(6,699
)

$
271,263

3,061,040

$
(18,160
)

$
337,986

$
—

$
337,986

	Common Stock						Additional			Accumulated Other						Treasury Stock
	Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			Total
Balance, December 31, 2019		33,233,614		$	3,324		$	90,572		$	(5,698	)	$	274,118			3,061,040	$	(18,160	)	$	344,156
Common stock issued under ESPP		22,776			2			350			—			—			—		—			352
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(586	)		—		—			(586	)
Foreign currency translation adjustment, net		—			—			—			(9,063	)		—			—		—			(9,063	)
Stock-based compensation		—			—			1,357			—			—			—		—			1,357
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(67,969	)		(7	)		(2,522	)		—			—			—		—			(2,529	)
Net income		—			—			—			—			520			—		—			520
Balance, March 31, 2020		33,188,421			3,319			89,757			(14,761	)		274,052			3,061,040		(18,160	)		334,207
Foreign currency translation adjustment, net		—			—			—			324			—			—		—			324
Stock-based compensation		—			—			1,188			—			—			—		—			1,188
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		40,657			5			49			—			—			—		—			54
Net income		—			—			—			—			3,887			—		—			3,887
Balance, June 30, 2020		33,229,078			3,324			90,994			(14,437	)		277,939			3,061,040		(18,160	)		339,660
Common stock issued under ESPP		26,892			3			366			—			—			—		—			369
Foreign currency translation adjustment, net		—			—			—			(83	)		—			—		—			(83	)
Stock-based compensation		—			—			1,231			—			—			—		—			1,231
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		81,105			8			682			—			—			—		—			690
Net income		—			—			—			—			2,927			—		—			2,927
Balance, September 30, 2020		33,337,075		$	3,335		$	93,273		$	(14,520	)	$	280,866			3,061,040	$	(18,160	)	$	344,794

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, 2017

32,241,866

$
3,225

$
75,658

$
(4,507
)

$
238,953

2,450,634

$
(8,269
)

$
305,060

$
254

$
305,314

Adjustment to recognize new revenue
   recognition standard, net of tax

—

—

—

—

2,214

—

—

2,214

—

2,214

Adjustment to recognize new standard
   on taxes on foreign asset transfers

—

—

—

—

(180
)

—

—

(180
)

—

(180
)
Common stock issued under ESPP

17,078

1

298

—

—

—

—

299

—

299

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(586
)

—

—

(586
)

—

(586
)
Foreign currency translation adjustment,
   net

—

—

—

672

—

—

—

672

—

672

Stock based compensation

—

—

1,309

—

—

��

—

—

1,309

—

1,309

Stock options exercised; grants, termination
   and vesting of restricted stock units
   (net of shares in lieu of taxes)

409,979

41

470

—

—

—

—

511

—

511

Net income

—

—

—

—

4,655

—

—

4,655

(50
)

4,605

Balance, March 31, 2018

32,668,923

3,267

77,735

(3,835
)

245,056

2,450,634

(8,269
)

313,954

204

314,158

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(587
)

—

—

(587
)

—

(587
)
Foreign currency translation adjustment,
   net

—

—

—

(898
)

—

—

—

(898
)

—

(898
)
Stock based compensation

—

—

1,469

—

—

—

—

1,469

—

1,469

Stock options exercised; grants,
   termination and vesting of restricted
   stock units (net of shares in lieu of
   taxes)

74,581

8

517

—

—

—

—

525

—

525

Net income

—

—

—

—

5,599

—

—

5,599

(35
)

5,564

Balance, June 30, 2018

32,743,504

3,275

79,721

(4,733
)

250,068

2,450,634

(8,269
)

320,062

169

320,231

Stocks issued under ESPP

18,872

1

370

—

—

—

—

371

—

371

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(588
)

—

—

(588
)

—

(588
)
Foreign currency translation adjustment,
   net

—

—

—

638

—

—

—

638

—

638

Stock based compensation

—

—

1,457

—

—

—

—

1,457

—

1,457

Stock options exercised; grants, termination
   and vesting of restricted stock units
   (net of shares in lieu of taxes)

(5,278
)

—

25

—

—

—

—

25

—

25

Net income

—

—

—

—

$
6,525

—

—

$
6,525

$
(35
)

$
6,490

Balance, September 30, 2018

32,757,098

$
3,276

$
81,573

$
(4,095
)

$
256,005

2,450,634

$
(8,269
)

$
328,490

$
134

$
328,624

	Common Stock				Additional			Accumulated Other						Treasury Stock
	Shares		Amount		Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			AVD Total
Balance, December 31, 2018		32,752,827	$	3,276	$	83,177		$	(4,507	)	$	262,840			2,902,992	$	(15,556	)	$	329,230
Common stock issued under ESPP		22,441		2		336			—			—			—		—			338
Cash dividends on common stock ($0.02 per share)		—		—		—			—			(580	)		—		—			(580	)
Foreign currency translation adjustment, net		—		—		—			(1,769	)		—			—		—			(1,769	)
Stock-based compensation		—		—		1,485			—			—			—		—			1,485
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		419,295		42		(930	)		—			—			—		—			(888	)
Shares repurchased															158,048		(2,604	)		(2,604	)
Net income		—		—		—			—			3,906			—		—			3,906
Balance, March 31, 2019		33,194,563		3,320		84,068			(6,276	)		266,166			3,061,040		(18,160	)		329,118
Cash dividends on common stock ($0.02 per share)		—		—		—			—			(580	)		—		—			(580	)
Foreign currency translation adjustment, net		—		—		—			657			—			—		—			657
Stock-based compensation		—		—		1,510			—			—			—		—			1,510
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		9,628		1		36			—			—			—		—			37
Net income		—		—		—			—			3,106			—		—			3,106
Balance, June 30, 2019		33,204,191		3,321		85,614			(5,619	)		268,692			3,061,040		(18,160	)		333,848
Common stock issued under ESPP		24,788		3		375														378
Cash dividends on common stock ($0.02 per share)												(582	)							(582	)
Foreign currency translation adjustment, net		—		—		—			(1,080	)		—			—		—			(1,080	)
Stock-based compensation		—		—		2,164			—			—			—		—			2,164
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		6,959		1		104			—			—			—		—			105
Net income		—		—		—			—			3,153			—		—			3,153
Balance, September 30, 2019		33,235,938	$	3,325	$	88,257		$	(6,699	)	$	271,263			3,061,040	$	(18,160	)	$	337,986

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

	For the Nine Months Ended September 30,						For the Nine-Months Ended September 30,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	10,165		$	16,659		$	7,334		$	10,165
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		13,892			14,233			14,584			13,892
Amortization of other long term assets		3,174			3,630
Amortization of other long-term assets and deferred loan fees								3,185			3,174
Amortization of discounted liabilities		41			314			9			41
Provision for bad debts		728			540			777			728
Reassessment of deferred consideration		(3,539	)		(5,437	)
Revision of deferred consideration								—			(3,539	)
Stock-based compensation		5,159			4,235			3,776			5,159
Deferred income taxes		(459	)		(34	)
Loss from equity method investments		149			1,051
Change in deferred income taxes								(1,757	)		(459	)
Change in investment fair value								(281	)		—
Loss from equity method investment								80			149
Net foreign currency adjustment								(711	)		550
Changes in assets and liabilities associated with operations:
Increase in net receivables		(15,983	)		(24,922	)		(5,089	)		(15,839	)
Increase in inventories		(19,713	)		(39,305	)		(16,941	)		(19,713	)
Increase in prepaid expenses and other assets		(849	)		(959	)		(532	)		(849	)
Decrease (increase) in income tax receivable								873			(4,477	)
Increase in net operating lease liability		117			—			14			117
(Decrease) increase in income tax receivable/payable, net		(4,477	)		2,069
(Decrease) increase in accounts payable		(5,516	)		5,711
Decrease in accounts payable								(1,759	)		(5,548	)
Decrease in deferred revenue		(19,800	)		(13,965	)		(1,079	)		(19,800	)
Increase in accrued program costs		20,163			22,882			20,058			20,163
Decrease in other payables and accrued expenses		(4,936	)		(1,792	)		(3,344	)		(4,967	)
Net cash used in operating activities		(21,684	)		(15,090	)
Net cash provided by (used in) operating activities								19,197			(21,053	)
Cash flows from investing activities:
Capital expenditures		(10,546	)		(5,154	)		(8,988	)		(10,546	)
Acquisition of business, product lines, and intangible assets		(31,836	)		(1,634	)		(3,942	)		(31,836	)
Investment								(1,190	)		—
Net cash used in investing activities		(42,382	)		(6,788	)		(14,120	)		(42,382	)
Cash flows from financing activities:
Net borrowings under line of credit agreement		68,200			19,675			377			68,200
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)		(30	)		1,731			(1,064	)		(30	)
Repurchase of common stock		(2,604	)		—			—			(2,604	)
Payment of cash dividends		(1,741	)		(1,611	)		(1,168	)		(1,741	)
Net cash provided by financing activities		63,825			19,795
Net decrease in cash and cash equivalents		(241	)		(2,083	)
Net cash (used in) provided by financing activities								(1,855	)		63,825
Net increase (decrease) in cash and cash equivalents								3,222			390
Effect of exchange rate changes on cash and cash equivalents		(40	)		114			(222	)		(671	)
Cash and cash equivalents at beginning of period		6,168			11,337			6,581			6,168
Cash and cash equivalents at end of period	$	5,887		$	9,368		$	9,581		$	5,887
Supplemental cash flow information:
Cash paid during the period for:
Interest							$	3,960		$	5,524
Income taxes, net							$	2,868		$	8,066

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

1. The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements of American Vanguard Corporation and Subsidiaries (“AVD” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. ~~Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements.~~ In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~nine months~~three- and nine-months ended September 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019. For further~~2020. The financial statements and related notes do not include all information ~~refer to~~and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements ~~and notes thereto~~ included in the Company’s ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The Company is closely monitoring the impact of the novel coronavirus (COVID-19) pandemic on all aspects of its business, including how the pandemic has impacted, and will likely impact, its customers, business partners, and employees. The Company is considered an essential business by most governments in the jurisdictions and territories in which the Company operates and, as a result, did not incur significant disruptions from the COVID-19 pandemic during the three- and nine-months ended September 30, 2020. At this point in the year, however, the Company can identify a number of effects on its overall performance as a result of the coronavirus. While none of them alone is material, taken together, they would constitute several million dollars in lost sales opportunities and an indeterminate level of profitability. First, while the Company has recorded strong sales of new products, particularly soybean and rice herbicides, the Company believes that those sales would likely have been higher but for the fact that the Company was constrained from holding in-person meetings with existing and potential new customers to promote those products. Second, demand for certain commodities – specifically, corn, potatoes and fruits and vegetables – have experienced a drop from restaurants that have been closed (in whole or in part) due to the coronavirus. This, in turn, has softened demand for some of the Company’s products that are used on those crops and could affect future contracts. Third, local currencies in Brazil, Mexico and Australia suffered a significant decline in value versus the US dollar during the first quarter of the year, which, in turn, has affected both sales and to a lesser extent profitability of our international business. These key currencies (from the Company’s perspective) have somewhat stabilized at new lower levels during the second and third quarter of the year. We do not know what movements in key rates to expect for the balance of 2020 and beyond. Further, while it is not possible to identify all of the reasons for the fluctuation in exchange rates with certainty, it is not unreasonable to include the pandemic among its causes.

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

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, along with related clarifications and improvements. As a result, we updated our significant accounting policies for the measurement of credit losses below. Refer to Note 15 “Recent Accounting Standards” for further information related to the Company's adoption of this standard.

Allowance for Credit Losses – The Company maintains an allowance to cover its Current Expected Credit Losses ("CECL") on its trade receivables, other receivables and contract assets arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over the life of its trade receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. The vast majority of the Company's trade receivables are less than 365 days.

Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on multiple portfolios. The determination of portfolios are based primarily on geographical location, type of customer and aging.

2. Leases— The Company has operating leases for warehouses, manufacturing facilities, offices, cars, railcars and certain equipment. On January 1, 2019, the Company adopted the accounting and adoption guidance in Accounting Standards Codification (“ASC”) 842, Leases, for its operating leases resulting in the recognition of operating lease right-of-use (ROU) assets and lease liabilities on the effective date. The Company measures ROU assets throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. The lease liabilities are measured at the present value of the unpaid lease payments at the lease commencement date. Leases that include both lease and non-lease components are accounted for as a single lease component for each asset class.

The minimum payments under operating leases are recognized on a straight-line basis over the lease term in the condensed consolidated statements of operations. Operating lease expenses related to variable lease payments are recognized in cost of sales or as operating expenses in a manner consistent with the nature of the underlying lease and as the events, activities, or circumstances in the lease agreement occur. Leases with a term of less than 12 months are not recognized on the condensed consolidated balance sheets, and the related lease expenses are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.

The accounting for leases requires management to exercise judgment and make estimates in determining the applicable discount rate, lease term and payments due under a lease. Most of our leases do not provide an implicit interest rate, nor is it available to us from our lessors. As an alternative, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. We also estimated the fair value of the lease and non-lease components for some of our warehouse leases based on market data and cost data.

The lease term includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not terminate) that the Company is reasonably certain to exercise. The Company has leases with a lease term ranging from 1 year to 1520 years.

~~The operating leases of the Company do not contain major restrictions or covenants such as those relating to dividends or additional financial obligations.~~ Finance leases are immaterial to the ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements. There were no lease transactions with related parties as of September 30, ~~2019.~~

The operating lease expense for the ~~three and nine months~~three-months ended September 30, 2020 and 2019 was $1,396 and $1,387, respectively, and $4,188 and $4,145 for the nine-months ended September 30, 2020 and 2019, respectively. Lease expenses related to variable lease payments and short-term leases were immaterial. Additional information related to operating leases are as follows:

The weighted-average remaining lease term and discount rate related to the operating leases as of September 30, ~~2019~~2020 were as follows:

Future minimum lease payments under non-cancellable operating leases as of September 30, ~~2019~~2020, were as follows:

3. Revenue Recognition—The Company recognizes revenue from the sale of its products, which include ~~insecticides, herbicides, soil fumigants, fungicides~~crop and ~~others, including growth regulators and distribution of third-party~~non-crop products. The Company sells its products to customers, which include distributors, retailers, and ~~retailers.~~growers. In addition, the Company recognizes royalty income from ~~the sale of intellectual property.~~licensing agreements. Based on similar economic and operational characteristics, the Company’s business is aggregated into ~~one~~1 reportable segment. Selective enterprise information of sales disaggregated by category and geographic region is as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

Net sales:

Crop:

Insecticides

$
35,847

$
31,048

$
112,539

$
115,702

Herbicides/soil fumigants/fungicides

46,772

41,882

115,510

113,144

Other, including plant growth regulators and
distribution

22,887

22,424

60,730

52,269

105,506

95,354

288,779

281,115

Non-crop, including distribution of third party products

19,378

16,426

48,885

41,819

Total net sales:

$
124,884

$
111,780

$
337,664

$
322,934

Net sales:

US

$
73,988

$
71,711

$
200,055

$
205,889

International

50,896

40,069

137,609

117,045

Total net sales:

$
124,884

$
111,780

$
337,664

$
322,934

Timing of revenue recognition:

Goods transferred at a point in time

$
124,884

$
111,675

$
337,285

$
322,266

Goods and services transferred over time

—

105

379

668

Total net sales:

$
124,884

$
111,780

$
337,664

$
322,934

	For the Three-Months Ended September 30,				For the Nine-Months Ended September 30,
	2020		2019		2020		2019
Net sales:
US crop	$	48,361	$	55,072	$	148,630	$	158,068
US non-crop		18,251		18,995		37,881		42,068
Total US		66,612		74,067		186,511		200,136
International		50,827		50,817		131,445		137,528
Total net sales	$	117,439	$	124,884	$	317,956	$	337,664
Timing of revenue recognition:
Goods and services transferred at a point in time	$	116,333	$	124,884	$	315,954	$	337,285
Goods and services transferred over time		1,106		—		2,002		379
Total net sales	$	117,439	$	124,884	$	317,956	$	337,664

Performance Obligations—A performance obligation is a promise in a contract or sales order to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification (“ASC ~~606.~~606”), Revenue From Contracts with Customers. A transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s sales orders have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the sales orders. For sales orders with multiple performance obligations, the Company allocates the sales order’s transaction price to each performance obligation based on its relative stand-alone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. The Company’s performance obligations are satisfied either at a point in time or over time as work progresses.

At September 30, 2019, the Company had $368 of remaining performance obligations, which is comprised of services and goods not yet delivered. The Company expects to recognize all remaining performance obligations as revenue in fiscal 2019.

Contract Balances—The timing of revenue recognition, billings and cash collections may result in deferred ~~revenue in the condensed consolidated balance sheets.~~revenue. The Company sometimes receives payments from its customers in advance of goods and services being provided in return for early cash incentive programs, resulting in deferred ~~revenue.~~revenues. These liabilities are reported in deferred revenue on the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheets at the end of each reporting period. The contract assets in the table below are related to royalties earned on certain licenses granted for the use of the Company’s intellectual property, which are recognized at a point in time and remain outstanding, as well as customized products without an alternative use.

Revenue recognized for the ~~three~~three- and ~~nine months~~nine-months ended September 30, ~~2019,~~2020, that was included in ~~the~~ deferred revenue ~~balance~~ at the beginning of ~~2019~~2020 was ~~$383~~$94 and ~~$19,675~~$2,573, respectively.

4. Property, plant and equipment at September 30, ~~2019~~2020 and December 31, ~~2018~~2019 consists of the following:

The Company recognized depreciation expense related to property, plant and equipment of ~~$1,571~~$1,878 and ~~$2,020~~$1,571 for the ~~three~~three- months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. During the ~~three months~~three-months ended September 30, 2020, the Company eliminated $205 from such assets and accumulated depreciation of fully depreciated assets. During the three-months ended September 30, 2019, ~~and 2018,~~ the Company eliminated $8 from assets and accumulated depreciation ~~$8 and $249, respectively,~~ of fully depreciated assets.

The Company recognized depreciation expense related to property, plant and equipment of ~~$4,796~~$5,235 and ~~$6,166~~$4,796 for the ~~nine months~~nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. During the ~~nine months~~nine-months ended September 30, ~~2019~~2020 and ~~2018,~~2019, the Company eliminated from such assets and accumulated depreciation ~~$718~~$601 and ~~$3,596,~~$718, respectively, of fully depreciated assets.

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

5. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out or average cost ~~method.~~methods. The components of inventories consist of the following:

6. Based on similar economic and operational characteristics, the Company’s business is aggregated into ~~one~~1 reportable segment. Selective enterprise information is as follows:

	For the three months ended September 30,												For the three-months ended September 30,
	2019			2018			Change			% Change			2020		2019		Change			% Change
Net sales:
US crop	$	55,952		$	55,285		$	667			1	%	$	48,361	$	55,072	$	(6,711	)		-12	%
US non-crop		18,036			16,426			1,610			10	%		18,251		18,995		(744	)		-4	%
US total		73,988			71,711			2,277			3	%		66,612		74,067		(7,455	)		-10	%
International		50,896			40,069			10,827			27	%		50,827		50,817		10			0	%
Net sales:	$	124,884		$	111,780		$	13,104			12	%
Net sales													$	117,439	$	124,884	$	(7,445	)		-6	%
Gross profit:
US crop	$	23,926		$	27,106		$	(3,180	)		-12	%	$	20,146	$	23,710	$	(3,564	)		-15	%
US non-crop		9,491			7,991			1,500			19	%		8,758		9,860		(1,102	)		-11	%
US total		33,417			35,097			(1,680	)		-5	%		28,904		33,570		(4,666	)		-14	%
International		14,046			10,203			3,843			38	%		14,361		13,893		468			3	%
Total gross profit:	$	47,463		$	45,300		$	2,163			5	%

Gross margin domestic		45	%		49	%
Gross margin international		28	%		25	%
Gross margin total		38	%		41	%

	For the nine months ended September 30,
	2019			2018			Change			% Change
Net sales:
US crop	$	152,512		$	166,397		$	(13,885	)		-8	%
US non-crop		47,543			39,492			8,051			20	%
US total		200,055			205,889			(5,834	)		-3	%
International		137,609			117,045			20,564			18	%
Net sales:	$	337,664		$	322,934		$	14,730			5	%
Gross profit:
US crop	$	66,140		$	78,439		$	(12,299	)		-16	%
US non-crop		24,363			19,843			4,520			23	%
US total		90,503			98,282			(7,779	)		-8	%
International		40,315			31,366			8,949			29	%
Total gross profit:	$	130,818		$	129,648		$	1,170			1	%

Gross margin domestic		45	%		48	%
Gross margin international		29	%		27	%
Gross margin total		39	%		40	%
Total gross profit													$	43,265	$	47,463	$	(4,198	)		-9	%

7. ~~Accrued Program Costs~~— Accrued Program Costs— The Company offers various discounts to customers based on the volume purchased within a defined time period, other pricing adjustments, some grower volume incentives or other key performance indicator driven payments made to distributors, retailers or growers, at the end of a growing season. The Company describes these payments as ~~“programs.~~“Programs.” Programs are a critical part of doing business in both the US crop and US non-crop ~~markets.~~chemicals market. These discount ~~programs~~Programs represent variable consideration. ~~Revenue~~In accordance with ASC 606, revenues from sales isare 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~~quarter-end, management compares individual sale transactions with ~~programs~~Programs to determine what, if any, estimated ~~program liability has~~Program liabilities have been incurred. Once this initial calculation is made for the specific quarter, sales and marketing management, along with executive and financial management, review 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.~~Program. Following this assessment, management ~~adjusts~~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 the adjustments are made at, or close to, the end of the crop season, at which time customer performance can be more fully assessed.~~ 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 ~~relating to prior period~~in estimates were made during the ~~three~~three- and ~~nine months~~nine-months ended September 30, 2020 and 2019, ~~and 2018,~~ respectively.

8. The Company has declared ~~and/or~~and paid the following cash dividends in the periods covered by this Form 10-Q:

9. ASC 260 Earnings Per Share (“EPS”) requires dual presentation of basic EPS and diluted EPS on the face of the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~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~~consist of options to purchase shares of the Company’s common stock, are exercised.

For the ~~three~~three- and ~~nine months~~nine-months ended September 30, 2020 and 2019, ~~and 2018, no~~respectively, 0 stock options were excluded from the computation of diluted earnings per share.

10. The Company has a revolving line of credit that is shown as long-term debt inon the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. The Company has no0 short-term debt as of September 30, ~~2019~~2020 and December 31, ~~2018. The revolving line of credit~~2019. Debt is summarized in the following table:

As of June 30, 2017, AMVAC Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliates (including the Company, AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment to Second Amended and Restated Credit Agreement ~~(the “Credit Agreement”)~~ with a group of commercial lenders led by Bank of the West ~~(AMVAC’s primary bank)~~ as agent, swing line lender and ~~Letter~~letter of ~~Credit (“L/C”)~~credit issuer. The ~~Credit Agreement~~agreement is a senior secured lending facility, consisting of a line of credit of up to $250,000, an accordion feature of up to $100,000 and a maturity date of June 30, 2022. The ~~Credit Agreement~~agreement contains two key financial covenants; namely, borrowers are required to maintain a Consolidated Funded Debt Ratio (the “CFD Ratio”) of no more than 3.25-to-1 and a Consolidated Fixed Charge Covenant Ratio of at least 1.25-to-1. The Company’s borrowing capacity varies with its financial performance, measured in terms of EBITDA as defined in the Credit Agreement, for the trailing ~~twelve month~~twelve-month period. Under the ~~Credit Agreement,~~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”). Interest payments for Eurocurrency Rate Loans are payable on the last day of each interest period (either one, two, three or ~~six months,~~nine-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. ~~Substantially all~~

As of November 27, 2019, AMVAC, as borrower, and certain affiliates entered into a Fourth Amendment to Second Amended and Restated Credit Agreement with its senior lenders under the ~~Company’s assets are pledged~~terms of which the maximum limits for both Permitted Acquisitions and Investments in Foreign Subsidiaries were increased and new language was added with respect to Eurocurrency Rates, LIBOR Rates and ERISA.

As of April 22, 2020, AMVAC, as ~~collateral~~borrower, and certain affiliates entered into a Fifth Amendment to the Second Amended and Restated Credit Agreement with its senior lenders (the “Credit Agreement”), having the same term and loan commitments, but under which the maximum permitted CFD Ratio has been increased from 3.25-to-1 to the following schedule: 4.00-to-1 through September 30, 2020, stepping down to 3.75-to-1 through December 31, 2020, 3.5-to-1 through March 31, 2021 and 3.25-to-1 thereafter. In addition, to the extent that it completes acquisitions totaling $15 million or more in any 90-day period, AMVAC may step-up the CFD Ratio by 0.5-to-1, not to exceed 4.25-to-1, for the ~~revolving line~~next three full consecutive quarters. Finally, to the extent that a proposed acquisition is at least $30 million but less than $50 million, the consent of ~~credit.~~the Lead Agent is required. Larger acquisitions continue to require the consent of a majority of the Lenders.

At September 30, ~~2019, according~~2020, the Company is compliant with all covenants to ~~the terms of the Credit Agreement and based~~its senior credit facility. Based on its performance against the most restrictive covenants ~~listed above,~~in the credit agreement, the Company had the capacity to increase its borrowings by up to ~~$30,435.~~$44,500. This compares to an available borrowing capacity of ~~$105,111~~$30,435, as of September 30, ~~2018.~~2019 and $26,977 at December 31, 2019. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA ~~for~~including both the trailing ~~twelve month~~twelve-month period ~~which has declined,~~and on a proforma basis arising from acquisitions, (2) net borrowings, ~~which~~

~~have increased due to recent acquisitions and to expansion of working capital needs for our growing international business,~~ and (3) the leverage covenant ~~(being the number of times EBITDA the Company may borrow under its credit facility agreement)~~(the Consolidated Funded Debt ratio).

11. Reclassification—Certain items may have been reclassified in the prior period ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements to conform with the September 30, ~~2019~~2020 presentation.

12. Total comprehensive income (loss) includes, in addition to net income, changes in equity that are excluded from the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations and are recorded directly into a separate section of stockholders’ equity on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. For the ~~three~~three- and nine-month periods ended September 30, ~~2019~~2020 and ~~2018,~~2019, total comprehensive income (loss) consisted of net income attributable to American Vanguard and foreign currency translation adjustments.

13. ~~Stock Based~~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”)~~options based on estimated fair values.

The following tables illustrate the Company’s stock-based compensation, unamortized stock-based compensation, and remaining weighted average ~~period for the three and nine months ended September 30, 2019 and 2018.~~amortization period.

~~Stock Options—During~~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 ended September 30, ~~2019, the Company did not grant any employees options to acquire shares of common stock.~~

~~Information relating to stock options at September 30, 2019, summarized by exercise price is as follows:~~

~~The weighted average exercise prices for options granted,~~2020 and ~~exercisable, and the weighted average remaining contractual life for options outstanding as of September 30, 2019, were as follows:~~

~~Common stock grants~~ — ~~A summary of non-vested shares as of, and for, the three and nine-months ended September 30, 2019 and 2018 is presented below:~~

Common stock grants — During the nine-months ended September 30, 2019, the Company issued a total of 338,201 shares of common stock to employees and directors of which 31,771 shares vested immediately, 9,000 shares will vest between a range of 95 days to 1,115 days, 6,751 shares will vest in three equal tranches on the employee’s anniversary, and the remaining shares will cliff vest after three years of service. The shares granted in 2019 were average fair valued at $16.86 per share. The fair value was determined by using the publicly traded share price as of the market close on 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, 2018, the Company issued a total of 277,280 shares of common stock to employees and directors of which 19,313 shares vested immediately, 19,760 shares will vest between a range of 178 days to 1,060 days, and the remaining shares will cliff vest after three years of service. The shares granted in 2018 were average fair valued at $20.27 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the value of restricted shares over the required service period.

During the three months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $1,082 and $870, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $2,751 and $2,427 respectively.

As of September 30, 2019, the Company had approximately $6,849 of unamortized stock-based compensation related to unvested restricted shares. This amount will be recognized over the weighted-average period of 2.0 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 shares as of, and for, the nine months ended September 30, 2019 and 2018, respectively is presented below:~~

~~Performance-Based Shares — During the nine months ended September 30, 2019, the Company issued a total of 137,557 performance based shares to employees.~~ The shares granted during the first nine months of 2019 have a weighted average fair value of $16.96. The fair value was determined by using the publicly traded share price as of the market close on 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 March 28, 2022 with a measurement period commencing January 1, 2019 and ending December 31, 2021. 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 2018 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, 2019, the Company has concluded that the performance measure based on EBIT and net sales for the performance based shares granted in 2016 and 2017, when compared to the peer group, were both met at 200% of targeted performance and all related additional expenses were recorded as of September 30, 2019. The performance shares based on market price was met at 125% and 100%, respectively, however, the market condition is reflected in the grant date fair value valuation and no additional expenses were recognized as of September 30, 2019. As a result, 42,368 additional shares were earned since the Company achieved performance targets when compared to the peer group.

~~During the nine months ended September 30, 2018, the Company issued a total~~Restricted and Unrestricted Stock — A summary of ~~130,332~~nonvested restricted and unrestricted stock is presented below:

Performance-Based Restricted Stock — A summary of nonvested performance-based ~~shares to employees.~~ The shares granted during the first nine months of 2018 have a weighted average fair value of $18.74. The fair value was determined by using the publicly traded share price as of the market close on the date of grant.stock is presented below:

Stock Options — 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 March 9, 2021 with a measurement period commencing January 1, 2018~~has stock options outstanding under its incentive stock option plans and ending December 31, 2020. 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 2017 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, 2019, performance-based shares related to EBIT and net sales have an average fair value of $17.34 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The performance-based shares related to the Company’s stock price have an average fair value of $15.46 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, 2019 and 2018, the Company recognized stock-based compensation related to performance-based shares of $977 and $491, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to performance based shares of $2,108 and $1,519, respectively.

As of September 30, 2019, the Company had approximately $3,320 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, 2019 and 2018, the Company did not grant any employees~~ performance incentive stock ~~options to acquire shares of common stock.~~

~~Information relating to performance~~plan. All outstanding stock options ~~at September 30, 2019 summarized by exercise price is as follows:~~

are vested and exercisable. The following tables present details for each type of plan:

Outstanding at September 30, 2020, summarized by exercise ~~prices for options granted and exercisable and~~price:

Activity of the ~~weighted average remaining contractual life for~~ performance incentive stock option plan:

All the performance incentive stock options outstanding as of September 30, ~~2019 are as follows:~~

2020 have an exercise price per share of $11.49 and a remaining life of 51 months.

14. Legal ~~Proceedings— In accordance with US GAAP,~~Proceedings — During the reporting period, the only material developments in legal proceedings that had been reported in the Company’s Form 10-K for the year ended December 31, 2019 were as follows:

EPA FIFRA/RCRA Matter. On November 10, 2016, the Company ~~records~~was served with a ~~liability~~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 relating to the Company’s reimportation of depleted Thimet containers from Canada and Australia. The Company retained defense counsel and completed production of documents. Since the fourth quarter of 2018, government attorneys have interviewed several individuals (both current and former employees) who may be knowledgeable of the matter. Three more such interviews are scheduled to occur in November 2020. At this stage, however, DoJ has not made clear its ~~condensed consolidated financial statements for loss contingencies when~~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 ~~known~~probable or ~~considered probable and the amount can be~~ reasonably ~~estimated. These liabilities include those relating to threatened or pending litigation and government proceedings. To the extent that any such litigation or proceeding is material to~~estimable. Accordingly, the Company ~~or its property, such matter (including any~~has not recorded a loss contingency ~~associated therewith) is reported as per Item 103 of Regulation S-K in Item 1 of Part II of~~on this ~~Form 10Q.~~matter.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02 and subsequent amendments, collectively known as ASC 842, Leases. ASC 842 requires recognition of operating leases as lease assets and liabilities on the balance sheet and requires the disclosure of key information about leasing arrangements. The Company elected to adopt ASC 842 by applying the modified transition method and, in addition, elected to use the effective date of January 1, 2019 as the initial date of application. We elected to apply all relevant practical expedients permitted under the transition guidance within the new lease standard with the exception of the practical expedient allowing the use of hindsight in determining the lease term and in assessing impairment. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected an accounting policy to keep leases with an initial term of 12 months or less off the balance sheet and to recognize those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. We also elected the practical expedient to not separate lease and non-lease components for all our leases, except for warehouse leases.

The adoption of ASC 842 resulted in the recognition of operating lease ROU assets of $12,936 and operating lease liabilities of $12,936 on the effective date as of January 1, 2019. The new guidance did not have a material impact on the condensed consolidated statement of operations or statement of cash flows. The accounting for finance leases under ASC 842 remained substantially unchanged from previous accounting guidance and are not material. See Note 2 for the disclosures required by ASC 842 and accounting policy information for leases.

InHarold Reed v. AMVAC et al. During January 2017, the ~~FASB issued ASU 2017-04,~~ ~~Intangibles-Goodwill~~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 ~~Other (ASC 350).~~ 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. The ~~FASB eliminated~~parties have exchanged written discovery, and depositions of persons most knowledgeable took place during the ~~Step 2 from~~first quarter of 2019. Citing the ~~goodwill impairment test. In computing~~length of the ~~implied fair value~~cases’ pendency and the expense, in December 2019, plaintiff Reed voluntarily dismissed two actions (160600211 and 160600237) for no consideration. With respect to the remaining action, additional depositions took place during the first quarter of ~~goodwill under Step 2, an entity had~~2020. The parties have scheduled a voluntary mediation for December 14-15, 2020. The Company believes that the claims against it in the remaining matters are without merit and intends to ~~perform procedures~~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 fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed inCompany has not recorded a business combination. Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. This update is effective for fiscal years beginning after December 15, 2019 with early adoption permitted after January 1, 2017. The Company adopted ASU 2017-04 as of January 1, 2019. The impact of the new standard will be dependent of the facts and circumstances of future individual impairments but did not have any immediate impact.loss contingency.

In June 2016, the FASB issued ASU 2016-13 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model, which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes ~~will~~ result in earlier recognition of credit losses. The Company ~~will adopt~~adopted ASU 2016-13 effective January 1, 2020. The adoption of this standard did not result in any material adjustments to the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirements on fair value measurements, including the consideration of costs and benefits. The Company adopted ASU 2018-13 effective January 1, 2020. The adoption of this standard did not result in any material adjustments to the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. ASU 2018-15 requires that issuers follow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which costs to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. The Company adopted ASU 2018-15 effective January 1, 2020. The adoption of this standard did not result in any material adjustments to the Company’s Condensed Consolidated Financial Statements.

In December 2019, the FASB issued ASU no. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” (“ASU No. 2019-12”). The amendment removes certain exceptions to the general income tax accounting methodology including an exception for the recognition of a deferred tax liability when a foreign subsidiary becomes an equity method investment and an exception for interim periods showing operating losses in excess of anticipated operating losses for the year. The amendment also reduces the complexity surrounding franchise tax recognition; the step up in the tax basis of goodwill in conjunction with business combinations; and the accounting for the effect of changes in tax laws enacted during interim periods. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those years with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on the Condensed Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU No. 2020-04”), which provides practical expedients for contract modifications and certain hedging relationships associated with the ~~cumulative effect of adoption recorded~~transition from reference rates that are expected to be discontinued. This guidance is applicable for our borrowing instruments, which use LIBOR as ~~an adjustment to retained earnings~~a reference rate, and is ineffective immediately, but is only available through December 31, 2022. The Company is currently evaluating the ~~process~~impact of ~~determining~~ASU 2020-04; however, at the current time the Company does not expect that the adoption of this ASU will have a material impact on its ~~operating results.~~Condensed Consolidated Financial Statements.

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

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 the bank is estimated~~borrowings, which are considered Level 2 liabilities, approximates fair value based ~~on the quoted market prices for the same or similar issues or on the~~upon current rates ~~offered~~and terms available to the Company for ~~debt~~similar debt.

The Company has one equity investment classified within Level 1 of ~~the same remaining maturities. Such fair value approximates the respective carrying values of the Company’s long-term debt payable to bank.~~

~~As of September 30, 2019, the Company reassessed~~ the fair value hierarchy. Please refer to Note 18 for further details regarding this investment.

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 ~~deferred consideration balances relating to~~fair value hierarchy. The Company may use various valuation techniques depending on the ~~2017 AgriCenter~~terms and ~~OHP acquisitions, which resulted in a combined reduction~~conditions of the ~~deferred~~contingent consideration ~~balances in~~including a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the ~~amount~~results are analyzed to determine probabilities of ~~$651 and $3,539~~different outcomes occurring. The following table illustrates the Company’s contingent consideration movements related to its business acquisitions:

There was no activity for the ~~three and nine months~~three-months ended September 30, 2019. During the three and nine months ended September 30, 2018, the Company recognized $3,969 and $5,437, respectively, as reductions in deferred consideration balances related to the acquisitions. These amounts are reflected as reductions to the general and administrative expenses within operating expenses in the condensed consolidated statements of operations. With regard to the acquisitions of Defensive and Agrovant in Brazil (completed in January 2019), the Company made payments in the amount of $30 and $838 during the three months and nine months ended September 30, 2019, respectively. In addition, the Company recorded accretion and foreign exchange adjustments resulting in a reduction of $92 and $167 of the deferred consideration balance during the three months and nine months ended September 30, 2019, respectively. There was no fair value adjustment made to deferred consideration relating to Defensive and Agrovant acquisitions.2020.

~~The total deferred consideration reflected in the condensed consolidated balance sheets as of September 30, 2019 and 2018 was $1,400 and $4,398, respectively.~~

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

18. Equity Investments — The Company ~~utilized~~has the following equity method of accounting with respect to its investment in TyraTech Inc. (“TyraTech”), a Delaware corporation that specializes in developing, marketing and selling pesticide products containing essential oils and other natural ingredients, until the Company acquired all of TyraTech’s remaining outstanding shares as of November 8, 2018. The Company recognized losses of $352 and $795 on its equity method investment for the three and nine months ended September 30, 2018. The Company’s ownership position in TyraTech was approximately 34% prior to the November 8, 2018 acquisition.investments:

On June 27, 2017, ~~each of~~both Amvac Netherlands BV and Huifeng Agrochemical Company, Ltd (“Huifeng”) made individual capital contributions of $950 to the Huifeng Amvac Innovation Co. Ltd (“Hong Kong Joint Venture”). As of September 30, ~~2019,~~2020, the Company’s ownership position in the Hong Kong Joint Venture was 50%. The Company utilizes the equity method of accounting with respect to this investment. On July 7, 2017, the Hong Kong Joint Venture purchased the shares of Profeng Australia, Pty Ltd.(“Profeng”), for a total consideration of $1,900. The purchase consists of Profeng Australia, Pty Ltd Trustee and Profeng Australia Unit Trust. Both Trust and Trustee were previously owned by Huifeng via its wholly owned subsidiary Shanghai Biological Focus ~~center.~~Center. For the ~~three~~three- and ~~nine months~~nine-months ended September 30, ~~2019,~~2020, the Company recognized losses of ~~$89~~$42 and ~~$149,~~$80, respectively, as a result of the Company’s ownership position in the Hong Kong Joint Venture. For the ~~three months~~three- and ~~nine months~~nine-months ended September 30, ~~2018,~~2019, the Company recognized losses of ~~$181~~$89 and ~~$256,~~$149, respectively. The Company’s investment in this joint venture amounted to $433 and $573, respectively ~~as a result of the Company’s ownership position in the Hong Kong Joint Venture.~~at September 30, 2020 and 2019.

In February 2016, AMVAC Netherlands BV made an investment in Biological Products for Agriculture (“Bi-PA”). Bi-PA develops biological plant protection products that can be used for the control of pests and disease of agricultural crops. As of September 30, ~~2019,~~2020, the Company’s ownership position in Bi-PA was 15%. The ~~Company adopted the provisions of ASU 2016-01 on January 1, 2018 and has elected to measure its cost method investment~~equity securities are without a readily determinable fair value because these securities are privately held, not traded on any public exchanges and not an investment in a mutual fund or similar investment. As a result, the Company has elected to alternatively measure this investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There were no observable price changes in the ~~three~~three- and ~~nine months~~nine-months ended September 30, 2020 and 2019. There was no0 impairment on the investment as of September 30, 2020 and 2019. The investment is not material and is recorded within other assets on the ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets.

On April 1, 2020, the Company purchased 6.25 million shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. (TSX Venture Exchange: “CSX”) for $1,190. The shares are publicly traded, have a readily determinable fair value, and are considered a Level 1 investment. The fair value of the stock amounted to $1,471 as of September 30, 2020, and the Company recorded a gain in the amount of $257 and $281 for the three- and nine-months ended September 30, 2020, included as a reduction to operating expenses on the Condensed Consolidated Financial Statements.

19. Income Taxes –— Income tax expense ~~decreased by $2,052 to end at an expense of $1,474~~was $492 for the three months ended September 30, ~~2019,~~2020, as compared to ~~$3,526~~$1,474 for the comparable period in 2018. The tax charge for the quarter ended September 30, 2018 included a one-time adjustment in the amount of $1,089 related to the transition tax element of the Tax Cuts and Jobs Act that was signed into law in December 2017.

2019. The effective tax rate for the quarter was ~~31.3%~~14.2%, as compared to ~~33.4%~~31.3% in the same period of the prior year. ~~The tax rate for the quarter ended September 30, 2018 included the adjustment of $1,089 and, if excluded, the effective tax rate would have been 23.1%.~~ Income tax expense was $1,852 for the nine-months ended September 30, 2020, as compared to $4,059 for the ~~nine~~nine- months ended September 30, ~~2019, as compared to $6,966 for the nine months ended September 30, 2018.~~2019. The effective tax rate for the ~~nine months~~nine-months ended September 30, 2020 and 2019 was 20.0% and ~~2018 was~~ 28.2%. As with the quarter ended September 30, 2018, the nine month period is impacted by the transition tax adjustment of $1,089. Excluding that one-time charge, the Company’s tax rate would have been 23.8% for the nine months ended September 30, 2018., respectively. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

For the three-months ended September 30, 2020, the Company’s income tax expense was reduced by the discrete benefit of the vesting of stock grants and the release of an uncertain tax position. For the nine-months ended September 30, 2020, the Company benefited from three discrete income tax benefits. First, the Company assessed its income tax positions to account for the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020. A provision of the act modified the amount of interest deduction allowed and therefore reduced the Company’s 2019 Global Intangible Low Tax Income (“GILTI”) inclusion. Second, the Company benefited from the tax impact of the vesting of certain stock grants. Third, the Company benefited from a release of an uncertain tax position.

The Florida Department of Revenue has completed its audit of the Company’s state income tax returns for the years ended December 31, 2012 through December 31, 2013 and December 31, 2015 through December 31, 2018. No adjustments have been proposed for these periods. The Company has also been notified by the Mississippi Department of Revenue of its intent to examine the Company’s state income tax returns for the years ended December 31, 2016 through December 31, 2018. The result of Mississippi’s audit is not determinable since the audit is presently in its initial phase.

20. Share Repurchase Program –— On November 5, 2018, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate amount of shares with a total purchase price not to exceed $20,000 of its common stock, par value $0.10 per share, in the open market, depending upon market conditions over the short to mid-term. The Shares Repurchase Program expired on March 8, 2019. During January 2019, the Company purchased 158,048 shares for a total of $2,604 at an average price of $16.48 per share. There were 0 such purchases during the three- and nine-months ended September 30, 2020.

21. ~~Business~~Product and ~~Asset~~Business Acquisitions – During the year ended December 31, 2019, the Company completed 3 acquisitions in exchange for a total cash consideration at closing of $37,972, net of cash acquired of $981 and deferred consideration of $3,051. In addition, the Company assumed liabilities of $19,867 and capitalized costs of $14 incurred in the asset acquisition process. The total asset value of $60,904 was allocated as follows: product rights $13,279, trade names $5,452, customer relationships $5,705, goodwill $22,652, working capital and fixed assets $10,432, and indemnification assets $3,384.

On January 10, 2019, the Company completed the acquisition of all of the outstanding shares of stock of ~~two~~2 affiliated businesses, Defensive and Agrovant, which are located in Jaboticabal in the state of Sao Paul, Brazil. At closing the Company paid cash consideration of $20,679, which was net of cash acquired of $981, deferred consideration of ~~$2,659~~$3,051 including contingent consideration dependent on certain financial results for 2019, and liabilities assumed of ~~$17,083,~~$18,160, including liabilities of ~~$10,112~~$9,111 related to income tax matters. These companies were founded in 2000 and are suppliers of crop protection products and micronutrients with focus on the fruit and vegetable ~~market segments.~~markets The acquisition was accounted for as a business combination and the total asset value of ~~$40,424 has been preliminarily~~$41,890 was allocated as follows: ~~product registrations and product rights $9,449,~~ trade name ~~$1,733,~~$1,010, customer relationships ~~$3,114,~~$5,705, goodwill ~~$14,268,~~$22,652, working capital ~~$8,072,~~and fixed assets ~~$404~~$9,139 and indemnification assets $3,384. The operating results of the acquired businesses are included in our ~~condensed~~ consolidated ~~statement~~statements of operations from the date of acquisition. The goodwill recognized is expected to be deductible for income tax purposes, subject to merging AMVAC do Brasil with Defensive and Agrovant.

On July 1, 2019, the Company completed a product acquisition for cash consideration in the amount of $7,293 and the assumption of a liability in the amount of ~~$300, which~~$300. The acquisition was ~~recorded at cost consisting~~accounted for as an asset acquisition and the acquired assets consist of ~~intangibles assets~~product rights $5,108, trade names $1,200, and ~~inventory.~~ inventory $1,293. Costs of $8 incurred in the asset acquisition process were capitalized.

~~The~~On December 20, 2019, the Company ~~paid E.I. DuPont et Nemours additional~~completed a product acquisition for cash consideration in the amount of ~~$3,564 related to one~~$10,000 and the assumption of a liability in the amount of $1,407. The acquisition was accounted for as an asset acquisition and the acquired assets consist of product ~~line~~rights $8,171 and trade names $3,242. Costs of $6 incurred in the asset acquisition ~~made at the end of 2018.~~process were capitalized.

Proforma operating results have not been presented because the effects of the acquisitions were not material to the Company’s Condensed Consolidated Financial Statements.

22. Foreign Currency – The Company incurred net foreign currency transaction losses in the amount of $303 and $817 during the three-months ended September 30, 2020 and 2019, respectively. The Company incurred net foreign currency transaction losses in the amount of $1,431 and $903 during the nine-months ended September 30, 2020 and 2019, respectively. These foreign currency transaction effects are included in operating expenses on the Condensed Consolidated Financial Statements.

23. Subsequent Events – The Company completed the acquisition of the Agrinos group of companies on October 2, 2020, and, separately, the acquisition of Agnova, located in Melbourne, Australia, on October 8, 2020. Both acquisitions will be accounted for as business combinations in the Company’s consolidated financial statements. The total consideration for the 2 acquisitions amounts to approximately $22,000, plus potential future earn-out consideration and net assets adjustments. The accounting for the two business combinations is in its early stage. Agrinos is a fully integrated biological input supplier with proprietary technology, internal manufacturing and global distribution capabilities. Agrinos’ high yield technology product platform works in conjunction with other nutritional crop inputs to increase crop yield, improve soil health and reduce the environmental footprint of traditional agricultural practices. AgNova is focused on serving customers primarily in the value-added fruit and vegetables segment of the Australian market.

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 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 USU.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,~~1A., Risk factors and Item ~~7A,~~7A., Quantitative and Qualitative Disclosures about Market Risk, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018 as well as in the Company’s Form 10-Q for the period ended September 30,~~ 2019.

The Company’s ~~top line showed growth~~Operations in the Context of the COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread across the world. To limit the spread of the contagion, governments have taken various actions to slow and otherwise control the spread of the pandemic, including the issuance of stay-at-home orders, social distancing guidelines and border restrictions. At its outset, the Company took swift action to understand, contain and mitigate the risks posed by this pandemic. Specifically, we formed the Pandemic Work Group with a mission to ensure the health and safety of the workforce while ensuring continuity of the business. In the workplace, we have designed and implemented protocols for social distancing, made provisions for the workforce to work remotely where possible, and established quarantine policies for those who present COVID-like symptom or may have been in touch with those who have. Further, the group keeps current with local, state, federal and international laws and restrictions that could affect the business; provides real-time information to the workforce; and draws from political commentary and news statements concrete directions on how best to continue operations. We have also prepared contingency plans to permit the continued operation of our factories, in the event that there are critical staffing issues due to attrition. In addition, in April 2020, we amended our credit facility to support future working capital needs. Further, we continuously monitor supply chain, transport, logistics and border closures and have reached out to third parties to make clear that we are continuing to operate, that we have our own policies relating to health and are committed to compliance with COVID-19 policies of our business partners. Our Chief Executive Officer and the Pandemic Work Group are holding regular “state of the company” calls with the functional heads of our businesses across the globe to ensure that our information is shared in a timely manner and that our direction is clear.

It is important to understand that under applicable federal guidelines (at https://www.cisa.gov), the Company is part of the nation’s “critical infrastructure” and falls within three of the 16 sectors that are specially permitted to operate: “Food and Agriculture” sector (engaged in “the production of chemicals and other substances used by the food and agriculture industry, including pesticides, herbicides etc.”), the “Chemical” sector (supporting the operation . . . of facilities (particularly those with high risk chemicals . . . whose work cannot be done remotely and requires the presence of highly trained personnel to ensure safe operations”) and the “Public Works and Infrastructure Support Services” sector (in support of public health including pest control and exterminators, landscapers and others who provide services to residences and businesses). In issuing guidance on Coronavirus, President Trump said, “If you work in a critical infrastructure industry, as defined by the Department of Homeland Security, such as healthcare services and pharmaceutical and food supply, you have a special responsibility to maintain your normal work schedule[emphasis added].” We have found that state COVID-19 orders and, indeed, even those of countries in which the outbreak has been most pronounced, have consistently excepted food supply as an area essential to the survival of its populations and, as such, had given special permission to companies, such as ours, to continue to operate during the ~~third quarter~~pandemic even during strict lockdowns.

In keeping with our charge to operate as an essential business and by virtue of ~~2019, led~~our efforts to contain and mitigate the risks posed by the pandemic, we have been able to manage our ~~international businesses, which recorded a 27% increase in net sales, a 36% increase in gross profit and improved profit margins. During the period, the domestic~~ business generated a 3% increase in net sales, while posting a 5% decrease in gross profit and a decline in gross margin percentage. Our international business continued to grow as a percent of the global enterprise, accounting for 41% of total net saleswith minimal disruption during the ~~quarter, which is up from 36% in 2018. Improved~~reporting period. As mentioned earlier (see Note 1 to the Condensed Consolidated Financial Statements), the coronavirus has affected our overall performance ~~in Central America, Mexico and Brazil (as~~to a result of businesses acquired earlier in 2019) led our international growth. By contrast, expansion of our domestic business was largely constrained by the effects of severe weather. The wet and cold conditions of the 2019 planting season serveddegree. Lost opportunities for certain new product launches, inability to ~~reduce demand for both fumigants and burn-down herbicides post-plant, while record-setting heat in the southern US during the third quarter~~meet potential new customers face-to-face, reduced demand for ~~our cotton defoliant, Folex.~~

~~In spite of overall growth,~~commodity crops sold to restaurants, and foreign exchange effects in Brazil, Mexico and Australia, have likely limited the Company’s top-line growth by up to several million dollars and the associated profitability, ~~declined during the three months ended September 30, 2019. This was due primarily~~ to the following factors. First, quarterly gross margins dropped from 41% to 38%, arising largely from both comparatively higher sales of lower-margin international products and lower factory utilization during the period, as the Company endeavored to limit production reflecting weather related comparatively softer demand for certain product lines, in order to overall inventory levels. Second, operating expenses for the period rose by 21% primarily due to operating expenses and amortization costs for new businesses, increased selling expenses (from marketing and promotional efforts in our domestic markets) and a comparatively higher benefit for the reassessment of deferred purchase price consideration in the third quarter of 2018. Third, the Company incurred higher interest expense during the period, due to higher average indebtedness arising from product acquisitions that occurredan indeterminate degree, since the ~~comparable period in 2018. These factors, taken together, yielded a decrease in net income attributable to American Vanguard for~~inception of the ~~quarter.~~

Quarterly net sales were up over 12% ($124,884 vs. $111,780), and gross profit rose approximately 5% ($47,463 vs. $45,300). Gross margin declined to 38% from 41% of net sales, while operating expenses rose by approximately 21% ($40,677 vs. $33,635), increasing as a percent of net sales from 30% to 33%. Net income attributable to American Vanguard was down 52% ($3,153 vs. $6,525).

~~The~~Overview of the Company’s ~~overview of sales and gross margin performance for the three months~~Third Quarter 2020 Performance ended September 30, ~~2019 and 2018 is as follows:~~2020

~~Our domestic business grew slightly during~~The Company’s quarterly performance was, on the ~~third quarter of 2019~~whole, about even with ~~sales up 3% versus those~~that of the ~~same period~~comparable quarter in ~~2018. Within quarterly~~2019. While sales declined by about 6% (to $117,439 in 2020 from $124,884 in 2019), net income was about even ($2,927 in 2020 v. $3,153 in 2019). As described in more detail below, domestic sales ~~our US Crop business recorded 1% higher sales, while our US non-crop business grew its top line~~declined by about 10% ~~quarter over quarter. Growth of~~due in part to severe weather conditions, commodity prices and conservative procurement practices amidst the ~~US Crop business was primarily limited by record heat and dryness in the Southern region, which reduced the need for Folex.~~pandemic. By contrast, ~~within the US non-crop business, hurricane and storm activity spurred increased~~international sales ~~of our mosquito products.~~

were flat quarter-over-quarter. Within ~~our US Crop business, sales~~that performance, was mixed. We experienced strong demand for Aztec corn soil insecticide, Counter nematicide and Bidrin foliar cotton insecticide. Demand was also up for herbicides, Dacthal, which is used on high-value vegetable crops, and Parazone products, which are used for burn down applications. Our soil fumigant business was flat, in spite of wet late season weather in parts of the country, while our fungicide business benefitted from stronger demand for our Equus® and PCNB products. The most significant negative factor in the US Crop business during the quarter was, as mentioned above, the record-setting, extreme heat and dryness which affected demand for our Folex®, sales of which decreased approximately $10,000 in the period.

Net sales of our US non-crop business increased about 10% to $18,036 from $16,426, quarter-over-quarter. This result was due largely to increased sales of our aerially-applied mosquito adulticide, Dibrom®, as applicators restocked to address persistent wet weather conditions in the US and to prepare for potential hurricane activity later in 2019.

Net sales of our international businesses were up 27% during the period ($50,896 vs. $40,069). A significant part of this increase was due to the addition of sales from our newly acquired Brazilian and Australian subsidiaries, and the addition of our Assure II herbicide products that were acquired in December 2018. We experienced improved sales performance from AgriCenter inMexico, Central America ~~despite some temporary usage declines in bananas, pineapples~~ and citrus resulting from drought, and seasonal crop rotation in bananas that reduced nematicide applications in 2019 (that are expected to increase in 2020). Elsewhere in the international business, we posted decreasedAustralia all grew sales of Mocap insecticide (in light of the phase-out of that product in the EU associated with non-renewal of its registration) and bromacil herbicides (due to continuing supply shortages) during this period. Both Nemacur and Thimet posted small sales declines outside of the US, primarily as the result of various weather-related issues. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

2019

2018

Change

% Change

Net sales:

Insecticides

$
35,847

$
31,048

$
4,799

15
%
Herbicides/soil fumigants/fungicides

46,772

41,882

4,890

12
%
Other, including plant growth regulators

22,887

22,424

463

2
%
Total crop

105,506

95,354

10,152

11
%
Non-crop

19,378

16,426

2,952

18
%
Total net sales

$
124,884

$
111,780

$
13,104

12
%
Cost of sales:

Insecticides

$
23,071

$
20,940

$
2,131

10
%
Herbicides/soil fumigants/fungicides

29,414

24,814

4,600

19
%
Other, including plant growth regulators

15,648

12,291

3,357

27
%
Total crop

68,133

58,045

10,088

17
%
Non-crop

9,288

8,435

853

10
%
Total cost of sales

$
77,421

$
66,480

$
10,941

16
%
Gross profit:

Insecticides

$
12,776

$
10,108

$
2,668

26
%
Herbicides/soil fumigants/fungicides

17,358

17,068

290

2
%
Other, including plant growth regulators

7,239

10,133

(2,894
)

-29
%
Gross profit crop

37,373

37,309

64

0
%
Gross profit non-crop

10,090

7,991

2,099

26
%
Total gross profit

$
47,463

$
45,300

$
2,163

5
%
Gross margin crop

35
%

39
%

Gross margin non-crop

52
%

49
%

Total gross margin

38
%

41
%

~~For the three months ended September 30, 2019, within our global crop business, net sales of our insecticides group were up approximately 15% to end at $35,847, as~~ compared to $31,048 during the third quarter of 2018. Within this category, net sales of our granular insecticides were up approximately 8% due to strong demand for Aztec (corn soil insecticide), Counter (nematode control in corn and sugar beets), and Bidrin (a foliar insecticide for cotton), offset by modest declines in Thimet (for domestic sugarcane) and both Mocap and Nemacur (largely in our international markets).

Within the group of herbicides/fungicides/fumigants used in global crop applications, net sales for the third quarter of 2019 increased by approximately 12% to $46,772 from $41,882 in the comparable period of 2018. Net sales of our herbicide products increased approximately 18%, with sales of our Dacthal® herbicide (that is used on a wide variety of high-valued vegetable crops) relatively flat, our Paraquat burn-down product sales increased, and we also enjoyed incremental sales as a result of three newly acquired Raymat products, which were partially offset by lower sales of our bromacil products due to a supply shortage. In global fungicides, we posted significantly higher sales of Equus despite abnormally high in-channel supply, as a result of pre-tariff importation of large quantities by many competitive sellers. Global soil fumigant sales were relatively flat in the quarter.

Within the group of other products (which includes distribution of certain third party products in Central and South America, plant growth regulators, molluscicides and tolling activity), net sales increased 2%, to $22,887, as compared to $22,424 in the third quarter of 2018. Quarterly sales were impacted by substantially reduced demand for our Folex® cotton defoliant due to natural defoliation that occurred as a result of extremely hot and dry weather in the Southeast and Mid-south regions of the United States. However, this decline was more than offset by the positive incremental sales added to this category by our Defensive and Agrovant distribution businesses in Brazil, our new Australia business and quarter-over-quarter gains in our Central American AgriCenter subsidiary.

~~Our global non-crop sales ended the third quarter of 2019 up 18% at $19,378, as compared to $16,426, for the same period of~~ the prior year. ~~This result was driven by a strong increase in quarterly sales of our aerially-applied Dibrom mosquito adulticide.~~

~~Our~~Overall cost of sales ~~for the third quarter of 2019 was $77,421 or 62% of sales. This compared to $66,480 or 59% of sales for the same period of 2018. The increase in cost of sales~~were slightly higher as a percentage of net sales, including a factory performance that was approximately flat compared to the same three-months period of 2019, and gross profit declined by 9% ($43,265 v. $47,463). Consequently, gross margin percentage decreased to 37% from 38% of net sales. Operating expenses decreased by about 5% (to $38,782 in ~~2019~~2020 from $40,677 in 2019), but remained flat at about 33% of net sales. With a lower base interest rate and more aggressive repayment of debt, our interest expense decreased by about 50%. Also, due to a higher mix of business in lower-tax jurisdictions coupled with two favorable adjustments, we benefitted from a lower effective tax rate. This yielded net income for the quarter in line with the same quarter of 2019. In short, the Company was able to maintain profitability on an absolute basis, despite a reduced top line in the midst of a global pandemic.

	2020			2019			Change			% Change
Net sales:
US crop	$	48,361		$	55,072		$	(6,711	)		-12	%
US non-crop		18,251			18,995			(744	)		-4	%
Total US		66,612			74,067			(7,455	)		-10	%
International		50,827			50,817			10			0	%
Total net sales	$	117,439		$	124,884		$	(7,445	)		-6	%
Cost of sales:
US crop	$	28,215		$	31,362		$	(3,147	)		-10	%
US non-crop		9,493			9,135			358			4	%
Total US		37,708			40,497			(2,789	)		-7	%
International		36,466			36,924			(458	)		-1	%
Total cost of sales	$	74,174		$	77,421		$	(3,247	)	��	-4	%
Gross profit:
US crop	$	20,146		$	23,710		$	(3,564	)		-15	%
US non-crop		8,758			9,860			(1,102	)		-11	%
Total US		28,904			33,570			(4,666	)		-14	%
International		14,361			13,893			468			3	%
Total gross profit	$	43,265		$	47,463		$	(4,198	)		-9	%
Gross margin:
US crop		42	%		43	%
US non-crop		48	%		52	%
Total US		43	%		45	%
International		28	%		27	%
Total gross margin		37	%		38	%

Our domestic crop business recorded net sales that were about 12% lower than those of the prior year period ($48,361 v. $55,072). During the third quarter of 2020, the distribution channel continued conservative procurement practices due, among other things, to reduced ethanol demand, commodity pricing, a strained farm economy and the COVID-19 pandemic. This procurement pattern was particularly evident in Midwest corn and soybean markets. In cotton, net sales of our foliar insecticide Bidrin were lower this year due to multiple factors. First, low cotton commodity prices caused an 11% decline in planted cotton acres (down 1.5 million acres to 12.2 million). Second, unfavorable weather conditions, specifically extensive drought in West Texas and three successive hurricanes in the Southeast region, reduced product application. Similarly, our cotton harvest defoliant Folex generated lower third quarter sales following multiple hurricanes that struck the region late in the season, thereby destroying some harvestable acreage and otherwise delaying some harvesting applications to the fourth quarter. Offsetting some of these negative factors, we saw a strong performance in our soil fumigant business driven by a ~~reduction~~rebound in ~~factory output~~usage by potato growers as ~~we balanced softer weather driven demand for some products with~~pandemic impacted restaurants and schools began to reopen.

Cost of sales within the ~~drive to reduce inventories during 2019. Furthermore, cost of goods~~domestic crop business was ~~affected by a change in product mix, including the effect of acquired products and distribution businesses, which drive high sales at comparatively~~10% lower ~~margins~~ than ~~our pre-existing business.~~

~~Gross profit for~~ the third quarter of 2019 ~~increased by $2,163, or 5%,~~(down to ~~end at $47,463,~~$28,215 from $31,362) and gross margin decreased to 42% of sales during the third quarter as compared to ~~$45,300~~43% for the comparable period last year.

Sales of our domestic non-crop business were down about 4% ($18,251 from $18,995) quarter-over-quarter. Our Dibrom® mosquito adulticide sales, which constitute a significant portion of overall non-crop sales, were approximately flat as compared to the third quarter of ~~2018.~~the prior year, as the mosquito control distributors continued to work down channel inventory during a succession of tropical storms and hurricanes this season. Net sales of Pest Strip were down as a result of reduced demand from restaurants and other similar establishments, which were subject to pandemic restrictions. Net sales from our OHP nursery and ornamental business were slightly higher than last year, as demand for homeowner garden and landscape products remained stable at retail locations around the country. We continue to maintain a steady level of business with our other commercial pest control products.

Cost of sales within the domestic non-crop business increased by about 4% (from $9,135 to $9,493) quarter-over-quarter. Gross profit for domestic non-crop decreased by 11% (from $9,860 in 2019 to $8,758 in 2020); and gross margin percentage for the non-crop business declined to 48% for the quarter as compared to 52% during the third quarter of 2019.

Net sales of our international businesses were flat during the period ($50,827 in 2020 v. $50,817in 2019). Several factors contributed to this result. Sales performance rose about 4% in Mexico and Central America on strong product demand for granular insecticides, bromacil herbicides and soil fumigants. In Brazil, net sales declined primarily as a result of the devaluation of the Brazilian Real in comparison to last year, which impacted sales when translated to US Dollars for inclusion in the financial statements. In addition, the business was impacted by limited customer access (in light of coronavirus protocols), competitive market conditions and the exchange rate impact when sales were translated from a local currency. In Europe, sales of our Mocap® insecticide declined due to the regulatory phase-out of that product, offset somewhat by increased demand in other countries. Overall our sales of Nemacur soil insecticide rose nearly 50% in the quarter, including lower sales in Europe primarily associated with timing on orders from our Italian commission agent that was more than offset by a threefold increase in sales to various other countries. The Nemacur performance more than offset the decline in Mocap. In Australia, third quarter sales doubled versus the prior year.

Cost of sales in our international business decreased slightly (about 1%) from $36,924 in 2019 to $36,466 in 2020. Gross profit for International rose by approximately 3% from $13,893 in 2019 to $14,361 in 2020, and gross margin improved from 27% in the third quarter of 2019 to 28% for the same period this year.

On a consolidated basis, gross profit for the quarter decreased by 9% (from $47,463 in 2019 to $43,265 in 2020). Gross margin percentage ~~ended at~~declined to 37% in the quarter, as compared to 38% in the ~~three months ended September 30, 2019, as compared to 41% in the~~ same ~~period~~quarter of the prior year. ~~As previously noted, the change in performance is largely driven~~

Operating expenses decreased by ~~decisions made~~$1,895 to ~~manage factory output and inventory levels and the significant growth of our international businesses including those acquired in late 2018 and early in 2019.~~

~~As discussed below in detail by department, operating expenses increased by $7,042 (or 21%) to $40,677~~$38,782 for the ~~three months~~three-months ended September 30, ~~2019,~~2020, as compared to the same period in ~~2018.~~2019. The differences in operating expenses by department are as follows:

Interest costs net of capitalized interest were ~~$2,070 in~~$1,022 during the ~~three months~~three-months ended September 30, ~~2019,~~2020, as compared to ~~$1,116~~$2,070 in the same period of ~~2018. Average indebtedness and interest~~2019. Interest costs are summarized in the following table:

The Company’s average overall debt for the ~~three months~~three-months ended September 30, ~~2019~~2020 was ~~$178,886,~~$162,734, as compared to ~~$80,001~~$178,886 for the ~~three months~~three-months ended September 30, ~~2018. This increase arose primarily from borrowing activity required~~2019. During the quarter, we continued to ~~fund acquisitions completed during the fall~~focus on managing our working capital for our expanded business and controlling our usage of ~~2018 and year to date in 2019.~~revolving debt. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was ~~4.6%~~2.5% for the ~~three months~~three-months ended September 30, ~~2019,~~2020, as compared to ~~5.6%~~4.6% in ~~2018.~~2019. The lower interest cost was substantially due to lower interest rates on borrowings in the US, which was part of Federal Government efforts to stimulate the overall economy.

Income tax expense ~~decreased by $2,052 to end at an expense of $1,474~~was $492 for the ~~three months~~three-months ended September 30, ~~2019,~~2020, as compared to ~~$3,526~~$1,474 for the comparable period in ~~2018.~~2019. The effective tax rate for the quarter was ~~31.3%~~14.2%, as compared to ~~33.4%~~31.3% in the same period of the prior year. ~~Our~~The effective tax rate for ~~2018 included a one-time adjustment related to~~all interim periods is based on the ~~implementation of the 2017 transition tax in the amount of $1,089. Excluding this one-time expense, the underlying effective tax rate~~projected income for the ~~quarter was 23.1%.~~full year and is subject to ongoing review and adjustment by management. The ~~increase~~decrease in effective tax rate is primarily driven by the mix of our domestic and international ~~income. Furthermore,~~ income and the discrete benefit of the vesting of stock grants and the release of an uncertain tax position.

During the three-months ended September 30, 2020 and 2019, we recognized losses of $42 and $89, respectively, on our investment in the Hong Kong joint venture, which is a 50% owned equity investment.

Our overall net income for the three-months ended September 30, 2020 was $2,927 or $0.10 per basic and diluted share, as compared to $3,153 or $0.11 per basic and diluted share in the same period of 2019.

With the advent of the global pandemic early in the year, the Company’s performance during the first nine months of 2020 declined in most respects as compared to the same period in 2019. Our domestic non-crop sales were hampered by severe weather, commodity pricing, conservative procurement within the distribution channel and reduced acres of certain crops, such as cotton. By contrast, soil fumigants and new product introductions were strong. Similarly, non-crop sales declined due largely to lower sales of Dibrom as distribution worked down inventory levels; this decline was partially offset by higher royalties from our Envance essential oil products. On the international side, we experienced a modest overall decrease in sales, largely due to the phase-out of Mocap in the European Union (“EU”), market conditions in Brazil and pandemic restrictions in Central America. This was partially offset by strong performance in Mexico.

On a consolidated basis, with domestic sales down 7% and international sales down by about 4%, overall net sales were down by about 6% ($317,956 v. $337,664). Cost of sales were down 5% on an absolute basis, while, in part driven by a strong factory performance, which improved during the first nine months of 2020 as compared to that of 2019. These factors, taken together, yielded a decline in gross profit of 7% ($8,866). In the first three quarters of 2020 operating expenses reduced by about 2% on an absolute basis, with considerably lower sales and marketing expenditures due largely to reduced travel and entertainment activities and customer visit limitations caused by restrictions in place related to the pandemic. However, operating expenses as a percent of net sales rose from 33% to 34% for the period. After both significantly lower interest and tax expense in the 2020 reporting period, net income declined to $7,334 (or $0.25 per diluted share from $10,165 or $0.34 per diluted share) during the first three quarters of the prior year. Details on our financial performance are set forth below.

	2020			2019			Change			% Change
Net sales:
US crop	$	148,630		$	158,068		$	(9,438	)		-6	%
US non-crop		37,881			42,068			(4,187	)		-10	%
Total US		186,511			200,136			(13,625	)		-7	%
International		131,445			137,528			(6,083	)		-4	%
Total net sales	$	317,956		$	337,664		$	(19,708	)		-6	%
Cost of sales:
US crop	$	80,511		$	89,009		$	(8,498	)		-10	%
US non-crop		19,346			20,624			(1,278	)		-6	%
Total US		99,857			109,633			(9,776	)		-9	%
International		96,147			97,213			(1,066	)		-1	%
Total cost of sales	$	196,004		$	206,846		$	(10,842	)		-5	%
Gross profit:
US crop	$	68,119		$	69,059		$	(940	)		-1	%
US non-crop		18,535			21,444			(2,909	)		-14	%
Total US		86,654			90,503			(3,849	)		-4	%
International		35,298			40,315			(5,017	)		-12	%
Total gross profit	$	121,952		$	130,818		$	(8,866	)		-7	%
Gross margin:
US crop		46	%		44	%
US non-crop		49	%		51	%
Total US		46	%		45	%
International		27	%		29	%
Total gross margin		38	%		39	%

Our domestic crop business recorded net sales that were about 6% below those of first three quarters of 2019 ($148,630 v. $158,068). When viewed by type of product and crop, sales were mixed. During the first nine months, we have seen careful procurement patterns in the domestic market, as low crop commodity prices and concerns about near-term demand from Asia caused growers and retailers to purchase crop protection inputs at a cautious and deliberate pace. With respect to our corn products, net sales of corn soil insecticides, including Aztec®, SmartChoice® and Counter®, and our Impact® post-emergent herbicide were lower as a result of this conservative approach to procurement. Also, a significant decline in planted cotton acres (relating to lower commodity prices) and unfavorable weather contributed to a drop in net sales of both our Bidrin® foliar insecticide product and our Folex® growth regulator. Partially offsetting these declines, soil fumigants had a strong performance during the first nine months of 2020 due to drier weather conditions in California and the Pacific Northwest, which facilitated more widespread product application largely on potato crops. Recently acquired products, including our rice herbicide Arroz®, our soybean herbicides (FirstRate, Classic and Python) and our miticide Stifle, provided a strong incremental upside during the first three quarters of 2020.

Cost of sales within the domestic crop business declined 9%, as compared to the first nine-months of 2019, and gross profit declined by 1% ($68,119 in 2020 versus $69,059 in 2019).

Our domestic non-crop business recorded a decrease in net sales (down about 10% to $37,881 from $42,068) versus the first three quarters of 2019. In this category, our Dibrom® mosquito adulticide sales declined significantly, as relatively full channel inventories were used to address the aftermath of a series of tropical storms and hurricanes in 2020. Royalty fees for our Envance essential oil technology were higher than the first nine months of last year; and we expect to recognize additional license fees and royalties during the balance of 2020. Net sales of Pest Strip were down as a result of reduced demand from restaurants and other similar establishments, which were subject to pandemic restrictions. Our OHP nursery and ornamental business posted an 8% sales increase, as demand for homeowner garden and landscape products continued unabated as consumers took increasingly to home improvement and gardening in light of pandemic restrictions.

Cost of sales within the domestic non-crop business decreased by about 6% (to $19,346 from $20,624) during the first nine-months of 2020 versus the comparable period in 2019. Gross profit for domestic non-crop decreased by 14% (to $18,535 in 2020 from $21,444 in 2019) due primarily to lower sales of our Dibrom mosquito adulticide.

Net sales of our international businesses were down by about 4% during the period ($131,445 in 2020 v. $137,528 in 2019). Several factors contributed to this result. In Europe, sales of our Mocap® insecticide continue to decline during the phase-out of that product following the cancellation of its registration in the EU. In Canada, we experienced a sharp decline in Assure II sales as a result of intense third quarter price competition; the Company elected to maintain brand value rather than match the downward price trend. Mexico posted improved sales with continuing demand for granular insecticides, bromacil herbicides, and soil fumigants for use on high-value vegetable crops. In Brazil, net sales declined due to lower disease pressure in soybeans (reducing demand for our fungicide products), portfolio streamlining and delays in procurement arising from uncertainty relating to the economy. The performances of our Brazilian and Mexican businesses were further affected by a devaluation in the Brazilian real and the Mexican peso. The average exchange rate of the Brazilian real and the Mexican peso decreased by approximately 23% and 11% for the nine-month period ended September 30, 2020 compared to the same period in the prior year.

Cost of sales in our international business decreased by 1% (from $97,213 in 2019 to $96,147 in 2020) primarily driven by mix and currency changes. Gross profit for the international businesses dropped by about 12% (from $40,315 in 2019 to $35,298 in 2020). This resulted from reduced sales of certain high margin products, including Mocap insecticide and Assure II herbicide. In addition, we experienced higher sales of lower-margin products from our business in Australia.

On a consolidated basis, gross profit for the nine-months of 2020 decreased by 7% (from $130,818 in 2019 to $121,952 in 2020), as a result of reduced sales volumes detailed above. Factory performance was significantly better in the first nine-months of 2020, as compared to the same period of 2019. Gross margin performance, when expressed as a percentage of sales, declined slightly to 38% from 39% in the comparable period of 2019.

Operating expenses decreased by $1,957 to $108,882 for the nine-months ended September 30, 2020, but were 34% of net sales, as compared with 33% of net sales during the same period in 2019. The differences in operating expenses by department are as follows:

Interest costs net of capitalized interest were $3,804 in the first nine-months of 2020, as compared to $5,606 in the same period of 2019. Interest costs are summarized in the following table:

The Company’s average overall debt for the nine-months ended September 30, 2020 was $171,203, as compared to $166,877 for the nine-months ended September 30, 2019. During the period, we continued to focus on our usage of revolving debt, while funding working capital for the newly acquired products and businesses. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 2.9% for the nine-months ended September 30, 2020, as compared to 4.4% in 2019.

Income tax expense decreased by $2,207 to end at $1,852 for the nine-months ended September 30, 2020, as compared to income tax expense of $4,059 for the comparable period in 2019. The effective tax rate for the nine-months ended September 30, 2020 was 20.0%, which included three discrete income tax benefits during the nine-months ended September 30, 2020. First, the Company assessed its income tax positions to account for the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020. A provision of the act modified the amount of interest deduction allowed and therefore reduced the Company’s 2019 Global Intangible Low Tax Income (“GILTI”) inclusion. Second, the Company benefited from the tax impact of the vesting of certain stock grants. Third, the Company benefited from the release of an uncertain tax position. During the nine-months ended September 30, 2019, the Company’s effective tax rate was 28.2%. 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~~nine-months ended September 30, 2020 and 2019, ~~and 2018, we~~the Company recognized losses of ~~$89~~$80 and ~~$181,~~$149, respectively, on ~~our~~its investment in the Hong Kong joint venture which is a 50% owned equity investment. ~~Furthermore, during the three months ended September 30, 2018, we recognized a loss of $352 on our investment in TyraTech, which became a wholly owned and consolidated subsidiary on November 9, 2018.~~

Non-controlling interest represents the share of net income or loss that is attributable to the minority stockholder of our majority owned subsidiary, Envance. During the three months ended September 30, 2018, a loss of $35 was attributed to non-controlling interest. Envance became a wholly owned subsidiary on November 9, 2018.

Our overall net income for the ~~three months~~nine-months ended September 30, ~~2019~~2020 was ~~$3,153~~$7,334 or ~~$0.11~~$0.25 per basic and diluted share, as compared to ~~$6,525 or $0.22 per basic and diluted share in the same period of 2018.~~

Broadly speaking, the Company’s financial performance for the nine-month period ended September 30, 2019 was characterized by modest growth, on an overall basis, and reduced profitability, as compared to the same period in 2018. Net sales increased by 5%, due entirely to the expansion of our international business, which showed an 18% increase in net sales and a 29% increase in gross profit, partially offset by a decline in the US business, which recorded a 3% decrease in net sales and an 8% decrease in gross profit. Further, for the first nine months of 2019, international sales constituted 41% of overall sales, up from 36% for the same period in 2018. Growth in Central America, Brazil, and in Canada, where we sell our recently acquired Assure II fungicide, set the pace for international growth during the period. Domestically, sales were constrained by wet and cold conditions throughout the US during the first and second quarters; these conditions reduced demand not only during the planting season, but also in the aftermath, at which time soil fumigant and burn-down herbicide use was limited. In addition, exceptional heat and dryness during the third quarter reduced the need for our cotton defoliant, Folex in the Southern region.

Gross margin decreased by 1% during the first nine months of 2019 as a result of the strong growth of our international sales, which are generally at lower margins when compared to our US business, and by decisions taken to hold down factory output in order to drive down inventory levels during 2019. Operating expenses during the nine-month period increased primarily as a result of the addition of products and businesses acquired in late 2018 and year to date in 2019, including reductions to deferred liabilities for purchase consideration which were lower in 2019, as compared to 2018. Further, we recorded higher interest expense arising from borrowings due largely to acquisition activity in 2018 and 2019. These factors, together, resulted in a decrease in net income for the first nine months of the year. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

The Company’s overall operating results for the first nine months of 2019 were mixed, as compared to those of the same period of 2018. Net sales for the first nine months of 2019 were up 5% ($337,664 vs. $322,934), gross profit was essentially flat ($130,818 vs. $129,648), and gross margin declined to 39% from 40% of net sales. Operating expenses rose by approximately 9% ($110,839 vs. $102,011) and increased as a percent of net sales to 33% from 32%. Net income attributable to American Vanguard was down 39% ($10,165 vs. $16,779).

~~The Company’s overview of sales and gross margin performance for the nine months ended September 30, 2019 and 2018 is as follows:~~

Our US crop business recorded net sales that were about 8% below those of the first nine months of 2018 ($152,512 vs. $166,397). Insecticides sales were down period-over-period with strong demand for our Aztec (corn insecticide), Counter (nematicide) and Bidrin cotton products offset by decreased sales of Thimet, largely attributable to unfavorable weather conditions in the Midwest and Southeast regions of the United States. With respect to herbicides, Dacthal sales improved, while Impact was stable period-over-period. Further, Parazone sales were down due to persistent wet weather in several key markets and higher than normal competitor inventory. Soil fumigant sales were down slightly in the first nine months this year due to wet weather in critical geographic regions that inhibited application of this liquid product. Fungicide sales were down due to an oversupply of Chinese-produced chlorothalonil arising from expedited purchases made by companies within our sector in order to minimize tariffs. Among growth regulators, we experienced a significant drop in demand for our Folex cotton harvest defoliant attributable to the natural defoliation that occurred in the southern United States, as the result of extreme hot and dry weather.

Net sales of our domestic non-crop business increased about 20% to $47,543 from $39,492, during the first nine months of 2019. This result was due largely to continued strong demand for our Dibrom® mosquito control adulticide (as applicators restocked this premium product), increased demand for our pest strips and from our Envance Technologies business.

Net sales of our international businesses were up approximately 18% during the period ($137,609 vs. $117,045). A significant part of this increase was due to the addition of sales from our newly acquired Brazilian subsidiaries, Defensive and Agrovant, our Australian acquisition, and the addition of our Assure II herbicide products that were acquired in December 2018. Additionally, we experienced improved sales performance from AgriCenter in Central America, with higher granular soil insecticide sales, steady demand for fungicides and miscellaneous products, and somewhat lower foliar insecticide sales. Elsewhere in the international sector, we posted reduced sales of our insecticides Mocap, Nemacur, Counter and Thimet, while bromacil sales were up slightly. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

2019

2018

Change

% Change

Net sales:

Insecticides

$
112,539

$
115,702

$
(3,163
)

-3
%
Herbicides/soil fumigants/fungicides

115,510

113,144

2,366

2
%
Other, including plant growth regulators

60,730

52,269

8,461

16
%
Total crop

288,779

281,115

7,664

3
%
Non-crop

48,885

41,819

7,066

17
%
Total net sales

$
337,664

$
322,934

$
14,730

5
%
Cost of sales:

Insecticides

$
68,401

$
73,441

$
(5,040
)

-7
%
Herbicides/soil fumigants/fungicides

72,478

66,990

5,488

8
%
Other, including plant growth regulators

42,044

31,459

10,585

34
%
Total crop

182,923

171,890

11,033

6
%
Non-crop

23,923

21,396

2,527

12
%
Total cost of sales

$
206,846

$
193,286

$
13,560

7
%
Gross profit:

Insecticides

$
44,138

$
42,261

$
1,877

4
%
Herbicides/soil fumigants/fungicides

43,032

46,154

(3,122
)

-7
%
Other, including plant growth regulators

18,686

20,810

(2,124
)

-10
%
Gross profit crop

105,856

109,225

(3,369
)

-3
%
Gross profit non-crop

24,962

20,423

4,539

22
%
Total gross profit

$
130,818

$
129,648

$
1,170

1
%
Gross margin crop

37
%

39
%

Gross margin non-crop

51
%

49
%

Total gross margin

39
%

40
%

Across our global crop business, net sales of our insecticides group declined approximately 3% to end at $112,539, as compared to $115,702 during the nine months ended September 30, 2018. Within this category, net sales of our non-granular insecticides were driven by our cotton insecticide Bidrin^®, which posted approximately a 50% sales gain due to increased cotton acres in 2019, as compared to the prior year. This increase more than offset sales declines of Abamectin resulting from regional weather issues and bifenthrin resulting from generic competitive pressures. Despite a 36% increase in net sales of our Aztec corn soil insecticide, granular soil insecticides were down about 9% due to lower Thimet sales in peanuts, lower sales of Counter in sugar beets, and lower sales internationally for Mocap and Nemacur, in part due to regulatory application limitations.

Within the group of herbicides/fungicides/fumigants used in global crop applications, net sales for the nine months ended September 30, 2019 increased by approximately 2% to $115,510 from $113,144, in the comparable period of 2018. While our Impact and Dacthal products continued to deliver strong and stable results, we experienced reduced sales of our chlorothalonil fungicide Equus due to abnormally high supply (from expedited, pre-tariff importation of large quantities by many sellers) and pricing pressure in the face of seasonally normal demand. Additionally, wet weather inhibited the application of our Parazone burn-down herbicide and Metam soil fumigants. Offsetting these declines were the addition of the Assure II herbicide acquired at the end of 2018 and a significant period-over-period increase in our bromacil herbicides; both of these factors impacted our international business performance for the period.

Within the group of other products (which includes distribution of certain third party products particularly in Central and South America, plant growth regulators, molluscicides and tolling activity), net sales were $60,730, up approximately 16%, as compared to $52,269 in the first nine months of 2018. This result benefitted from the inclusion of the Brazilian and Australian businesses, increased sales in the AgriCenter business and improved sales of our growth regulator NAA. These items were partially offset by significantly lower sales of our Folex® cotton defoliant resulting from extreme hot and dry weather in the southern United States during the cotton harvest season.

Our non-crop sales ended the first nine months of 2019 with net sales of $48,885 up 17%, as compared to $41,819 for the same period of the prior year. This category benefitted from continued strong sales of our aerially-applied mosquito adulticide Dibrom, commercial pest control products including pest strips, and our pharmaceutical products.

International sales for the first nine months ended at $137,609, an 18% increase over the $117,045 in the same period of 2018. The main driver of this performance was the addition of the Defensive and Agrovant businesses in Brazil, the new Australian business, continuing growth of the AgriCenter Central American business, and the acquisition of the Assure II products at the end of 2018. Our traditional product portfolio (including Mocap, Nemacur) showed significant year-to-date sales declines resulting from various weather-related and regulatory influences.

Our cost of sales for the first nine months ended September 30, 2019 is $206,846 or 61% of net sales. This compares to $193,286 or 60% of net sales in the same period of 2018. The increase in cost of sales as a percentage of net sales in 2019 was driven in part by decisions made to reduce factory output as part of our 2019 manufacturing plan.

Gross profit for the nine months ended September 30, 2019 increased by $1,170 to end at $130,818, as compared to $129,648 for the first nine months of 2018. Gross margin percentage ended at 39% in the first nine months of 2019, as compared to 40% in the same period of the prior year. As previously noted, the change in performance is largely driven by the Company manufacturing plan for 2019, which responds to the weather related lower sales already discussed and the new businesses acquired in early 2019.

~~Operating expenses increased by $8,828 to $110,839 for the nine months ended September 30, 2019, as compared to the same period in 2018. The changes in operating expenses by department are as follows:~~

Interest costs net of capitalized interest were $5,606 in the first nine months of 2019, as compared to $2,961 in the same period of 2018. Average indebtedness and interest costs are summarized in the following table:

The Company’s average overall debt for the nine months ended September 30, 2019 was $166,877, as compared to $92,971 for the nine months ended September 30, 2018. The difference in average debt levels between the two periods relates to the businesses acquired during the final quarter of 2018 and year-to-date in 2019. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 4.5% for the nine months ended September 30, 2019, as compared to 4.2% in 2018.

Income tax expense was $4,059 for the nine months ended September 30, 2019, as compared to $6,966 for the nine months ended September 30, 2018. The effective tax rate for the nine months ended September 30, 2019 and 2018 was 28.2%. As with the quarter ended September 30, 2018, the nine month period is impacted by the transition tax adjustment of $1,089. Excluding that one-time charge, the Company’s tax rate would have been 23.8% for the nine months ended September 30, 2018. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

During the nine months ended September 30, 2019 and 2018, the Company recognized losses of $149 and $256, respectively, on our investment in the Hong Kong joint venture which is a 50% owned equity investment. During the nine months ended September 30, 2018, we recognized a loss of $795 on our investment in TyraTech. TyraTech became a wholly owned and consolidated subsidiary on November 9, 2018.

Non-controlling interest represents the share of net income or loss that is attributable to the minority stockholder of our majority owned subsidiary, Envance. During the nine months ended September 30, 2018, a loss of $120 attributed to non-controlling interest. Envance became a wholly owned subsidiary on November 9, 2018.

~~Net income for the nine months ended September 30, 2019 was~~ $10,165 or $0.35 per basic and $0.34 per diluted share ~~as compared to $16,779 or $0.57 per basic and $0.56 per diluted share~~ in the same period of ~~2018.~~2019.

The ~~Company used~~Company’s operating activities provided net cash of ~~$21,684 in operating activities~~$19,197 during the ~~nine months~~nine-months ended September 30, ~~2019,~~2020, as compared to ~~$15,090~~utilizing $21,053 during the ~~nine months~~nine-months ended September 30, ~~2018.~~2019. Included in the ~~$21,684~~$19,197 are net income of ~~$10,165,~~$7,334, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of ~~$17,107,~~$14,584, the amortization of other assets of $3,185 and provision for bad debts in the amount of ~~$728, reassessment of deferred~~$777. Also included are stock-based compensation of ~~$3,539, stock based compensation~~$3,776, change in investment fair value of ~~$5,159, changes~~$281, loss from equity method investment of $80, decrease in deferred income taxes of ~~$459~~$1,757 and ~~losses from equity method investments~~net foreign currency adjustment of ~~$149. The total~~$711. These together provided net cash inflows of ~~$29,310,~~$26,996, as compared to ~~$35,191~~$29,860 for the same period of ~~2018.~~2019.

During the nine-months of ~~September 30, 2019,~~2020, the Company increased working capital by ~~$49,160,~~$4,950, as compared to ~~working capital at December 31, 2018. Inventories~~an increase of $49,160 during the same period of the prior year. Included in this change: inventories increased by $16,941, as compared to $19,713 ~~driven by our expanded businesses.~~for the nine-months of 2019. Deferred revenue decreased by $1,079, as compared to $19,800 in the same period of 2019, driven by customer decisions regarding ~~product~~ demand, payment timing and our cash incentive programs. Our accounts payable balances ~~increased~~decreased by ~~$5,516 driven by increased manufacturing activity and~~$1,759, as compared to $5,548 in the ~~impact~~same period of ~~newly acquired businesses.~~2019. Accounts receivables increased by ~~$15,983 driven primarily by a different mix~~$5,089, as compared to $15,839 in the same period of ~~domestic crop sales (and associated timing and terms) following the purchases of new products in 2018.~~2019. Prepaid expenses increased by $532, as compared to $849 ~~and income~~in the same period of 2019. Income tax ~~payable increased~~receivable net decreased by ~~$4,477.~~$873, as compared to an increase by $4,477 in the prior year. Accrued programs increased by ~~$20,163.~~$20,058, as compared to $20,163 in the prior year. The change reflected some changes in product mix and domestic programs. Finally, other payables and accrued expenses decreased by ~~$4,936.~~$3,344, as compared to $4,967 in the prior year as a result of the reduced incentive compensation accrual.

With regard to our program accrual, the ~~change~~increase (as noted above) primarily reflects our mix of sales and customers in the first ~~nine months~~nine-months of ~~2019,~~2020, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. ~~Most of our programs relate to domestic products.~~ Typically ~~domestic crops~~crop products have a growing season that ends on September 30^thof each year. During the first ~~nine months~~nine-months of ~~2019,~~2020, the Company made accruals for programs in the amount of ~~$38,900~~$42,254 and made payments in the amount of ~~$18,737.~~$22,208. During the first ~~nine months~~nine-months of ~~2018,~~the prior year, the Company made accruals in the amount of ~~$38,027~~$37,903 and made payments in the amount of ~~$15,145.~~$17,740.

Cash used for investing activities was $14,120 for the nine-months ended September 30, 2020, as compared to $42,382 for the ~~nine months~~nine-months ended September 30, ~~2019, as compared to $6,788 for the nine months ended September 30, 2018.~~2019. The Company spent ~~$10,546~~$8,988 on ~~capital expenditures~~fixed assets acquisitions, primarily focused on continuing to invest in manufacturing infrastructure, and ~~$31,836 relating~~$5,132 on investments and intangible assets.

During the nine-months ended September 30, 2020, financing activities used $1,855, as compared to ~~products and business acquisitions during~~provide $63,825 for the same period of the prior year. This is principally from the reduced borrowings on the Company’s senior credit facility. In the first nine-months of 2020, the Company paid dividends to stockholders amounting to $1,168, as compared to $1,741 in the same period of 2019.

The Company has a revolving line of credit that is shown as long-term debt in the ~~condensed consolidated balance sheets~~Condensed Consolidated Balance Sheets at September 30, ~~2019~~2020 and December 31, ~~2018. The debt is~~2019. These are summarized in the following table:

As of June 30, 2017, AMVAC Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliates (including the Company, AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment to Second Amended and Restated Credit Agreement (the “Credit Agreement”) 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 $250,000, an accordion feature of up to $100,000 and a maturity date of June 30, 2022. The Credit Agreement contains two key financial covenants; namely, borrowers are required to maintain a Consolidated Funded Debt Ratio of no more than 3.25-to-1 and a Consolidated Fixed Charge Covenant Ratio of at least 1.25-to-1. The Company’s borrowing capacity varies with its financial performance, measured in terms of EBITDA, for the trailing twelve month period. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with proper notice, on either (i) LIBOR plus the “Applicable Rate” which is based upon the Consolidated Funded Debt Ratio (“Eurocurrency Rate Loan”) or (ii) 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”). 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, ~~2019, according~~2020, the Company is compliant with all covenants to ~~the terms of the~~its Senior Credit ~~Agreement and based~~Facility. Based on its performance against the most restrictive covenants ~~listed above,~~in the Credit Agreement (see, supra Note 10), the Company had the capacity to increase its borrowings by up to ~~$30,435.~~$44,500, according to the terms thereof. This compares to an available borrowing capacity of ~~$105,111~~$30,435 as of September 30, ~~2018.~~2019 and $26,977 at December 31, 2019. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing twelve month period ~~which has declined,~~and on a proforma basis arising from acquisitions, (2) net borrowings, ~~which have increased due to recent acquisitions, and~~ (3) the leverage covenant ~~(being the number of times EBITDA the Company may borrow under its credit facility agreement)~~(the Consolidated Funded Debt Ratio).

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

Please refer to Note 15 in the accompanying Notes to the Condensed Consolidated Financial Statements for recently issued accounting standards.

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, ~~2018,~~2019, 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, ~~2018,~~2019, except for the adoption of ~~ASC 842, Leases, as of January 1, 2019.~~ Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, along with related clarifications and improvements.

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 revisions are reflected in the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements in the period that revisions are determined to be necessary. Actual results may differ from these estimates under different outcomes or conditions.

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, ~~2018.~~2019.

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 US 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.

As of September 30, ~~2019,~~2020, 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, ~~2019,~~2020, 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. ~~We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new accounting standards under ASC 842,~~ ~~Leases~~.

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

~~During~~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 US District Court for the Southern District of Alabama in which the US 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 retained defense counsel and completed production of documents. Over the past several months, government attorneys have interviewed several individuals who may be knowledgeable of the matter. At this stage, however, 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.

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 Report on Form 10-K for the fiscal year ended December 31, ~~2018 as well as~~2019, filed on March 10, 2020. In preparing this document, we have reviewed all the ~~Company’s Form 10-Q~~risk factors included in that document and find that there are no material changes to those risk factors, except for the ~~period~~following:

The Covid-19 pandemic is creating risk, uncertainty and adverse conditions in many industries both here and abroad. The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how the pandemic has impacted and may, in the future, impact its customers, business partners, and employees. While the Company did not incur significant disruptions from the COVID-19 pandemic during the three- and nine-months ended September 30, ~~2019.~~2020, the coronavirus did have the effect of limiting sales on new product launches, limiting interactions with potential new customers, reducing demand for products used on crops that are purchased by restaurants, and negatively impacting foreign currency exchange rates in Brazil, Mexico and Australia. The Company is unable to predict the impact that the pandemic will have on its financial condition, results of operations and cash flows in future reporting due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. There is no guarantee that the Company will be able to operate without material disruption for the duration of the pandemic or that its financial conditions and results of operations will not be materially adversely affected by the pandemic in future quarters.

The table below summarizes the number of shares of our common stock that were repurchased during the ~~nine months~~nine-months ended September 30, 2019 under the share repurchase program. The shares and respective amount are recorded as treasury shares on the Company’s ~~condensed consolidated balance sheet.~~Condensed Consolidated Balance Sheets.

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.

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)

		Page Number
PART I—FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Operations	3

	~~Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2019 and 2018~~	3

	Condensed Consolidated Statements of Comprehensive Income ~~for the three months and nine months ended September 30, 2019 and 2018~~(Loss)	4

	Condensed Consolidated Balance Sheets ~~as of September 30, 2019 and December 31, 2018~~	5

	Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity ~~for the three months and nine months ended September 30, 2019 and 2018~~	6

	Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2019 and 2018~~	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II—OTHER INFORMATION		32

Item 1.	Legal Proceedings	32
~~Item 1A.~~	~~Risk Factors~~	32

Item 6.1A.	Risk Factors	32

Item 2.	Purchase of Equity Securities by the Issuer	32



Item 6.	Exhibits	33

SIGNATURES		34

Weighted-average remaining lease term (in years)			~~3.43~~4.62
Weighted-average discount rate			~~3.69~~3.81	%

	September 30, 2019
Remainder of 2019	$	1,352
2020		5,024
2020 (excluding nine-months ended September 30, 2020)			$	1,364
2021		3,243		4,003
2022		1,679		2,464
2023		697		1,677
2024				1,065
Thereafter		1,179		2,925
Total lease payments	$	13,174		13,498
Less: imputed interest		871		1,207
Total	$	12,303	$	12,291

Amounts recognized in the condensed consolidated balance sheet:
Amounts recognized in the Condensed Consolidated Balance Sheets:
Operating lease liabilities, current	$	4,889	$	4,312
Operating lease liabilities, long term	$	7,414
Operating lease liabilities, long-term			$	7,979

	September 30, 2019			December 31, 2018			September 30, 2020			December 31, 2019
Land	$	2,706		$	2,548		$	2,706		$	2,706
Buildings and improvements		18,080			17,555			18,629			18,640
Machinery and equipment		111,859			109,064			119,920			116,757
Office furniture, fixtures and equipment		6,203			5,655			6,954			6,228
Automotive equipment		1,775			1,116			1,656			1,762
Construction in progress		7,984		��	2,513			9,316			5,263
Total gross value		148,607			138,451			159,181			151,356
Less accumulated depreciation		(93,277	)		(89,199	)		(99,380	)		(94,835	)
Total net value	$	55,330		$	49,252		$	59,801		$	56,521

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net sales:
Crop:
Insecticides	$	35,847	$	31,048	$	112,539	$	115,702
Herbicides/soil fumigants/fungicides		46,772		41,882		115,510		113,144
Other, including plant growth regulators and distribution		22,887		22,424		60,730		52,269
		105,506		95,354		288,779		281,115
Non-crop, including distribution of third party products		19,378		16,426		48,885		41,819
Total net sales:	$	124,884	$	111,780	$	337,664	$	322,934
Net sales:
US	$	73,988	$	71,711	$	200,055	$	205,889
International		50,896		40,069		137,609		117,045
Total net sales:	$	124,884	$	111,780	$	337,664	$	322,934
Timing of revenue recognition:
Goods transferred at a point in time	$	124,884	$	111,675	$	337,285	$	322,266
Goods and services transferred over time		—		105		379		668
Total net sales:	$	124,884	$	111,780	$	337,664	$	322,934

	September 30, 2019		December 31, 2018
Trade	$	140,220	$	123,320
Contract assets		3,435		3,000
Other receivables		10,348		7,709
Total receivables, net	$	154,003	$	134,029
Deferred revenue		368		20,043

Declaration Date	Record Date	Distribution Date	Dividend Per Share		Total Paid		Record Date	Distribution Date	Dividend Per Share		Total Paid
March 9, 2020							March 26, 2020	April 16, 2020	$	0.020	$	586
December 9, 2019							December 26, 2019	January 9, 2020	$	0.020	$	582
September 16, 2019	October 3, 2019	October 17, 2019	$	0.020	$	582	October 3, 2019	October 17, 2019	$	0.020	$	582
June 10, 2019	June 28, 2019	July 12, 2019	$	0.020	$	580	June 28, 2019	July 12, 2019	$	0.020	$	580
March 6, 2019	March 27, 2019	April 10, 2019	$	0.020	$	580	March 27, 2019	April 10, 2019	$	0.020	$	580
December 10, 2018	December 27, 2018	January 10, 2019	$	0.020	$	581	December 27, 2018	January 10, 2019	$	0.020	$	581

	Three Months Ended September 30,				Nine Months Ended September 30,				For the Three-Months Ended September 30,				For the Nine-Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Numerator:
Net income attributable to AVD	$	3,153	$	6,525	$	10,165	$	16,779	$	2,927	$	3,153	$	7,334	$	10,165
Denominator: (in thousands)
Weighted average shares outstanding-basic		29,057		29,399		29,013		29,340		29,501		29,057		29,401		29,013
Dilutive effect of stock options and grants		593		810		578		806		472		593		525		578
		29,650		30,209		29,591		30,146		29,973		29,650		29,926		29,591

Long-term indebtedness ($000's)	September 30, 2019			December 31, 2018			September 30, 2020			December 31, 2019
Revolving line of credit	$	165,600		$	97,400		$	149,900		$	149,300
Deferred loan fees		(592	)		(729	)		(538	)		(534	)
Net long-term debt	$	165,008		$	96,671		$	149,362		$	148,766

									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, 2020
Restricted Stock									$	695	$	2,173	$	3,030		1.3
Unrestricted Stock										110		351		293		0.7
Performance-Based Restricted Stock										426		1,252		1,494		1.3
Total									$	1,231	$	3,776	$	4,817
	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, 2019											��
Restricted Stock	$	1,082	$	2,751	$	6,849		2.0	$	1,082	$	2,751	$	6,849		2.2
Unrestricted Stock		105		300		280		0.7		105		300		280		0.7
Performance Based Restricted Stock		977		2,108		3,320		2.0
Performance-Based Restricted Stock										977		2,108		3,320		2.0
Total	$	2,164	$	5,159	$	10,449			$	2,164	$	5,159	$	10,449
September 30, 2018
Restricted Stock	$	870	$	2,427	$	5,949		2.0
Unrestricted Stock		96		289		257		0.7
Performance Based Restricted Stock		491		1,519		2,814		2.0
Total	$	1,457	$	4,235	$	9,020

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2018		384,064		$	9.10	$	9.10
Options exercised		(14,677	)		9.18		—
Balance outstanding, March 31, 2019		369,387			9.10		9.10
Options exercised		(4,313	)		8.71		—
Balance outstanding, June 30, 2019		365,074			9.10		9.10
Options exercised		(15,800	)		7.55		—
Balance outstanding, September 30, 2019		349,274		$	9.17	$	9.17

	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		202,445		14	$	7.50		202,445	$	7.50
$11.32—$14.49		146,829		61		11.48		146,829		11.48
		349,274			$	9.17		349,274	$	9.17

As of September 30, 2019	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
Incentive Stock Option Plan:
Outstanding		349,274	$	9.17		33	$	2,279
Exercisable		349,274	$	9.17		33	$	2,279

	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		587,210		$	17.59		391,753		$	15.61
Granted		297,679			17.34		254,972			19.97
Vested		(105,582	)		15.21		(8,800	)		12.07
Forfeited		(6,589	)		17.69		(5,265	)		16.51
Nonvested shares at March 31^st		772,718			17.77		632,660			17.41
Granted		40,522			13.34		22,308			23.66
Vested		(32,771	)		13.35		(20,313	)		22.82
Forfeited		(21,184	)		17.77		(6,424	)		17.25
Nonvested shares at June 30th		759,285			17.72		628,231			17.40
Granted		—			—		—			—
Vested		(3,685	)		17.84		(17,591	)		13.51
Forfeited		(8,595	)		17.89		(13,659	)		17.35
Nonvested shares at September 30th		747,005		$	17.72		596,981		$	17.51

	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		287,077		$	16.87		186,057		$	14.93
Granted		137,557			16.96		122,446			18.79
Additional granted based on performance achievement		41,568			12.88		—			—
Vested		(90,872	)		14.73		(14,625	)		11.01
Forfeited		(3,543	)		15.98		(1,765	)		15.40
Nonvested shares at March 31^st		371,787			16.99		292,113			16.74
Granted		—			—		3,850			22.69
Forfeited		(14,022	)		17.11		(2,179	)		17.67
Nonvested shares at June 30th		357,765			16.99		293,784			16.81
Additional granted based on performance achievement		800			17.50		4,036			13.53
Vested		(1,700	)		17.28		(8,232	)		13.47
Forfeited		(100	)		13.70		(1,870	)		15.67
Nonvested shares at September 30th		356,765		$	16.99		287,718		$	16.87

	For the Nine-Months Ended September 30, 2020					For the Nine-Months Ended September 30, 2019
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		719,845		$	17.67		587,210		$	17.59
Granted		4,185			18.63		297,679			17.34
Vested		(213,781	)		16.18		(105,582	)		15.21
Forfeited		(14,715	)		18.08		(6,589	)		17.69
Nonvested shares at March 31^st		495,534			18.31		772,718			17.77
Granted		43,168			13.45		40,522			13.34
Vested		(37,958	)		13.88		(32,771	)		13.35
Forfeited		(8,221	)		18.64		(21,184	)		17.77
Nonvested shares at June 30^th		492,523			18.22		759,285			17.72
Granted		—			—		—			—
Vested		—			—		(3,685	)		17.84
Forfeited		(8,430	)		18.54		(8,595	)		17.89
Nonvested shares at September 30^th		484,093		$	18.22		747,005		$	17.72

	For the Nine-Months Ended September 30, 2020					For the Nine-Months Ended September 30, 2019
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		345,432		$	16.92		287,077		$	16.87
Granted		—			—		137,557			16.96
Additional granted based on performance achievement		76,445			16.56		41,568			12.88
Vested		(184,785	)		15.87		(90,872	)		14.73
Forfeited		(3,759	)		17.23		(3,543	)		15.98
Nonvested shares at March 31^st		233,333			17.63		371,787			16.99
Forfeited		(2,268	)		18.00		(14,022	)		17.11
Nonvested shares at June 30^th		231,065			17.63		357,765			16.99
Additional granted based on performance achievement		—			—		800			17.50
Vested		—			—		(1,700	)		17.28
Forfeited		—			—		(100	)		13.70
Nonvested shares at September 30^th		231,065		$	17.63		356,765		$	16.99

	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2019		332,823		$	9.14
Options exercised		(15,836	)		8.83
Balance outstanding, March 31, 2020		316,987			9.16
Options exercised		(9,291	)		8.27
Balance outstanding, June 30, 2020		307,696			9.16
Options exercised		(86,446	)		7.58
Balance outstanding, September 30, 2020		221,250		$	9.81

	For the Nine-months ended September 30, 2020
Balance, December 31, 2019	$	1,243
Payments		(1,227	)
Foreign exchange effect		(16	)
Balance, September 30, 2020	$	—

	Three months ended September 30, 2019								Three months ended September 30, 2018								Three-months ended September 30, 2020								Three-months ended September 30, 2019
	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)	$	178,886	$	2,045			4.6	%	$	80,001	$	822			4.1	%	$	162,734	$	1,007			2.5	%	$	178,886	$	2,045			4.6	%
Amortization of deferred loan fees		—		58			—			—		60			—			—		80			—			—		58			—
Amortization of other deferred liabilities		—		41			—			—		107			—			—		2			—			—		41			—
Other interest (income) expense		—		32			—			—		146			—
Other interest expense																		—		7			—			—		32			—
Subtotal		178,886		2,176			4.9	%		80,001		1,135			5.7	%		162,734		1,096			2.7	%		178,886		2,176			4.9	%
Capitalized interest		—		(106	)		—			—		(19	)		—			—		(74	)		—			—		(106	)		—
Total	$	178,886	$	2,070			4.6	%	$	80,001	$	1,116			5.6	%	$	162,734	$	1,022			2.5	%	$	178,886	$	2,070			4.6	%

	Nine-months ended September 30, 2020								Nine-months ended September 30, 2019
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	171,203	$	3,751			2.9	%	$	166,877	$	5,530			4.4	%
Amortization of deferred loan fees		—		219			—			—		161			—
Amortization of other deferred liabilities		—		8			—			—		41			—
Other interest expense		—		64			—			—		102			—
Subtotal		171,203		4,042			3.1	%		166,877		5,834			4.7	%
Capitalized interest		—		(238	)		—			—		(228	)		—
Total	$	171,203	$	3,804			3.0	%	$	166,877	$	5,606			4.5	%

	Nine months ended September 30, 2019								Nine months ended September 30, 2018
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	166,877	$	5,530			4.4	%	$	92,971	$	2,399			3.4	%
Amortization of deferred loan fees		—		161			—			—		177			—
Amortization of other deferred liabilities		—		41			—			—		261			—
Other interest (income) expense		—		102			—			—		178			—
Subtotal		166,877		5,834			4.7	%		92,971		3,015			4.3	%
Capitalized interest		—		(228	)		—			—		(54	)		—
Total	$	166,877	$	5,606			4.5	%	$	92,971	$	2,961			4.2	%

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, ~~2019,~~2020, formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive ~~Income;~~Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated ~~Statements~~Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed ~~consolidated~~Consolidated Financial Statements, tagged as blocks of text.

	americanvanguardcorporation

Dated: November ~~6, 2019~~9, 2020	By:	/s/ ericg. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: November ~~6, 2019~~9, 2020	By:	/s/ davidt. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer