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—~~30,287,577~~30,828,461 shares as of ~~October 29, 2020.~~April 30, 2021.

	For the Three-Months Ended September 30,				For the Nine-Months Ended September 30,				For the three months ended March 31
	2020		2019		2020		2019		2021			2020
Net sales	$	117,439	$	124,884	$	317,956	$	337,664	$	116,155		$	95,962
Cost of sales		74,174		77,421		196,004		206,846		(71,024	)		(57,581	)
Gross profit		43,265		47,463		121,952		130,818		45,131			38,381
Operating expenses		38,782		40,677		108,882		110,839		(41,444	)		(36,545	)
Adjustment to bargain purchase gain on business acquisition										(33	)		—
Operating income		4,483		6,786		13,070		19,979		3,654			1,836
Change in fair value of an equity investment										1,066			—
Other income										672			—
Interest expense, net		1,022		2,070		3,804		5,606		(946	)		(1,508	)
Income before provision for income taxes and loss on equity method investment		3,461		4,716		9,266		14,373
Income tax expense		492		1,474		1,852		4,059
Income before loss on equity method investment		2,969		3,242		7,414		10,314
Income before provision for income taxes (benefit) and loss on equity method investment										4,446			328
Income tax (expense) benefit										(1,362	)		205
Income before loss from equity method investment										3,084			533
Loss from equity method investment		42		89		80		149		(13	)		(13	)
Net income attributable to American Vanguard	$	2,927	$	3,153	$	7,334	$	10,165
Net income									$	3,071		$	520
Earnings per common share—basic	$	.10	$	.11	$	.25	$	.35	$	0.10		$	0.02
Earnings per common share—assuming dilution	$	.10	$	.11	$	.25	$	.34	$	0.10		$	0.02
Weighted average shares outstanding—basic		29,501		29,057		29,401		29,013		29,737			29,288
Weighted average shares outstanding—assuming dilution		29,973		29,650		29,926		29,591		30,523			29,948

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

		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
Current assets:
Cash and cash equivalents		$	9,581		$	6,581			$	13,765		$	15,923
Receivables:
Trade, net of allowance for doubtful accounts of $3,046 and $2,300, respectively			145,374			136,075
Trade, net of allowance for doubtful accounts of $3,979 and $3,297, respectively										156,010			130,029
Other			9,064			16,949				10,247			8,444
Total receivables, net			154,438			153,024				166,257			138,473
Inventories, net			176,287			163,313
Inventories										172,234			163,784
Prepaid expenses			10,738			10,457				11,221			10,499
Income taxes receivable			1,972			2,824				2,409			3,046
Total current assets			353,016			336,199				365,886			331,725
Property, plant and equipment, net			59,801			56,521				65,945			65,382
Operating lease right-of-use assets			12,128			11,258				11,207			12,198
Intangible assets, net of amortization			191,133			198,377
Intangible assets, net of applicable amortization										193,776			197,514
Goodwill			40,737			46,557				50,505			52,108
Other assets			18,926			21,186				18,492			18,602
Deferred income tax assets, net										4,213			2,764
Total assets		$	675,741		$	670,098			$	710,024		$	680,293

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	210		$	1,513			$	909		$	2,647
Accounts payable			61,283			64,881				60,946			59,253
Deferred revenue			5,689			6,826				32,316			43,611
Accrued program costs			67,745			47,699				53,196			45,441
Accrued expenses and other payables			11,266			12,815				15,865			16,184
Operating lease liabilities, current			4,312			4,904				3,664			4,188
Total current liabilities			150,505			138,638				166,896			171,324
Long-term debt, net of deferred loan fees			149,362			148,766
Operating lease liabilities, long-term			7,979			6,503
Other liabilities, excluding current installments			9,087			12,890
Deferred income tax liabilities			14,014			19,145
Long-term debt, net										143,423			107,442
Operating lease liabilities, long term										7,692			8,177
Other liabilities, net of current installments										8,453			9,054
Deferred income tax liabilities, net										23,514			23,560
Total liabilities			330,947			325,942				349,978			319,557
Commitments and contingent liabilities
Stockholders' equity:
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
Preferred stock, $.10 par value per share; authorized 400,000 shares; NaN issued										—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,874,322 shares at March 31, 2021 and 33,922,433 shares at December 31, 2020										3,389			3,394
Additional paid-in capital			93,273			90,572				95,985			96,642
Accumulated other comprehensive loss			(14,520	)		(5,698	)			(11,825	)		(9,322	)
Retained earnings			280,866			274,118				290,657			288,182
			362,954			362,316
Less treasury stock at cost, 3,061,040 shares at September 30, 2020 and December 31, 2019			(18,160	)		(18,160	)
Less treasury stock at cost, 3,061,040 shares										(18,160	)		(18,160	)
Total stockholders’ equity			344,794			344,156				360,046			360,736
Total liabilities and stockholders' equity		$	675,741		$	670,098			$	710,024		$	680,293

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

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

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~For The Three Months Ended March 31, 2021 and March 31, 2020

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

	Common Stock						Additional			Accumulated Other						Treasury Stock
	Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			Total
Balance, December 31, 2020		33,922,433		$	3,394		$	96,642		$	(9,322	)	$	288,182			3,061,040	$	(18,160	)	$	360,736
Stocks issued under ESPP		25,120			2			338			—			—			—		—			340
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(596	)		—		—			(596	)
Foreign currency translation adjustment, net		—			—			—			(2,503	)		—			—		—			(2,503	)
Stock based compensation		—			—			1,792						—			—		—			1,792
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(73,231	)		(7	)		(2,787	)		—			—			—		—			(2,794	)
Net income		—			—			—			—			3,071			—		—			3,071
Balance, March 31, 2021		33,874,322		$	3,389		$	95,985		$	(11,825	)	$	290,657			3,061,040	$	(18,160	)	$	360,046

Balance, December 31, 2019		33,233,614		$	3,324		$	90,572		$	(5,698	)	$	274,118			3,061,040	$	(18,160	)	$	344,156
Stocks 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

For the Nine-Months Ended September 30,

2020

2019

Cash flows from operating activities:

Net income

$
7,334

$
10,165

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

14,584

13,892

Amortization of other long-term assets and deferred loan fees

3,185

3,174

Amortization of discounted liabilities

9

41

Provision for bad debts

777

728

Revision of deferred consideration

—

(3,539
)
Stock-based compensation

3,776

5,159

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

(5,089
)

(15,839
)
Increase in inventories

(16,941
)

(19,713
)
Increase in prepaid expenses and other assets

(532
)

(849
)
Decrease (increase) in income tax receivable

873

(4,477
)
Increase in net operating lease liability

14

117

Decrease in accounts payable

(1,759
)

(5,548
)
Decrease in deferred revenue

(1,079
)

(19,800
)
Increase in accrued program costs

20,058

20,163

Decrease in other payables and accrued expenses

(3,344
)

(4,967
)
Net cash provided by  (used in) operating activities

19,197

(21,053
)
Cash flows from investing activities:

Capital expenditures

(8,988
)

(10,546
)
Acquisition of business, product lines, and intangible assets

(3,942
)

(31,836
)
Investment

(1,190
)

—

Net cash used in investing activities

(14,120
)

(42,382
)
Cash flows from financing activities:

Net borrowings under line of credit agreement

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)

(1,064
)

(30
)
Repurchase of common stock

—

(2,604
)
Payment of cash dividends

(1,168
)

(1,741
)
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

(222
)

(671
)
Cash and cash equivalents at beginning of period

6,581

6,168

Cash and cash equivalents at end of period

$
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

	For the three months ended March 31
	2021			2020
Cash flows from operating activities:
Net income	$	3,071		$	520
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed and intangible assets		5,403			4,762
Amortization of other long-term assets		1,200			967
Accretion of discounted liabilities		18			4
Amortization of deferred loan fees		81			59
Provision for bad debts		682			359
Loan principal and interest forgiveness		(672	)		—
Stock-based compensation		1,792			1,357
Decrease in deferred income taxes		(269	)		(910	)
Change in fair value of an equity investment		(1,066	)		—
Loss from equity method investment		13			13
Adjustment to bargain purchase gain on business acquisition		33			—
Changes in assets and liabilities associated with operations:
Increase in net receivables		(30,422	)		(6,578	)
Increase in inventories		(9,615	)		(16,446	)
Increase in prepaid expenses and other assets		(1,052	)		(776	)
(Increase) decrease in income tax receivable/payable, net		638			(597	)
Decrease in net operating lease liability		(18	)		—
Increase in accounts payable		2,293			1,617
Decrease in deferred revenue		(11,293	)		(2,342	)
Increase in accrued program costs		7,770			6,016
Decrease in other payables and accrued expenses		(1,187	)		(2,094	)
Net cash used in operating activities		(32,600	)		(14,069	)
Cash flows from investing activities:
Capital expenditures		(2,904	)		(2,980	)
Intangible assets		(41	)		—
Net cash used in investing activities		(2,945	)		(2,980	)
Cash flows from financing activities:
Net borrowings under line of credit agreement		35,900			19,400
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings)		(2,454	)		(2,177	)
Payment of cash dividends		(593	)		(582	)
Net cash provided by financing activities		32,853			16,641
Net decrease in cash and cash equivalents		(2,692	)		(408	)
Effect of exchange rate changes on cash and cash equivalents		534			(629	)
Cash and cash equivalents at beginning of period		15,923			6,581
Cash and cash equivalents at end of period	$	13,765		$	5,544

1. Summary of Significant Accounting Policies —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. In the opinion of management, all adjustments (consisting of consolidating adjustments, eliminations and normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~three- and nine-months~~three months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021. The financial statements and related notes do not include all information and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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-~~three-months ended March 31, 2021 and ~~nine-months~~2020. During the three-month period 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, whileMarch 31, 2021, the Company has ~~recorded~~experienced strong ~~sales of new~~demand for its products, ~~particularly soybean~~more stability in foreign exchange rates 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~~in some jurisdictions in which it operates, return to more normal business activities including more face-to-face meetings with ~~existing~~customers and ~~potential new customers~~suppliers etc., albeit at a much-reduced level as compared to ~~promote those products. Second, demand for certain commodities – specifically, corn, potatoes and fruits and vegetables – have experienced~~pre-pandemic times. The Company established a ~~drop from restaurants that have been closed (in whole or in part) due to~~pandemic working group at the ~~coronavirus. This, in turn, has softened demand for some~~start of the ~~Company’s products that are used on those crops~~COVID-19 pandemic. That group meets bi-weekly and ~~could affect future contracts. Third, local currencies~~is presently monitoring the safety of its employees, especially in Brazil ~~Mexico~~ and ~~Australia suffered~~India, as those countries are experiencing a ~~significant decline~~surge in ~~value versus~~new virus variants. During the ~~US dollar during the first quarter~~same period of the prior 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~~business operated comparatively normally, however, was impacted by adverse movements in some 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~~currency exchange rates ~~with certainty, it is not unreasonable to include~~as the pandemic ~~among its causes.~~news spread across the globe.

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

Finance leases are immaterial to the ~~Condensed Consolidated Financial Statements.~~accompanying condensed consolidated financial statements. There were no lease transactions with related parties as of ~~September 30, 2020.~~and for the three-month periods presented in the table below.

The operating lease expense for the ~~three-months~~three months ended ~~September 30,~~March 31, 2021 and 2020 was $1,454 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,~~$1,395, respectively. Lease expenses related to variable lease payments and short-term leases were immaterial. ~~Additional~~Other 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, 2020 were as follows:~~

Future minimum lease payments under non-cancellable operating leases as of ~~September 30, 2020,~~March 31, 2021 were as follows:

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

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”), Revenue From Contracts with Customers.~~customer. 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.

Contract ~~Balances~~Assets and Deferred Revenue —The contract assets are included in other receivables on the condensed consolidated balance sheets and relate to royalties earned on certain functional licenses granted for the use of the Company’s intellectual property. The timing of revenue recognition, billings and cash collections may result in deferred 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 revenues. These liabilities are reported in deferred revenue on the 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- and nine-months~~three months ended ~~September 30, 2020,~~March 31, 2021, that was included in the deferred revenue balance at the beginning of ~~2020~~2021 was ~~$94 and $2,573, respectively.~~$11,295. The Company expects to recognize all its remaining deferred revenue in fiscal 2021.

4.Property, Plant and Equipment — Property, plant and equipment at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consists of the following:

The Company recognized depreciation expense related to property ~~plant~~ and equipment of ~~$1,878~~$2,171 and ~~$1,571~~$1,517 for the ~~three-~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. During the ~~three-months~~three months ended ~~September 30,~~March 31, 2021 and 2020, the Company eliminated ~~$205 from such assets and accumulated depreciation of fully depreciated assets. During the three-months ended September 30, 2019, the Company eliminated $8~~ from assets and accumulated depreciation $62 and $113, of fully depreciated ~~assets.~~

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

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

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

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

For the nine-months
ended September 30,

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
%
US total

186,511

200,136

(13,625
)

-7
%
International

131,445

137,528

(6,083
)

-4
%
Net sales

$
317,956

$
337,664

$
(19,708
)

-6
%
Gross profit:

US crop

$
68,119

$
69,059

$
(940
)

-1
%
US non-crop

18,535

21,444

(2,909
)

-14
%
US total

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
%

	For the three Months Ended March 31
	2021			2020			Change			% Change
Net sales:
U.S. crop	$	54,755		$	50,362		$	4,393			9	%
U.S. non-crop		17,453			10,993			6,460			59	%
Total U.S.		72,208			61,355			10,853			18	%
International		43,947			34,607			9,340			27	%
Total net sales:	$	116,155		$	95,962		$	20,193			21	%
Gross profit:
U.S. crop	$	21,271		$	24,245		$	(2,974	)		-12	%
U.S. non-crop		9,383			4,719			4,664			99	%
Total U.S.		30,654			28,964			1,690			6	%
International		14,477			9,417			5,060			54	%
Total gross profit:	$	45,131		$	38,381		$	6,750			18	%
Gross margin:
U.S. crop		39	%		48	%
U.S. non-crop		54	%		43	%
Total U.S.		42	%		47	%
International		33	%		27	%
Gross margin:		39	%		40	%

7. Accrued Program ~~Costs—~~Costs — The Company offers various discounts to customers based on the volume purchased within a defined time period, other pricing adjustments, some grower volume incentives or other key performance indicator driven payments, which are usually made ~~to distributors, retailers or growers,~~ at the end of a growing ~~season.~~season, to distributors, retailers or growers. The Company describes these payments as “Programs.” Programs are a critical part of doing business in both the USU.S. crop and US non-crop chemicals ~~market.~~marketplaces. These discount Programs represent variable consideration. ~~In accordance with ASC 606, revenues~~Revenues from sales are recorded at the net sales price, which is the transaction price net of the impact of Programs and includes estimates of variable consideration. Variable consideration includes amounts expected to be paid to its customers estimated using the expected value method. Each ~~quarter-end,~~quarter management compares individual sale transactions with Programs to determine what, if any, estimated ~~Program~~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 balance and, for volume driven payments, make assessments of whether or not customers are tracking in a manner that indicates that they will meet the requirements set out in agreed upon terms and conditions attached to each Program. Following this assessment, management makes adjustments to the accumulated accrual to properly reflect the Company’s best estimate of the liability at the balance sheet date. Programs are paid out predominantly on an annual basis, usually in the final quarter of the financial year or the first quarter of the following year. No significant changes in estimates were made during the ~~three-~~three months ended March 31, 2021 and ~~nine-months ended September 30,~~ 2020, ~~and 2019,~~ respectively.

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

~~9. ASC 260~~ ~~Earnings Per Share (“EPS”)~~ requires dual presentation of basic EPS and diluted EPS on the face of the Condensed Consolidated Statements of Operations. Basic EPS is computed as net income divided by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects potential dilution that could occur if securities or other contracts, which, for the Company, consist of options to purchase shares of the Company’s common stock, are exercised.

9. Earnings Per Share —The components of basic and diluted earnings per share were as follows:

For the ~~three-~~three months ended March 31, 2021 and ~~nine-months ended September 30,~~ 2020, ~~and 2019, respectively,~~ 0 stock options were excluded from the computation of diluted earnings per share.

10. Debt — The Company has a revolving line of credit that is shown as long-term debt onin the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. The Company has 0 short-term debt as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019. Debt~~2020. The debt is summarized in the following table:

AsThe Company’s main bank is Bank of ~~June~~the West, a wholly-owned subsidiary of the French bank, BNP Paribas. Bank of the West has been the Company’s bank for more than 30 ~~2017,~~years and is the syndication manager for the Company’s loans.

The revolving line of credit agreement (the “Credit Agreement”) is a senior secured lending facility among 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~~on the one hand, and ~~Restated Credit Agreement with~~ a group of commercial lenders led by Bank of the West as agent, swing line lender and ~~letter~~Letter of ~~credit issuer. The agreement is a senior secured lending facility,~~Credit issuer on the other hand, 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 ~~agreement~~Credit 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 period. Under the ~~agreement,~~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 ~~nine-months,~~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.

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 terms of which the maximum limits for both Permitted Acquisitions and Investments in Foreign Subsidiaries were increased and new language The interest rate on March 31, 2021 was ~~added with respect to Eurocurrency Rates, LIBOR Rates and ERISA.~~2.75%.

As of April 22, 2020, AMVAC, as borrower, and certain affiliates ~~entered into a Fifth Amendment to~~amended the ~~Second Amended and Restated~~Credit Agreement. The Credit Agreement, ~~with its senior lenders (the “Credit Agreement”), having~~as amended, has the same term and loan commitments, ~~but under which~~however the maximum permitted ~~CFD Ratio~~consolidated funded debt ratio (the “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 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 the Lead Agent is required. Larger acquisitions continue to require the consent of a majority of the Lenders.

At ~~September 30, 2020,~~March 31, 2021, the Company is compliant with all covenants to its ~~senior credit facility.~~Senior Credit Facility. Based on its performance against the most restrictive covenants in the ~~credit agreement,~~Credit Agreement, the Company had the capacity to increase its borrowings by up to ~~$44,500.~~$50,993, according to the terms thereof. This compares to an available borrowing capacity of ~~$30,435,~~$86,736 as of ~~September 30, 2019 and $26,977 at~~ December 31, ~~2019.~~2020 and $39,552 as of March 31, 2020. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA ~~including~~for both the trailing ~~twelve-month~~twelve month period and ~~on a~~ proforma basis arising from acquisitions, (2) net borrowings, and (3) the leverage covenant (the Consolidated Funded Debt ~~ratio)~~Ratio).

Agrinos had an existing Paycheck Protection Program (PPP) loan in the amount of $705 as of the date it was acquired by the Company. This PPP loan was granted on April 27, 2020, $667 in principal and $5 in interest of this PPP loan was forgiven by the Small Business Administration on January 7, 2021 and Agrinos repaid the remaining outstanding balance. As a result, the PPP loan was extinguished on January 7, 2021 and the total amount forgiven of $672 was recorded as other income in the Company’s condensed consolidated statement of operations and represents a non-cash financing activity on the condensed consolidated statement of cash flows for the three months ended March 31, 2021.

11. ~~Reclassification—~~Reclassifications — Certain items ~~may~~ have been reclassified in the prior period ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements to conform with the ~~September 30, 2020~~March 31, 2021 presentation.

12. Comprehensive Income (Loss) —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- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ total comprehensive income (loss) consisted of net income attributable to American Vanguard and foreign currency translation adjustments.

13. Stock-Based ~~Compensation—The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Share-Based Payment,~~Compensation — ” 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 and employee stock options based on estimated fair values.

The following tables illustrate the Company’s stock-based compensation, unamortized stock-based compensation, and remaining weighted average amortization period.

	Stock-Based Compensation for the Three-months ended		Stock-Based Compensation for the Nine- months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)		Stock-Based Compensation for the Three months Period		Unamortized Stock-Based Compensation as of March 31		Remaining Weighted Average Period (years)
September 30, 2020
Restricted Stock	$	695	$	2,173	$	3,030		1.3
March 31, 2021
Time-Based Restricted Stock									$	1,057	$	5,703		1.8
Unrestricted Stock		110		351		293		0.7		110		73		0.2
Performance-Based Restricted Stock		426		1,252		1,494		1.3		625		2,698		1.8
Total	$	1,231	$	3,776	$	4,817			$	1,792	$	8,474

September 30, 2019			��
Restricted Stock	$	1,082	$	2,751	$	6,849		2.2
March 31, 2020
Time-Based Restricted Stock									$	776	$	4,555		1.5
Unrestricted Stock		105		300		280		0.7		123		82		0.2
Performance-Based Restricted Stock		977		2,108		3,320		2.0		458		2,288		1.7
Total	$	2,164	$	5,159	$	10,449			$	1,357	$	6,925

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 months ended March 31, 2021 and ~~nine-months ended September 30, 2020 and 2019.~~2020.

Restricted and Unrestricted Stock — A summary of nonvested time based restricted and unrestricted stock is presented below:

Performance-Based Restricted Stock — A summary of nonvested performance-based stock is presented below:

	For the Nine-Months Ended September 30, 2020					For the Nine-Months Ended September 30, 2019					Three Months Ended March 31, 2021					Three Months Ended March 31, 2020
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		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		391,771		$	16.26		345,432		$	16.92
Granted		—			—		137,557			16.96		—			—		—			—
Additional granted based on performance achievement		76,445			16.56		41,568			12.88		71,180			20.53		76,445			16.56
Vested		(184,785	)		15.87		(90,872	)		14.73		(175,087	)		19.78		(184,785	)		15.87
Forfeited		(3,759	)		17.23		(3,543	)		15.98		(505	)		19.26		(3,759	)		17.23
Nonvested shares at March 31^st		233,333			17.63		371,787			16.99		287,359		$	15.16		233,333		$	17.63
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

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

Outstanding at ~~September 30, 2020,~~March 31, 2021, summarized by exercise price:

All the performance incentive stock options outstanding as of ~~September 30, 2020~~March 31, 2021 have an exercise price per share of $11.49 and a remaining life of 5145 months.

14. Legal Proceedings — During the reporting period, ~~the only~~there have been no material developments in legal proceedings that ~~had been~~were reported in the Company’s Form 10-K for the year ended December 31, ~~2019 were~~2020, except as ~~follows:~~described below.

EPA FIFRA/RCRA Matter. On November 10, 2016, the Company was served with a grand jury subpoena ~~out of~~from the ~~U.S. District Court~~United States Attorney’s Office for the Southern District of Alabama, ~~in which~~seeking documents regarding the ~~U.S. Department~~importation, transportation, and management of ~~Justice (“DoJ”) sought production of documents relating to the Company’s reimportation of depleted Thimet containers from Canada and Australia.~~a specific pesticide. The Company retained defense counsel to assist in responding to the subpoena and ~~completed production~~otherwise defending the Company’s interests. AMVAC is cooperating in the investigation.

Since April 2018, the Department of ~~documents. Since~~Justice (“DOJ”) has conducted several interviews of AMVAC employees and issued supplemental document requests in connection with the ~~fourth quarter of 2018, government attorneys have interviewed several individuals (both current~~investigation. In November 2020, DOJ issued a second grand jury subpoena seeking records 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 intentions~~related communications with regard to ~~either~~a submission made by the Company to the Environmental Protection Agency (“EPA”) in connection with a request to amend a pesticide’s registration. Soon thereafter, DOJ also identified the Company and one of its ~~theory~~non-executive employees as targets of the ~~case or potential criminal enforcement. Thus,~~government’s investigation. In January 2021, DOJ and EPA informed the Company that it is ~~too early to tell whether a loss is probable or reasonably estimable. Accordingly,~~investigating violations of two environmental statutes, the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) and the Resource Conservation and Recovery Act (“RCRA”), as well as obstruction of an agency proceeding and false statement statutes. DOJ also identified for the Company ~~has~~as well as for the individual target evidence that it contends supports alleged violations with respect to both the Company and the individual target. The Company is evaluating the legal and factual issues raised by the government and is engaged in discussions with DOJ regarding possible resolution.

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

~~Harold Reed v. AMVAC et al~~. During January 2017, the Company was served with two Statements of Claim that had been filed on March 29, 2016 with the Court of Queen’s Bench of Alberta, Canada (as case numbers 160600211 and 160600237) in which plaintiffs Harold Reed (an applicator) and 819596 Alberta Ltd. dba Jem Holdings (an application equipment rental company) allege physical injury and damage to equipment, respectively, arising from a fire that occurred during an application of the Company’s potato sprout inhibitor, SmartBlock, at a potato storage facility in Coaldale, Alberta on April 2, 2014. The parties have exchanged written discovery, and depositions of persons most knowledgeable took place during the first quarter of 2019. Citing the length of the cases’ pendency and the expense, in December 2019, plaintiff Reed voluntarily dismissed two actions (160600211 and 160600237) for no consideration. With respect to the remaining action, additional depositions took place during the first quarter of 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 defend them vigorously. At this stage in the proceedings, however, it is too early to determine whether a loss is probable or reasonably estimable; accordingly, the Company has not recorded a loss contingency.

~~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 result in earlier recognition of credit losses. The Company 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”,~~Adopted — ~~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,”~~ (“adopted ASU No. 2020-04”), which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for our borrowing instruments, which use LIBOR as a reference rate, and is2019-12 effective ~~immediately, but is only available through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04; however, at the current time the Company does not expect that the~~January 1, 2021.The adoption of this ~~ASU will have a~~standard did not result in any material ~~impact on its Condensed Consolidated Financial Statements.~~adjustments to the Company’s condensed consolidated financial statements.

16. Fair Value of Financial ~~Instruments—~~Instruments — The accounting standard for fair value measurements provides a framework for measuring fair value and requires ~~certain~~expanded 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 amount of the Company’s financial instruments, which principally include cash and cash equivalents, short-term investments, accounts receivable, long-term investments, accounts payable and accrued expenses, approximates fair value because of the relatively short maturity of such instruments. The carrying amount of the Company’s short-term and long-term borrowings, which are considered Level 2 liabilities, approximates fair value based upon current rates and terms available to the Company for similar debt.

~~The Company has one equity investment classified within Level 1 of 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 fair value hierarchy. The Company may use various valuation techniques depending on the terms and conditions of the contingent consideration including a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the results are analyzed to determine probabilities of different outcomes occurring. The following table illustrates the Company’s contingent consideration movements related to its business acquisitions:

~~There was no activity for~~The current portion of the ~~three-months ended September 30, 2020.~~

contingent consideration in the amount of $750 is included in current installments of other liabilities and the long-term portion in the amount of $1,455 is included in other liabilities on the condensed consolidated balance sheets.

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

18. ~~Equity Investments — The Company has the following equity investments:~~

—On August 2, 2016, AMVAC BV entered into a joint venture with Huifeng (Hong Kong) Ltd, which is a wholly owned subsidiary of the Huifeng Group. The resulting entity, Hong Kong JV, is intended to focus on activities such as market access and technology transfer between the two members. AMVAC BV is a 50% owner of the entity. No material contributions were made subsequent to the initial investment. On June 27, 2017, both ~~Amvac Netherlands~~AMVAC BV and Huifeng ~~Agrochemical Company, Ltd (“Huifeng”)~~(Hong Kong) Ltd. made individual capital contributions of $950 to the ~~Huifeng Amvac Innovation Co. Ltd (“~~Hong Kong ~~Joint Venture”). As of September 30, 2020, the Company’s ownership position in the Hong Kong Joint Venture was 50%.~~JV. The Company utilizes the equity method of accounting with respect to this investment. On July 7, 2017, the Hong Kong ~~Joint Venture~~JV 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~~(via its wholly owned subsidiary ~~Shanghai Biological Focus Center.~~ Huifeng (Hong Kong) Ltd).

For the ~~three-~~three months ended March 31, 2021 and ~~nine-months ended September 30,~~ 2020, the Company recognized losses of ~~$42 and $80, respectively,~~$13 in each period, as a result of the Company’s ownership position in the Hong Kong Joint Venture. ~~For the three- and nine-months ended September 30, 2019, the Company recognized losses of $89 and $149, respectively.~~ The Company’s investment in this joint venture amounted to ~~$433~~$375 and ~~$573,~~$500, respectively at ~~September 30,~~March 31, 2021 and 2020 and ~~2019.~~are included in other assets.

—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, 2020,~~March 31, 2021, the Company’s ownership position in Bi-PA was 15%. ~~The equity securities are without a~~Since this investment does not have 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~~the investment at ~~its~~ cost ~~minus~~less impairment, if any, ~~plus~~and also records an increase or ~~minus~~decrease for changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Bi-PA. The Company periodically reviews the ~~same issuer. There were no observable price changes in the three- and nine-months ended September 30, 2020 and 2019.~~investment for possible impairment. There was 0 impairment or observable price changes on the investment ~~as of September 30, 2020~~during the three months ended March 31, 2021 and ~~2019. The investment is not material and is recorded within other assets on the Condensed Consolidated Balance Sheets.~~2020.

On April 1, 2020, ~~the Company~~AMVAC purchased 6.25 million shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. (TSX Venture Exchange: “CSX”) for $1,190. The shares are publicly traded, have a readily determinable fair value, and are considered a Level 1 investment. The fair value of the stock amounted to ~~$1,471~~$2,973 as of ~~September 30, 2020,~~March 31, 2021, and the Company recorded a gain in the amount of ~~$257 and $281~~$1,066 for the ~~three- and nine-months~~three-month period ended ~~September 30, 2020, included as a reduction to operating expenses on the Condensed Consolidated Financial Statements.~~March 31, 2021.

~~19.~~ 20. Income Taxes — Income tax expense was ~~$492~~$1,362 for the three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$1,474~~income tax benefit of $205 for the ~~comparable period in 2019.~~three months ended March 31, 2020. The effective tax rate for the ~~quarter~~three months ended March 31, 2021 was ~~14.2%~~30.6%, asand is based on the rates in the territories in which the Company operates. The rate has decreased compared to ~~31.3%~~prior years reflecting mix of income in the same period of the prior year. Income tax expense was $1,852 for the nine-months ended September 30, 2020, as compared to $4,059 for the nine- months ended September 30, 2019. The effective tax rate for the nine-months ended September 30, 2020 and 2019 was 20.0% and 28.2%, respectively.different jurisdictions. 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~~three months ended ~~September 30,~~March 31, 2020 the ~~Company’s income tax expense~~effective rate 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,~~31.0%. In addition, during that period, the Company benefited from ~~three~~two 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,~~These benefits did not recur in the ~~Company benefited from a release~~same period of ~~an uncertain tax position.~~the current year.

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~~at its ~~initial phase.~~preliminary stage.

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. Product and Business Acquisitions – —The Company did not complete any acquisitions during the three months ended March 31, 2021 and 2020.

During the year ended December 31, ~~2019,~~2020, the Company completed 32 acquisitions in exchange for a total cash consideration at closing of ~~$37,972,~~$19,342, which was net of cash acquired of ~~$981~~$1,970, and ~~deferred~~contingent consideration of ~~$3,051.~~$2,007, and the settlement of a net asset adjustment of $623. In addition, the Company assumed liabilities of ~~$19,867~~$10,288 and ~~capitalized costs of $14 incurred~~recognized a bargain purchase gain in the ~~asset acquisition process.~~amount of $4,624. The total asset value of ~~$60,904~~$36,884 was preliminarily allocated as follows: product rights ~~$13,279,~~$6,645, trade names ~~$5,452,~~$1,195, customer relationships ~~$5,705,~~$632, goodwill ~~$22,652,~~$8,672, working capital and fixed assets ~~$10,432,~~$19,740. During the three months ended March 31, 2021, the Company recorded an adjustment to reduce the bargain purchase gain by the amount of $33, with a corresponding adjustment to working capital.

The purchase price allocation for both acquisitions is preliminary with respect to the valuation of contingent consideration, intangibles, property, plant and ~~indemnification assets $3,384.~~equipment, income taxes and certain other working capital items as the Company is still in the process of gathering additional information and the determination of the respective fair values.

On ~~January 10, 2019,~~October 2, 2020, the Company completed the acquisition of all ~~of the~~ outstanding ~~shares of~~ stock of 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 $3,051 including contingent consideration dependent on certain financial results for 2019, and liabilities assumed of $18,160, including liabilities of $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 markets The acquisition was accounted for as a business combination and the total asset value of $41,890 was allocated as follows: trade name $1,010, customer relationships $5,705, goodwill $22,652, working capital and fixed assets $9,139 and indemnification assets $3,384. The operating results of the acquired businesses are included in our consolidated 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. The acquisition was accounted for as an asset acquisition and the acquired assets consist of product rights $5,108, trade names $1,200, and inventory $1,293. Costs of $8 incurred in the asset acquisition process were capitalized.

On December 20, 2019, the Company completed a product acquisition for cash consideration in the amount of $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 rights $8,171 and trade names $3,242. Costs of $6 incurred in the asset acquisition 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~~Group Companies (Agrinos), except for ~~as business combinations~~Agrinos AS. Agrinos has operating entities 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~~U.S., Mexico, India, Brazil, China, Ukraine, and ~~net assets adjustments. The accounting for the two business combinations is in its early stage.~~Spain. Agrinos is a fully integrated biological input supplier with proprietary technology, internal manufacturing, and global distribution capabilities. At closing, the Company paid cash consideration of $3,125, which was net of cash acquired of $1,813, and liabilities assumed of $4,963, including liabilities of $595 related to income tax matters. The acquisition was accounted for as a business combination and resulted in a preliminary bargain purchase gain of $4,624 (including a reduction of $33 recorded during the three months ended March 31, 2021). The total asset value of $12,712 has been preliminarily allocated as follows: working capital $7,458 (including trade receivables of $2,358), property, plant and equipment of $5,004, and intangible assets of $250. Agrinos was acquired out of bankruptcy. This provided the Company with an opportunity to acquire Agrinos at an advantageous purchase price which was below the preliminary fair value of Agrinos’ ~~high yield technology product platform works~~net assets acquired resulting in ~~conjunction with other nutritional crop inputs to increase crop yield, improve soil health and reduce~~ the ~~environmental footprint~~above-mentioned bargain purchase gain.

On October 8, 2020, the Company completed the acquisition of ~~traditional agricultural practices.~~all outstanding stock of AgNova Technologies Pty Ltd (“AgNova”). AgNova is ~~focused~~an Australian entity that sources, develops, and distributes specialty crop protection and production solutions for agricultural and horticultural producers, and for selected non-crop users. At closing, the Company paid cash consideration of $16,217, which was net of cash acquired of $157, contingent consideration dependent on ~~serving customers primarily~~certain financial results of $2,007, the settlement of a net asset adjustment of $623, and liabilities assumed of $5,325, including liabilities of $2,529 related to income tax matters. The fair value of the contingent consideration of $2,007 was estimated using an income approach and the maximum potential undiscounted payout is $2,811. The acquisition was accounted for as a business combination and the total asset value of $24,172 has been preliminarily allocated as follows: product registrations and product rights $6,395, trade names and trademarks $1,195, customer relationships and customer lists $632, goodwill $8,672, which is non-deductible for tax purposes, working capital $7,206, including trade receivables of $1,508, and equipment $73. The allocation of the excess purchase price over the preliminary estimated fair value of the net assets acquired was provisional, pending completion of a valuation analysis. The provisional allocation to intangibles and goodwill was based on the proportional allocation of excess purchase price to intangible assets and goodwill for a comparable acquisition transaction completed by the Company in a prior year for which the purchase accounting had been finalized. The final determination during the measurement period of the allocation of excess purchase price to the intangible assets and goodwill could differ significantly from the provisional estimates. There were 0 adjustments to the preliminary allocations of the total asset value during the three months ended March 31, 2021. The goodwill represents the synergies expected to be achieved from the combined operations of the acquired company.

22. Foreign Currency — The Company incurred net foreign currency transaction losses in the ~~value-added fruit~~amount of $1,203 and ~~vegetables segment of~~$837 during the ~~Australian market.~~three months ended March 31, 2021 and 2020, respectively, included in operating expenses on the condensed consolidated financial statements.

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 U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 1A., Risk factors and Item 7A., Quantitative and Qualitative Disclosures about Market Risk, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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.~~needs (see note 10). 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~~CEO and the leader of the Pandemic Work Group ~~are~~is holding ~~regular~~bi-weekly “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~~(“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, former 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 (e.g., Italy), 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 ~~pandemic even during strict lockdowns.~~pandemic.

In keeping with our charge to operate as an essential business and by virtue of our efforts to contain and mitigate the risks posed by the pandemic, we have been able to manage our business with minimal ~~disruption~~impact during the reporting period. As mentioned earlier (see Note 1 to the Condensed Consolidated Financial Statements), the coronavirus has affected our overall performance to a degree. Lost opportunities for certain new product launches, inability to meet potential new customers face-to-face, reduced demand for 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, to an indeterminate degree, since the inception of the pandemic.

While the first quarter of 2020 ~~Performance ended September 30, 2020~~marked the start of a global pandemic that continued throughout the year, the first quarter of 2021 marked a favorable inflection point domestically with lower pandemic curves, ample supply of vaccines and easing of social restrictions. Within this context, the Company’s overall operating results for the first three months of 2021 improved considerably (both domestically and abroad), as compared with those of the same period of 2020. Net sales increased by 21 % ($116,155 as compared to $95,962) and net income increased by a factor of six (to $3,071 from $520).

On a consolidated basis, domestic sales rose 18% and international sales increased 27%, resulting in an overall net sales improvement of about 21%. The ~~Company’s quarterly~~domestic net sales include an increase in royalty and license fees from our Envance proprietary solutions business of approximately $3,000. Cost of sales increased by 23% or $13,443 due not only to increased sales but also to changes in mix related to both products and territories and factory performance ~~was, on~~(including the ~~whole, about even with that~~addition of two new factory operations acquired as part of the Agrinos group). Cost of sales were 61% of sales in 2021, as compared to 60% for the same period of 2020. These factors, taken together, yielded a 18% increase in gross profit (to $45,131 from $38,381 in the comparable quarter ~~in 2019. While sales~~of 2020), while average gross margin percent declined to 39% from 40% quarter-over-quarter. Operating expenses on an absolute basis increased by about ~~6% (to $117,439 in 2020 from $124,884 in 2019)~~13%, net income was about even ($2,927 in 2020 v. $3,153 in 2019). As described in more detail below, domestic sales declined by about 10% due in part to severe weather conditions, commodity prices and conservative procurement practices amidst the pandemic. By contrast, international sales were flat quarter-over-quarter. Within that performance, Mexico, Central America and Australia all grew salesas compared to the ~~prior year. Overall cost~~comparable quarter (to $41,444 from $36,545), largely due to the expanded scope of ~~sales were slightly higher~~the Company’s global footprint following the acquisition of Agrinos biological products and the AgNova business in Australia. However, operating expenses as a ~~percentage~~percent of net sales ~~including a factory performance that was approximately flat compared~~dropped 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%~~35% from 38% for the quarter indicating greater economies of ~~net sales.~~scale for the period. Operating ~~expenses decreased~~income for the period doubled (to $3,654 from $1,836), driven by ~~about 5% (to $38,782 in 2020 from $40,677 in 2019), but remained flat at about 33% of net sales. With a~~the strong sales increase. The Company recorded significantly lower ~~base interest rate and more aggressive repayment of debt, our~~ interest expense ~~decreased~~during the quarter as a result of working capital management in part driven by ~~about 50%. Also, due to a higher mix~~strong support from some of ~~business~~our biggest customers participating in ~~lower-tax jurisdictions~~early pay programs. These factors, coupled with ~~two favorable adjustments, we benefitted from~~ a ~~lower effective tax rate. This~~beneficial fair-value adjustment of an equity investment, yielded net income for the ~~quarter~~period of $3,071, a six-fold increase compared to $520 in ~~line with~~ the ~~same~~first 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.~~

													For the three months ended March 31,
	2020			2019			Change			% Change			2021			2020			Change			% Change
Net sales:
US crop	$	48,361		$	55,072		$	(6,711	)		-12	%	$	54,755		$	50,362		$	4,393			9	%
US non-crop		18,251			18,995			(744	)		-4	%		17,453			10,993			6,460			59	%
Total US		66,612			74,067			(7,455	)		-10	%		72,208			61,355			10,853			18	%
International		50,827			50,817			10			0	%		43,947			34,607			9,340			27	%
Total net sales	$	117,439		$	124,884		$	(7,445	)		-6	%
Total net sales:													$	116,155		$	95,962		$	20,193			21	%
Cost of sales:
US crop	$	28,215		$	31,362		$	(3,147	)		-10	%	$	33,484		$	26,117		$	7,367			28	%
US non-crop		9,493			9,135			358			4	%		8,070			6,274			1,796			29	%
Total US		37,708			40,497			(2,789	)		-7	%		41,554			32,391			9,163			28	%
International		36,466			36,924			(458	)		-1	%		29,470			25,190			4,280			17	%
Total cost of sales	$	74,174		$	77,421		$	(3,247	)	��	-4	%
Total cost of sales:													$	71,024		$	57,581		$	13,443			23	%
Gross profit:
US crop	$	20,146		$	23,710		$	(3,564	)		-15	%	$	21,271		$	24,245		$	(2,974	)		-12	%
US non-crop		8,758			9,860			(1,102	)		-11	%		9,383			4,719			4,664			99	%
Total US		28,904			33,570			(4,666	)		-14	%		30,654			28,964			1,690			6	%
International		14,361			13,893			468			3	%		14,477			9,417			5,060			54	%
Total gross profit	$	43,265		$	47,463		$	(4,198	)		-9	%
Total gross profit:													$	45,131		$	38,381		$	6,750			18	%
Gross margin:
US crop		42	%		43	%								39	%		48	%
US non-crop		48	%		52	%								54	%		43	%
Total US		43	%		45	%								42	%		47	%
International		28	%		27	%								33	%		27	%
Total gross margin		37	%		38	%
Gross margin:														39	%		40	%

Our domestic crop business recorded net sales that were about ~~12% lower~~9% higher than those of the ~~prior year period~~first quarter 2020 ($~~48,361 v. $55,072)~~54,755 as compared to $50,362). When viewed by type of product and crop, sales were mixed. During the ~~third~~first 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. Thiswe saw an improved procurement pattern ~~was particularly evident~~ in ~~Midwest~~the domestic market, as rising crop commodity prices caused growers and retailers to increase their purchases

of crop protection inputs. Among our corn products, sales of our Impact® herbicide brands increased sharply, while those of our granular soil insecticides, including Aztec®, SmartChoice®, Force®, Thimet ® and ~~soybean markets. In cotton,~~Counter®, were up 8% as compared to the prior year. Soybean products, such as Scepter® and our post-emergent products Hornet® and Python® recorded higher sales, as compared to the same quarter in 2020. By contrast, we experienced a drop in net sales of ~~our foliar insecticide Bidrin were lower this~~Bidrin® due to carryover of inventory from last season when weather was dry and insect pressure was low. Further, soil fumigants posted a somewhat softer performance than the prior year due primarily to ~~multiple factors. First, low cotton commodity prices caused an 11% decline~~water allocation restrictions 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 rebound in usage by potato growers as pandemic impacted restaurants and schools began to reopen.California.

Cost of sales within the domestic crop business ~~was 10%~~increased significantly both as a result of the increased volumes just discussed, and as a result of both a mix change and lower ~~than the third quarter of 2019 (down to $28,215 from $31,362) and gross margin decreased to 42% of sales during the third quarter~~factory output, as compared to ~~43% for~~ the ~~comparable period last year.~~first quarter of 2020. This generated a reduction of 12% in gross profit (from $24,245 in the first quarter of 2020 to $21,271 this year).

~~Sales of our~~Our domestic non-crop business ~~were down about 4% ($18,251~~increased net sales by 59% (to $17,453 from ~~$18,995)~~$10,993) quarter-over-quarter. ~~Our~~In this category, our Dibrom® mosquito adulticide and our pest strips business sales ~~which constitute a significant portion of overall non-crop sales, were~~both grew, influenced by timing shifts in customer procurement. Royalty and license fees for our Envance proprietary solutions increased by approximately ~~flat~~$3,000, as compared to the ~~third~~first quarter of 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. Netlast year. In addition, we recorded improved 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~~in big box stores recovered following the lifting of pandemic-related stay-at-home restrictions at ~~retail locations around the country. We continue to maintain a steady level of business with our other commercial pest control products.~~certain locations.

Cost of sales within the domestic non-crop business ~~increased~~rose by about 4%21% (from ~~$9,135~~$6,274 to ~~$9,493)~~$8,070) quarter-over-quarter. ~~Gross~~This increase was volume driven. As indicated in the table, our costs increased at a slower rate than sales primarily because of the strong performance on royalty and license fees of the Envance technology business. As a result of these dynamics, gross profit for domestic non-crop ~~decreased~~increased by ~~11%~~99% (from ~~$9,860~~$4,719 in ~~2019~~2020 to ~~$8,758~~$9,383 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.~~2021).

Net sales of our international businesses ~~were flat~~rose by about 27% during the period ($~~50,827~~34,607 in 2020 ~~v. $50,817~~to $43,947 in ~~2019)~~2021). Several factors contributed to this result. ~~Sales performance rose about 4% in~~The addition of sales from our recently acquired AgNova business, an established crop protection business, effectively increased our Australian sales by seven times quarter over quarter. Mexico ~~and Central America on strong product~~posted strongly improved sales with increased demand for granular insecticides, ~~bromacil~~ herbicides, and soil ~~fumigants.~~fumigants for use on high-value vegetable crops. In Brazil, net sales ~~declined primarily as a result of the devaluation of the Brazilian Real~~increased significantly despite delays in ~~comparison to last year, which impacted~~customer procurement arising from economic uncertainty and continued widespread COVID-19 limitations. Partially offsetting these gains, sales ~~when translated to US Dollars for inclusion~~performance was slightly lower 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 declinedCentral America due to consolidation by certain AgriCenter suppliers, logistical difficulties arising from the ~~regulatory phase-out of that product, offset somewhat by increased demand~~pandemic and hurricane activity 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.Honduras.

Cost of sales in our international business ~~decreased slightly (about 1%) from $36,924~~increased by 17% (from $25,190 in ~~2019~~2020 to ~~$36,466~~$29,470 in ~~2020.~~2021), primarily driven by the addition of AgNova and by the strong growth of our other businesses in North and Central America. Gross profit for ~~International rose~~the international businesses increased by ~~approximately 3% from $13,893 in 2019 to $14,361~~about 54% (from $9,417 in 2020 ~~and gross margin improved from 27%~~to $14,477 in ~~the third quarter of 2019 to 28% for the same period this year.~~2021).

On a consolidated basis, gross profit for the first quarter ~~decreased~~of 2021 increased by 9%18% (from ~~$47,463~~$38,381 in ~~2019~~2020 to ~~$43,265~~$45,131 in ~~2020)~~2021). ~~Gross~~The change in volume and mix, described above, had the impact of increasing absolute gross profit by 18% and reducing gross margin percentage ~~declined to 37%~~by approximately 1%. As mentioned above, overall gross margin percentage ended at 39% in the first quarter of 2021, as compared to ~~38%~~40% in the ~~same~~first quarter of the prior year.

Operating expenses ~~decreased~~increased by ~~$1,895~~$4,899 or 13% to ~~$38,782~~$41,444 for the ~~three-months~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to the same period in ~~2019.~~2020. The differences in operating expenses by department are as follows:

On April 1, 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. During the three months ended March 31, 2021, the Company recorded positive fair value adjustments in the amount of $1,066.

During the three months ended March 31, 2021, a Paycheck Protection Program loan assumed on the acquisition of Agrinos in the fourth quarter of 2020 was fully extinguished with the majority of the balance forgiven and recorded as other income in the Company’s condensed consolidated statements of operations in the amount of $672.

Interest costs net of capitalized interest were ~~$1,022 during~~$946 in the ~~three-months ended September 30, 2020,~~first three months of 2021, as compared to ~~$2,070~~$1,508 in the same period of ~~2019.~~2020. Interest costs are summarized in the following table:

	Three-months ended September 30, 2020								Three-months ended September 30, 2019								Q1 2021								Q1 2020
	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)	$	162,734	$	1,007			2.5	%	$	178,886	$	2,045			4.6	%	$	125,299	$	860			2.7	%	$	165,076	$	1,496			3.6	%
Amortization of deferred loan fees		—		80			—			—		58			—			—		80			—			—		59			—
Amortization of other deferred liabilities		—		2			—			—		41			—			—		18			—			—		3			—
Other interest expense		—		7			—			—		32			—
Other interest (income) expense																		—		48			—			—		30			—
Subtotal		162,734		1,096			2.7	%		178,886		2,176			4.9	%	$	125,299	$	1,006			3.2	%	$	165,076	$	1,588			3.8	%
Capitalized interest		—		(74	)		—			—		(106	)		—			—		(60	)		—			—		(80	)		—
Total	$	162,734	$	1,022			2.5	%	$	178,886	$	2,070			4.6	%	$	125,299	$	946			3.0	%	$	165,076	$	1,508			3.7	%

The Company’s average overall debt for the ~~three-months~~three months ended ~~September 30, 2020~~March 31, 2021 was ~~$162,734,~~$125,299, as compared to ~~$178,886~~$165,076 for the ~~three-months~~three months ended ~~September 30, 2019. During~~March 31, 2020. Our borrowings in the ~~quarter, we continued~~three months ended March 31, 2021 were lower mainly due to ~~focus on managing~~the increased participation from our biggest customers in our 2020 year-end early pay program, partially offset by the acquisition activity over the last 12 months and the associated investment in expanded working ~~capital for our expanded business and controlling our usage of revolving debt.~~capital. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was ~~2.5%~~2.7% for the ~~three-months~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~4.6%~~3.6% in ~~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 ~~was $492~~increased by $1,567 to $1,362 for the ~~three-months~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$1,474~~income tax benefit of $205 for the comparable period in ~~2019.~~2020. The underlying effective tax rate for the ~~quarter was 14.2%, as compared to 31.3% in the same period of the prior year. The effective tax rate for all interim periods is based on the projected income for the full year~~three months ended March 31, 2021 and ~~is subject to ongoing review and adjustment by management. The decrease in effective tax rate is primarily driven by the mix of our domestic and international 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~~30.6% and ~~diluted share, as compared to $3,153 or $0.11 per basic and diluted share in~~31.0%, respectively. During the ~~same period of 2019.~~

~~Overview of the Company’s Nine-Months Performance~~three months ended ~~September 30,~~March 31, 2020,

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 arisingbenefited 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.~~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,~~These benefits in the ~~Company benefited from~~prior year did not recur in the ~~release of an uncertain tax position. During the nine-months ended September 30, 2019, the Company’s effective tax rate was 28.2%.~~current year. 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 ~~nine-months~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019, the Company~~we recognized ~~losses~~a loss of ~~$80 and $149, respectively,~~$13 in each period, on ~~its~~our investment in the Hong Kong joint venture which is a 50% owned equity investment.

Our overall net income for the ~~nine-months ended September 30, 2020~~first three months of 2021 was ~~$7,334~~$3,071 or ~~$0.25~~$0.10 per basic and diluted share, as compared to ~~$10,165~~$520 or ~~$0.35~~$0.02 per basic and ~~$0.34 per~~ diluted share in the same ~~period~~quarter of ~~2019.~~2020.

The ~~Company’s~~Company used cash of $32,600 in operating activities ~~provided net cash of $19,197~~ during the ~~nine-months~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~utilizing $21,053~~$14,069 during the ~~nine-months~~three months ended ~~September 30, 2019.~~March 31, 2020. Included in the ~~$19,197~~$32,600 are net income of ~~$7,334,~~$3,221, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of ~~$14,584, the~~$6,621, amortization of ~~other assets~~deferred loan fees of ~~$3,185~~$81 and provision for bad debts in the amount of ~~$777.~~$682. Also included are stock-based compensation of ~~$3,776, change in investment fair value of $281, loss~~$1,792, losses from equity method investment of ~~$80,~~$13, decrease in deferred income taxes of ~~$1,757~~$269, change in equity investment fair value of $1,066, forgiveness of a PPP loan of $672, and ~~net foreign currency~~an adjustment to the bargain purchase gain of ~~$711.~~$33. These together provided net cash ~~inflows~~outflows of ~~$26,996,~~$10,436, as compared to ~~$29,860~~$7,131 for the same period of ~~2019.~~2020.

During the ~~nine-months~~first three months of ~~2020,~~2021, the Company increased working capital by ~~$4,950,~~$38,589, as compared to ~~an increase of $49,160~~$14,161 during the same period of the prior year. Included in this change: inventories increased by ~~$16,941,~~$9,615 (normal at this point in the season), as compared to ~~$19,713~~$16,446 for the ~~nine-months~~first quarter of ~~2019.~~2020. Deferred revenue decreased by ~~$1,079,~~$11,293, as compared to ~~$19,800~~$2,342 in the same period of ~~2019,~~2020, driven by customer decisions regarding demand, payment timing and our cash incentive programs. Our accounts payable balances ~~decreased~~increased by ~~$1,759,~~$2,293, as compared to ~~$5,548~~$1,617 in the same period of ~~2019.~~2020. Accounts receivables increased by ~~$5,089,~~$30,422, as compared to ~~$15,839~~$6,578 in the same period of ~~2019.~~2020. This is primarily driven by increased group sales and strong international growth. Prepaid expenses increased by ~~$532,~~$1,052, as compared to ~~$849~~$776 in the same period of ~~2019.~~2020. Income tax receivable ~~net~~ decreased by ~~$873,~~$638, as compared to ~~an increase~~increasing by ~~$4,477~~$597 in the prior year. Accrued programs increased by ~~$20,058,~~$7,770, as compared to ~~$20,163~~$6,016 in the prior ~~year. The change reflected some changes~~year, which is normal at this point in ~~product mix and domestic programs.~~the growing season. Finally, other payables and accrued expenses decreased by ~~$3,344,~~$1,187, as compared to ~~$4,967~~$2,094 in the prior ~~year as a result of the reduced incentive compensation accrual.~~year.

With regard to our program accrual, the increase (as noted above) primarily reflects our mix of sales and customers in the first ~~nine-months~~quarter of ~~2020,~~2021, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30^thof each year. During the first ~~nine-months~~quarter of ~~2020,~~2021, the Company made accruals for programs in the amount of ~~$42,254~~$18,815 and made payments in the amount of ~~$22,208.~~$11,060. During the first ~~nine-months~~quarter of the prior year, the Company made accruals in the amount of ~~$37,903~~$17,189 and made payments in the amount of ~~$17,740.~~$11,192.

Cash used for investing activities was ~~$14,120~~$2,904 for the ~~nine-months~~three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~$42,382~~$2,980 for the ~~nine-months~~three months ended ~~September 30, 2019.~~March 31, 2020. The Company spent ~~$8,988~~$2,904 on fixed assets acquisitions primarily focused on continuing to invest in manufacturing infrastructure and ~~$5,132~~$41 on ~~investments and intangible assets.~~patents for the Envance technology business.

During the ~~nine-months~~three months ended ~~September 30, 2020,~~March 31, 2021, financing activities ~~used $1,855,~~provided $32,853, from borrowings on the Company’s senior credit facility, as compared to ~~provide $63,825~~$16,641 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~~quarter of ~~2020, the Company~~2021, we paid dividends to stockholders amounting to ~~$1,168,~~$593, as compared to ~~$1,741~~$582 in the same period of ~~2019.~~2020.

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, 2020~~March 31, 2021 and December 31, ~~2019. These are~~2020. The debt is summarized in the following table:

At ~~September 30, 2020,~~March 31, 2021, the Company is compliant with all covenants to its Senior Credit Facility. Based on its performance against the most restrictive covenants in the Credit Agreement (see ~~supra~~Note 10), the Company had the capacity to increase its borrowings by up to ~~$44,500,~~$50,993, according to the terms thereof. This compares to an available borrowing capacity of ~~$30,435~~$86,736 as of ~~September 30, 2019 and $26,977 at~~ December 31, ~~2019.~~2020 and $39,552 as of March 31, 2020. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing ~~twelve month~~twelve-month period and ~~on a~~ proforma basis arising from acquisitions, (2) net borrowings, (3) the leverage covenant (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 and adopted 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, ~~2019,~~2020, 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, ~~2019, except for the adoption of~~ ~~Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326)”, along with related clarifications and improvements.~~2020.

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, ~~2019.~~2020.

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

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

As of ~~September 30, 2020,~~March 31, 2021, 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, 2020,~~March 31, 2021, 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.

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

Please refer to Note 14 in the accompanying Notes to the 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, ~~2019,~~2020, filed on March ~~10, 2020.~~31, 2021. In preparing this document, we have reviewed all the risk factors included in that document and find that there are no material changes to those risk factors, except for the 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,~~will 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~~three months ended ~~September 30, 2020,~~March 31, 2021, 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 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 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

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statements of Comprehensive Income (Loss)	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	87

	Notes to Condensed Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2319

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3124

Item 4.	Controls and Procedures	3124

PART II—OTHER INFORMATION		32

Item 1.	Legal Proceedings	3225

Item 1A.	~~Risk~~Risks Factors	32

~~Item 2.~~	~~Purchase of Equity Securities by the Issuer~~	32

		25

Item 6.	Exhibits	3326

SIGNATURES		3427

	Three months ended March 31, 2021			Three months ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities	$	1,465		$	1,396
ROU assets obtained in exchange for new liabilities	$	376		$	825

Weighted-average remaining lease term (in years)		4.53			3.15
Weighted-average discount rate		3.83	%		3.67	%

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

2020 (excluding nine-months ended September 30, 2020)	$	1,364
2021		4,003
			March 31, 2021
2021 (excluding three months ended March 31, 2021)			$	3,166
2022		2,464		2,970
2023		1,677		2,008
2024		1,065		1,256
2025				1,025
Thereafter		2,925		2,019
Total lease payments		13,498	$	12,444
Less: imputed interest		1,207		1,088
Total	$	12,291	$	11,356
Amounts recognized in the Condensed Consolidated Balance Sheets:

Amounts recognized in the condensed consolidated balance sheet:
Operating lease liabilities, current	$	4,312	$	3,664
Operating lease liabilities, long-term	$	7,979
Operating lease liabilities, long term			$	7,692

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

	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

	For the Nine-Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net income	$	7,334		$	10,165
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		14,584			13,892
Amortization of other long-term assets and deferred loan fees		3,185			3,174
Amortization of discounted liabilities		9			41
Provision for bad debts		777			728
Revision of deferred consideration		—			(3,539	)
Stock-based compensation		3,776			5,159
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		(5,089	)		(15,839	)
Increase in inventories		(16,941	)		(19,713	)
Increase in prepaid expenses and other assets		(532	)		(849	)
Decrease (increase) in income tax receivable		873			(4,477	)
Increase in net operating lease liability		14			117
Decrease in accounts payable		(1,759	)		(5,548	)
Decrease in deferred revenue		(1,079	)		(19,800	)
Increase in accrued program costs		20,058			20,163
Decrease in other payables and accrued expenses		(3,344	)		(4,967	)
Net cash provided by (used in) operating activities		19,197			(21,053	)
Cash flows from investing activities:
Capital expenditures		(8,988	)		(10,546	)
Acquisition of business, product lines, and intangible assets		(3,942	)		(31,836	)
Investment		(1,190	)		—
Net cash used in investing activities		(14,120	)		(42,382	)
Cash flows from financing activities:
Net borrowings under line of credit agreement		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)		(1,064	)		(30	)
Repurchase of common stock		—			(2,604	)
Payment of cash dividends		(1,168	)		(1,741	)
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		(222	)		(671	)
Cash and cash equivalents at beginning of period		6,581			6,168
Cash and cash equivalents at end of period	$	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

	For the Three-Months Ended September 30,				For the Nine-Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Net sales:
US crop	$	48,361	$	55,072	$	148,630	$	158,068	$	54,755	$	50,362
US non-crop		18,251		18,995		37,881		42,068		17,453		10,993
Total US		66,612		74,067		186,511		200,136		72,208		61,355
International		50,827		50,817		131,445		137,528		43,947		34,607
Total net sales	$	117,439	$	124,884	$	317,956	$	337,664
Total net sales:									$	116,155	$	95,962
Timing of revenue recognition:
Goods and services transferred at a point in time	$	116,333	$	124,884	$	315,954	$	337,285	$	115,971	$	95,776
Goods and services transferred over time		1,106		—		2,002		379		184		186
Total net sales	$	117,439	$	124,884	$	317,956	$	337,664
Total net sales:									$	116,155	$	95,962

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Finished products	$	163,356	$	151,917	$	150,026	$	149,415
Raw materials		12,931		11,396		22,208		14,369
	$	176,287	$	163,313
Inventories					$	172,234	$	163,784

Declaration Date	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
June 10, 2019	June 28, 2019	July 12, 2019	$	0.020	$	580
March 6, 2019	March 27, 2019	April 10, 2019	$	0.020	$	580
December 10, 2018	December 27, 2018	January 10, 2019	$	0.020	$	581

	For the Three-Months Ended September 30,				For the Nine-Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Numerator:
Net income attributable to AVD	$	2,927	$	3,153	$	7,334	$	10,165
Denominator: (in thousands)
Net income									$	3,071	$	520
Denominator:
Weighted average shares outstanding-basic		29,501		29,057		29,401		29,013		29,737		29,288
Dilutive effect of stock options and grants		472		593		525		578		786		660
		29,973		29,650		29,926		29,591
Weighted average shares outstanding-diluted										30,523		29,948

Long-term indebtedness ($000's)	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Revolving line of credit	$	149,900		$	149,300		$	143,800		$	107,900
Deferred loan fees		(538	)		(534	)		(377	)		(458	)
Net long-term debt	$	149,362		$	148,766
Total indebtedness							$	143,423		$	107,442

	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

	Number of Shares			Weighted Average Price Per Share
Balance outstanding, December 31, 2020		123,087		$	11.48
Options exercised		(5,838	)		11.49
Balance outstanding, March 31, 2021		117,249		$	11.48

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Land	$	2,706		$	2,706		$	2,756		$	2,756
Buildings and improvements		18,629			18,640			19,731			19,786
Machinery and equipment		119,920			116,757			126,425			124,199
Office furniture, fixtures and equipment		6,954			6,228			9,530			7,403
Automotive equipment		1,656			1,762			1,747			1,747
Construction in progress		9,316			5,263			8,767			10,392
Total gross value		159,181			151,356
Total								168,956			166,283
Less accumulated depreciation		(99,380	)		(94,835	)		(103,011	)		(100,901	)
Total net value	$	59,801		$	56,521
Property, plant and equipment, net							$	65,945		$	65,382

	Outstanding Weighted Average
Exercise Price Per Share	Number of Shares		Remaining Life (Months)		Exercise Price
$7.50		92,888		2	$	7.5
$11.32—$14.49		128,362		49		11.48
		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 March 31, 2021
Balance, December 31, 2020	$	2,468
Payments on existing obligations		(250	)
Accretion of discounted liabilities		16
Foreign exchange effect		(29	)
Balance, March 31, 2021	$	2,205

	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	%

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, 2020,~~March 31, 2021, formatted in ~~iXBRL (Inline Extensible~~XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

	american vanguard corporation

Dated: ~~November 9, 2020~~May 7, 2021	By:	/s/ eric g. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: ~~November 9, 2020~~May 7, 2021	By:	/s/ david t. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer