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~~$0.10 Par Value—~~30,828,461~~30,813,295 shares as of April ~~30, 2021.~~27, 2022.

		March 31, 2021			December 31, 2020				March 31, 2022			December 31, 2021
Current assets:
Cash and cash equivalents		$	13,765		$	15,923			$	17,841		$	16,285
Receivables:
Trade, net of allowance for doubtful accounts of $3,979 and $3,297, respectively			156,010			130,029
Trade, net of allowance for doubtful accounts of $4,446 and $3,938, respectively										183,505			149,326
Other			10,247			8,444				11,073			9,595
Total receivables, net			166,257			138,473				194,578			158,921
Inventories			172,234			163,784				168,049			154,306
Prepaid expenses			11,221			10,499				13,644			12,488
Income taxes receivable			2,409			3,046
Total current assets			365,886			331,725				394,112			342,000
Property, plant and equipment, net			65,945			65,382				67,440			66,111
Operating lease right-of-use assets			11,207			12,198				24,950			25,386
Intangible assets, net of applicable amortization			193,776			197,514				196,365			197,841
Goodwill			50,505			52,108				49,077			46,260
Other assets			18,492			18,602				15,500			16,292
Deferred income tax assets, net			4,213			2,764				17			270
Total assets		$	710,024		$	680,293			$	747,461		$	694,160

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	909		$	2,647			$	1,437		$	802
Accounts payable			60,946			59,253				77,704			67,140
Deferred revenue			32,316			43,611
Customer prepayments										18,542			63,064
Accrued program costs			53,196			45,441				87,962			63,245
Accrued expenses and other payables			15,865			16,184				23,412			20,745
Income taxes payable										6,050			3,006
Operating lease liabilities, current			3,664			4,188				5,035			5,059
Total current liabilities			166,896			171,324				220,142			223,061
Long-term debt, net			143,423			107,442				98,309			52,240
Operating lease liabilities, long term			7,692			8,177				20,301			20,780
Other liabilities, net of current installments			8,453			9,054				6,011			5,335
Deferred income tax liabilities, net			23,514			23,560				20,075			20,006
Total liabilities			349,978			319,557				364,838			321,422
Commitments and contingent liabilities
Stockholders' equity:
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
Preferred stock, $0.10 par value per share; authorized 400,000 shares; NaN issued										—			—
Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,091,876 shares at March 31, 2022 and 34,248,218 shares at December 31, 2021										3,410			3,426
Additional paid-in capital			95,985			96,642				101,291			101,450
Accumulated other comprehensive loss			(11,825	)		(9,322	)			(6,704	)		(13,784	)
Retained earnings			290,657			288,182				313,584			304,385
Less treasury stock at cost, 3,061,040 shares			(18,160	)		(18,160	)
Less treasury stock at cost, 3,693,444 shares at March 31, 2022 and 3,361,040 shares at December 31, 2021										(28,958	)		(22,739	)
Total stockholders’ equity			360,046			360,736				382,623			372,738
Total liabilities and stockholders' equity		$	710,024		$	680,293			$	747,461		$	694,160

	Common Stock						Additional			Accumulated Other						Treasury Stock								Common Stock						Additional			Accumulated Other						Treasury Stock
																								Shares			Amount			Paid-in Capital			Comprehensive Loss			Retained Earnings			Shares		Amount			Total
Balance, December 31, 2021																									34,248,218		$	3,426		$	101,450		$	(13,784	)	$	304,385			3,361,040	$	(22,739	)	$	372,738
Stocks issued under ESPP																									26,751			2			434			—			—			—		—			436
Cash dividends on common stock ($0.025 per share)																									—			—			—			—			(736	)		—		—			(736	)
Foreign currency translation adjustment, net																									—			—			—			7,080			—			—		—			7,080
Stock-based compensation																									—			—			1,563						—			—		—			1,563
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)																									(183,093	)		(18	)		(2,156	)		—			—			—		—			(2,174	)
Shares repurchased																									—			—			—			—			—			332,404		(6,219	)		(6,219	)
Net income																									—			—			—			—			9,935			—		—			9,935
Balance, March 31, 2022																									34,091,876		$	3,410		$	101,291		$	(6,704	)	$	313,584			3,693,444	$	(28,958	)	$	382,623
	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			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			25,120			2			338			—			—			—		—			340
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(596	)		—		—			(596	)		—			—			—			—			(596	)		—		—			(596	)
Foreign currency translation adjustment, net		—			—			—			(2,503	)		—			—		—			(2,503	)		—			—			—			(2,503	)		—			—		—			(2,503	)
Stock based compensation		—			—			1,792						—			—		—			1,792
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	)		(73,231	)		(7	)		(2,787	)		—			—			—		—			(2,794	)
Net income		—			—			—			—			3,071			—		—			3,071			—			—			—			—			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			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 three months ended March 31						For the three months ended March 31
	2021			2020			2022			2021
Cash flows from operating activities:
Net income	$	3,071		$	520		$	9,935		$	3,071
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed and intangible assets		5,403			4,762			5,230			5,403
Amortization of other long-term assets		1,200			967			1,173			1,200
Accretion of discounted liabilities		18			4
Amortization of deferred loan fees		81			59
Loss on disposal of property, plant and equipment								77			—
Accretion of discounted liabilities and deferred loan fees								75			99
Provision for bad debts		682			359			494			682
Loan principal and interest forgiveness		(672	)		—			—			(672	)
Fair value adjustment of contingent consideration								599			—
Stock-based compensation		1,792			1,357			1,563			1,792
Decrease in deferred income taxes		(269	)		(910	)		207			(269	)
Change in fair value of an equity investment		(1,066	)		—			(83	)		(1,066	)
Loss from equity method investment		13			13
Adjustment to bargain purchase gain on business acquisition		33			—
Other								—			46
Net foreign currency adjustment								(261	)		194
Changes in assets and liabilities associated with operations:
Increase in net receivables		(30,422	)		(6,578	)		(33,660	)		(30,482	)
Increase in inventories		(9,615	)		(16,446	)		(11,738	)		(9,615	)
Increase in prepaid expenses and other assets		(1,052	)		(776	)		(800	)		(1,052	)
(Increase) decrease in income tax receivable/payable, net		638			(597	)
Decrease in income tax receivable/payable, net								3,046			638
Decrease in net operating lease liability		(18	)		—			(67	)		(18	)
Increase in accounts payable		2,293			1,617			9,677			2,223
Decrease in deferred revenue		(11,293	)		(2,342	)
Decrease in customer prepayments								(44,528	)		(11,293	)
Increase in accrued program costs		7,770			6,016			24,601			7,770
Decrease in other payables and accrued expenses		(1,187	)		(2,094	)
Increase (decrease) in other payables and accrued expenses								2,145			(1,187	)
Net cash used in operating activities		(32,600	)		(14,069	)		(32,315	)		(32,536	)
Cash flows from investing activities:
Capital expenditures		(2,904	)		(2,980	)		(3,294	)		(2,904	)
Proceeds from disposal of property, plant and equipment								54			—
Intangible assets		(41	)		—			(1,010	)		(41	)
Net cash used in investing activities		(2,945	)		(2,980	)		(4,250	)		(2,945	)
Cash flows from financing activities:
Net borrowings under line of credit agreement		35,900			19,400			46,000			35,900
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	)
Net receipt from the issuance of common stock under ESPP								436			340
Net receipt from the exercise of stock options								—			67
Payment for tax withholding on stock-based compensation awards								(2,174	)		(2,861	)
Repurchase of common stock								(6,219	)		—
Payment of cash dividends		(593	)		(582	)		(594	)		(592	)
Net cash provided by financing activities		32,853			16,641			37,449			32,854
Net decrease in cash and cash equivalents		(2,692	)		(408	)
Net increase (decrease) in cash and cash equivalents								884			(2,627	)
Effect of exchange rate changes on cash and cash equivalents		534			(629	)		672			469
Cash and cash equivalents at beginning of period		15,923			6,581			16,285			15,923
Cash and cash equivalents at end of period	$	13,765		$	5,544		$	17,841		$	13,765

1. Summary of Significant Accounting Policies — The accompanying unaudited condensed consolidated financial statements of American Vanguard Corporation and Subsidiaries (“AVD” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of consolidating adjustments, eliminations and normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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, ~~2020.~~2021.

The Company is closely monitoring the impact of the novel coronavirus (COVID-19) pandemic on all aspects of its business, including how the pandemic will impact its customers, business partners, and employees. The Company is considered an essential business by most 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-months ended March 31, ~~2021~~2022 and ~~2020.~~2021. During the three-month period ended March 31, ~~2021,~~2022, the Company ~~has~~ experienced strong demand for its domestic crop and international products, ~~more stability in~~significant favorable movements on foreign exchange rates and, ~~in some jurisdictions in which it operates, return to~~generally more normal business activities including ~~more~~ face-to-face meetings with customers and suppliers etc.~~, albeit at a much-reduced level as compared to pre-pandemic times.~~ The Company established a pandemic working group at the start of the COVID-19 pandemic. That group meets bi-weekly and is presently monitoring the safety of its employees, especially in Brazil and India, as those countries are experiencing a surge in new virus variants. During the same period of the prior year our business operated comparatively normally, however, was impacted by adverse movements in some key currency exchange rates as the pandemic 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 since the start of the pandemic, cannot be predicted with confidence. The Company continues to monitor its business for adverse impacts of the pandemic, including some continuing volatility in ~~the~~ foreign exchange markets, ~~demand,~~ supply-chain disruptions in certain markets, and increased costs of employee safety, among others.

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

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

The operating lease expense for the three months ended March 31, 2022 and 2021 was $1,604 and ~~2020 was~~ $1,454, ~~and $1,395,~~ respectively. Lease expenses related to variable lease payments and short-term leases were immaterial. Other information related to operating leases follows:

	Three months ended March 31, 2021			Three months ended March 31, 2020			Three months ended March 31, 2022			Three months ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities	$	1,465		$	1,396		$	1,674		$	1,465
ROU assets obtained in exchange for new liabilities	$	376		$	825		$	926		$	376

Weighted-average remaining lease term (in years)		4.53			3.15			6.52			4.53
Weighted-average discount rate		3.83	%		3.67	%		4.01	%		3.83	%

Future minimum lease payments under non-cancellable operating leases as of March 31, ~~2021~~2022 were as follows:

	March 31, 2021
2021 (excluding three months ended March 31, 2021)	$	3,166
2022		2,970
2022 (excluding three months ended March 31, 2022)			$	4,455
2023		2,008		5,113
2024		1,256		4,340
2025		1,025		3,877
2026				2,972
Thereafter		2,019		8,291
Total lease payments	$	12,444	$	29,048
Less: imputed interest		1,088		3,712
Total	$	11,356	$	25,336

Amounts recognized in the condensed consolidated balance sheet:
Operating lease liabilities, current	$	3,664	$	5,035
Operating lease liabilities, long term	$	7,692	$	20,301

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

	Three Months Ended March 31,				Three Months Ended March 31,
	2021		2020		2022		2021
Net sales:
US crop	$	54,755	$	50,362
US non-crop		17,453		10,993
Total US		72,208		61,355
U.S. crop					$	88,193	$	54,755
U.S. non-crop						13,396		17,453
Total U.S.						101,589		72,208
International		43,947		34,607		47,846		43,947
Total net sales:	$	116,155	$	95,962	$	149,435	$	116,155
Timing of revenue recognition:
Goods and services transferred at a point in time	$	115,971	$	95,776	$	149,329	$	115,971
Goods and services transferred over time		184		186		106		184
Total net sales:	$	116,155	$	95,962	$	149,435	$	116,155

~~Performance Obligations~~ — ~~A performance obligation is a promise in a contract or sales order~~Contract assets amounted to ~~transfer a distinct good or service to the customer. A transaction price is allocated to each distinct performance obligation~~$3,450 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$3,900 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 Assets~~March 31, 2022 and ~~Deferred Revenue~~ —~~The contract assets~~December 31, 2021, respectively, and 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~~programs. These payments are included in ~~deferred revenues.~~ customer prepayments on the condensed consolidated balance sheets.

Revenue recognized for the three months ended March 31, ~~2021,~~2022, that was included in ~~the deferred revenue balance~~customer prepayments at the beginning of ~~2021~~2022, was ~~$11,295.~~ $44,528. The Company expects to recognize all its remaining ~~deferred~~customer prepayments as revenue in fiscal ~~2021.~~2022.

4. Property, Plant and Equipment — Property, plant and equipment at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 consists of the following:

	March 31, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Land	$	2,756		$	2,756		$	2,756		$	2,756
Buildings and improvements		19,731			19,786			19,814			19,844
Machinery and equipment		126,425			124,199			132,440			132,159
Office furniture, fixtures and equipment		9,530			7,403			10,189			10,094
Automotive equipment		1,747			1,747			1,713			1,832
Construction in progress		8,767			10,392			11,231			8,199
Total		168,956			166,283			178,143			174,884
Less accumulated depreciation		(103,011	)		(100,901	)		(110,703	)		(108,773	)
Property, plant and equipment, net	$	65,945		$	65,382		$	67,440		$	66,111

The Company recognized depreciation expense related to property and equipment of ~~$2,171~~$2,103 and ~~$1,517~~$2,171 for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~During the three months ended March 31, 2021 and 2020, the Company eliminated from assets and accumulated depreciation $62 and $113, of fully depreciated assets, respectively.~~

Substantially all of the Company’s assets are pledged as collateral with 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 method. The components of inventories consist of the following:

	March 31, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Finished products	$	150,026	$	149,415	$	143,396	$	138,159
Raw materials		22,208		14,369		24,653		16,147
Inventories	$	172,234	$	163,784	$	168,049	$	154,306

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 three Months Ended March 31												For the three Months Ended March 31
	2021			2020			Change			% Change			2022			2021			Change			% Change
Net sales:
U.S. crop	$	54,755		$	50,362		$	4,393			9	%	$	88,193		$	54,755		$	33,438			61	%
U.S. non-crop		17,453			10,993			6,460			59	%		13,396			17,453			(4,057	)		-23	%
Total U.S.		72,208			61,355			10,853			18	%		101,589			72,208			29,381			41	%
International		43,947			34,607			9,340			27	%		47,846			43,947			3,899			9	%
Total net sales:	$	116,155		$	95,962		$	20,193			21	%	$	149,435		$	116,155		$	33,280			29	%
Gross profit:
U.S. crop	$	21,271		$	24,245		$	(2,974	)		-12	%	$	40,345		$	21,271		$	19,074			90	%
U.S. non-crop		9,383			4,719			4,664			99	%		5,965			9,383			(3,418	)		-36	%
Total U.S.		30,654			28,964			1,690			6	%		46,310			30,654			15,656			51	%
International		14,477			9,417			5,060			54	%		14,883			14,477			406			3	%
Total gross profit:	$	45,131		$	38,381		$	6,750			18	%	$	61,193		$	45,131		$	16,062			36	%
Gross margin:
U.S. crop		39	%		48	%								46	%		39	%
U.S. non-crop		54	%		43	%								45	%		54	%
Total U.S.		42	%		47	%								46	%		42	%
International		33	%		27	%								31	%		33	%
Gross margin:		39	%		40	%								41	%		39	%

7. Accrued Program Costs — The Company offers various discounts to customers based on the volume purchased within a defined time period, other pricing adjustments, ~~some grower~~ volume incentives or other key performance ~~indicator~~ driven payments, which are usually made at the end of a growing season, to distributors, retailers or growers. The Company describes these payments as “Programs.” Programs are a critical part of doing business in both the U.S. crop and non-crop chemicals marketplaces. These discount Programs represent variable consideration. Revenues from sales are recorded at the net sales price, which is the transaction price net of the impact of Programs and includes estimates of variable consideration. Variable consideration includes amounts that are expected to be paid to its customers estimated using the expected value method. Each quarter management compares individual sale transactions with Programs to determine what, if any, estimated program liabilities have been incurred. Once this initial calculation is made for the specific quarter, sales and marketing management, along with executive and financial management, review the accumulated Program balance and, for ~~volume driven~~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 months ended March 31, ~~2021~~2022 and ~~2020,~~2021, 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:

Declaration Date	Record Date	Distribution Date	Dividend Per Share		Total Paid		Record Date	Distribution Date	Dividend Per Share		Total Paid
March 14, 2022							March 25, 2022	April 15, 2022	$	0.025	$	736
December 13, 2021							December 27, 2021	January 10, 2022	$	0.020	$	594
March 10, 2021	March 15, 2021	April 15, 2021	$	0.020	$	596	March 15, 2021	April 15, 2021	$	0.020	$	596
December 7, 2020	December 23, 2020	January 6, 2021	$	0.020	$	593	December 23, 2020	January 6, 2021	$	0.020	$	592
March 9, 2020	March 26, 2020	April 16, 2020	$	0.020	$	586
December 9, 2019	December 26, 2019	January 9, 2020	$	0.020	$	582

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

	Three Months Ended March 31,				Three Months Ended March 31,
	2021		2020		2022		2021
Numerator:
Net income	$	3,071	$	520	$	9,935	$	3,071
Denominator:
Weighted average shares outstanding-basic		29,737		29,288		29,677		29,737
Dilutive effect of stock options and grants		786		660		672		786
Weighted average shares outstanding-diluted		30,523		29,948		30,349		30,523

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, 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 in the condensed consolidated balance sheets at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. The Company has 0 short-term debt as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. The debt is summarized in the following table:

Long-term indebtedness ($000's)	March 31, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Revolving line of credit	$	143,800		$	107,900		$	99,300		$	53,300
Deferred loan fees		(377	)		(458	)		(991	)		(1,060	)
Total indebtedness	$	143,423		$	107,442		$	98,309		$	52,240

The Company’s main bank is Bank of 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 3040 years and is the syndication manager for the Company’s loans.

The Company and certain of its affiliates are parties to a revolving line of credit agreement entitled the “Third Amended and Restated Loan and Security Agreement” dated as of August 5, 2021 (the “Credit Agreement”), which is a senior secured lending facility among AMVAC, the Company’s principal operating subsidiary, as ~~borrower, and affiliates~~Borrower Agent (including the Company ~~AMVAC CV~~ and AMVAC BV), as ~~guarantors and/or borrowers,~~Borrowers, on the one hand, and a group of commercial lenders led by Bank of the West as administrative agent, ~~swing line lender~~documentation agent, syndication agent, collateral agent, sole lead arranger and ~~Letter of Credit issuer~~book runner, on the other ~~hand, consisting~~hand. The Credit Agreement consists of a line of credit of up to ~~$250,000,~~$275,000, an accordion feature of up to ~~$100,000~~$150,000, a letter of credit and swingline sub-facility (each having limits of $25,000) and has a maturity date of August 5, 2026. The Credit Agreement amended and restated the previous credit facility, which had a maturity date of June 30, 2022. ~~The~~With respect to key financial covenants, the Credit Agreement contains ~~two key financial covenants;~~two: namely, borrowers are required to maintain a ~~Consolidated Funded Debt~~Total Leverage (“TL”) Ratio of no more than 3.5-to-1, during the first three years, stepping down to 3.25-to-1 as of September 30, 2024, and a ~~Consolidated~~ Fixed Charge ~~Covenant~~Coverage Ratio of at least 1.25-to-1. In addition, to the extent that it completes acquisitions totaling $15 million or more in any 90-day period, AMVAC may step-up the TL Ratio by 0.5-to-1, not to exceed 4.00-to-1, for the next three full consecutive quarters. Acquisitions below $50 million do not require Agent consent. Distributions to the Company’s shareholders are limited to net income for the four fiscal quarter period ending on the fiscal quarter immediately prior to the fiscal quarter in which the current distribution was declared.

The Company’s borrowing capacity varies with its financial performance, measured in terms of Consolidated EBITDA as defined in the Credit Agreement, for the trailing twelve-month period. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with proper notice, on either (i) LIBOR plus the “Applicable ~~Rate”~~Margin” which is based upon the ~~Consolidated Funded Debt~~Total Leverage (“TL”) Ratio (“~~Eurocurrency Rate~~LIBOR Revolver Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.5%, and (z) the Daily One-Month LIBOR Rate plus 1.00%, plus, in the case of (x), (y) or (z) the Applicable ~~Rate~~Margin (“~~Alternate~~Adjusted Base Rate Revolver Loan”). To the extent that LIBOR is discontinued during its term, the Credit Agreement includes a rate that approximates LIBOR. Interest payments for ~~Eurocurrency Rate~~LIBOR Revolver Loans are payable on the last day of each interest period (either ~~one, two, three~~one-, three- or ~~six~~six- months, as selected by the borrower) and the maturity date, while interest payments for ~~Alternate~~Adjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date. The interest rate on March 31, ~~2021~~2022 was ~~2.75%~~1.83%.

As of April 22, 2020, AMVAC, as borrower, and certain affiliates amended the Credit Agreement. The Credit Agreement, as amended, has the same term and loan commitments, however the maximum permitted 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 March 31, 2021,~~2022, the Company iswas compliant with all covenants toof its ~~Senior~~ Credit ~~Facility. Based~~Agreement. As of March 31, 2022, based on its performance against the most restrictive covenants in the Credit Agreement, the Company had the capacity to increase its borrowings by up to ~~$50,993,~~$166,165, according to the terms thereof. This compares to an available borrowing capacity of ~~$86,736~~$178,705 as of December 31, ~~2020~~2021 and ~~$39,552~~$50,993 as of March 31, ~~2020.~~2021. 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, and (3) the leverage covenant (the Consolidated Funded Debt Ratio).

As of the date it was acquired by the Company in October 2020, Agrinos had an existing Paycheck Protection Program (PPP) loan in the amount of ~~$705 as of the date it was acquired by the Company.~~$705. This PPP loan was granted on April 27, ~~2020,~~2020. On January 7, 2021, the Small Business Administration forgave $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.~~loan. As a result, the PPP loan was extinguished on January 7, 2021 and the total amount forgiven of $672 was recorded as other income in the Company’s condensed consolidated ~~statement~~statements 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. Reclassifications — Certain items have been reclassified in the prior period condensed consolidated financial statements to conform with the March 31, ~~2021~~2022 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 of operations and are recorded directly into a separate section of stockholders’ equity on the condensed consolidated balance sheets. For the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, total comprehensive income ~~(loss)~~ consisted of net income attributable to American Vanguard and foreign currency translation adjustments.

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

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 months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

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

	Three Months Ended March 31, 2021					Three Months Ended March 31, 2020					Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
	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		820,624		$	16.64		719,845		$	17.67		817,290		$	17.04		820,624		$	16.64
Granted		—			—		4,185			18.63
Vested		(197,615	)		19.91		(213,781	)		16.18		(230,080	)		17.31		(197,615	)		19.91
Forfeited		(11,580	)		16.95		(14,715	)		18.08		(24,109	)		17.10		(11,580	)		16.95
Nonvested shares at March 31^st		611,429		$	15.57		495,534		$	18.31		563,101		$	16.93		611,429		$	15.57

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

	Three Months Ended March 31, 2021					Three Months Ended March 31, 2020					Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
	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		391,771		$	16.26		345,432		$	16.92		379,061		$	16.43		391,771		$	16.26
Granted		—			—		—			—
Additional granted based on performance achievement		71,180			20.53		76,445			16.56
Additional granted (forfeited) based on performance achievement												(41,088	)		16.56		71,180			20.53
Vested		(175,087	)		19.78		(184,785	)		15.87		(78,704	)		17.18		(175,087	)		19.78
Forfeited		(505	)		19.26		(3,759	)		17.23		(7,074	)		16.77		(505	)		19.26
Nonvested shares at March 31^st		287,359		$	15.16		233,333		$	17.63		252,195		$	16.17		287,359		$	15.16

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:~~

There was no activity for the three months ended March 31, 2022. There were 108,036 of incentive stock options outstanding as of March 31, 2022, with an exercise price per share of $11.49 and a remaining life of 33 months.

	Outstanding Weighted Average						Outstanding Weighted Average
Exercise Price Per Share	Shares		Remaining Life (Months)		Exercise Price		Shares		Remaining Life (Months)		Exercise Price
Incentive Stock Option Plan:
$11.32		7,200		3	$	7.5
$14.49		110,049		45	$	11.49
		117,249			$	11.48		7,200		3	$	11.32
								110,049		45	$	11.49
								117,249			$	11.48

~~Activity~~There was no activity for the three months ended March 31, 2022 and 2021. There were 114,658 of ~~the performance incentive stock option plan:~~

~~All the~~ performance incentive stock options outstanding as of March 31, 2022 and 2021, ~~have~~with an exercise price per share of $11.49 and a remaining life of 33 and 45 ~~months.~~

14. Legal Proceedings — During the reporting period, there have been no material developments in legal proceedings that were reported in the Company’s Form 10-K for the year ended December 31, ~~2020,~~2021, except as described below.

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

Since April 2018, the Department of Justice (“DOJ”) has conducted several interviews of AMVAC employees and issued supplemental document requests in connection with the investigation. In November 2020, DOJ issued a second grand jury subpoena seeking records and related communications with regard to a submission made by the Company to the Environmental Protection Agency (“EPA”) in connection with a request to amend a pesticide’s registration. Soon thereafter, DOJ also identified the Company and one of its non-executive employees as targets of the government’s investigation. In January 2021, DOJ and EPA informed the Company that it is 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 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~~As part of discussions regarding possible resolution, in October 2021, the Company presented its evaluation of the legal and factual issues raised by the government (which do not include any allegations of harm to human health or the environment) to both DOJ and USEPA. Further, three corporate witnesses were interviewed by the grand jury in Mobile, Alabama in February 2022. Following that interview, the individual target entered into a plea agreement which is expected to be entered with the court having jurisdiction in this matter in August 2022. At this stage, 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 for 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. Four other related matters were subsequently consolidated into this case (alleging loss of potatoes, damage to equipment, damage to Quonset huts and loss of business income). The parties have exchanged written discovery, and depositions of persons most knowledgeable took place during the first quarter of 2019. Citing the length of the cases’ pendency and the expense, in December 2019, plaintiff Reed voluntarily dismissed two actions (160600211 and 160600237) for no consideration. Over the course of 2020, discovery was completed, and the parties held a mediation on March 11, 2021; however, no settlement was reached. The parties have set a second mediation to occur in August 2022. The Company continues to believe that it is not primarily at risk but that a loss is probable and reasonably estimable and, to that end, has recorded a loss contingency in an amount that is not material to its financial performance or operations cash flows.

In ~~December 2019,~~November 2021, the ~~FASB~~Financial Accounting Standards Board (the “FASB”) issued ASU ~~no. 2019-12, “~~No. 2021-10, “Disclosures by Business Entities about Government Assistance.” The ASU codifies new requirements to disclose information about the nature of certain government assistance received, the accounting policy used to account for the transactions, the location in the financial statements where such transactions were recorded and significant terms and conditions associated with such transactions. The guidance is effective for annual periods beginning after December 15, 2021. Effective January 1, 2022, the Company adopted ASU No. 2021-10 on a prospective basis. ~~Income Taxes~~The adoption of this standard was not material to the Company’s condensed consolidated financial statements.

Combinations (Topic ~~740)~~805): ~~Simplifying the~~ Accounting for ~~Income Taxes,~~”Contract Assets and Contract Liabilities from Contracts with Customers" (“ASU ~~No. 2019-12”~~2021-08”). The ~~amendment removes certain exceptions~~standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers,” as if it had originated the ~~general income tax accounting methodology including an exception~~contracts. The standard is effective for ~~the recognition of a deferred tax liability when a foreign subsidiary becomes an equity method investment~~fiscal years, 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 forwithin those fiscal years, beginning after December 15, ~~2020, including interim periods within those years with early~~2022. Early adoption is permitted. The Company ~~adopted~~does not expect the adoption of ASU ~~No. 2019-12~~2021-08 to have a significant impact on its consolidated financial statements and plans to adopt the standard effective January 1, ~~2021~~2023.

~~.The adoption of this standard did~~The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not ~~result in any material adjustments~~applicable or not expected to ~~the Company’s~~have a significant impact to its condensed consolidated financial statements.

16. Fair Value of Financial Instruments — The accounting standard for fair value measurements provides a framework for measuring fair value and requires 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 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:

				Three months ended March 31, 2022
Balance, December 31, 2021				$	786
Fair value adjustment					599
Accretion of discounted liabilities					6
Foreign exchange effect					46
Balance, March 31, 2022				$	1,437
	Three months ended March 31, 2021			Three months ended March 31, 2021
Balance, December 31, 2020	$	2,468		$	2,468
Payments on existing obligations		(250	)
Payment on contingent consideration					(250	)
Accretion of discounted liabilities		16			16
Foreign exchange effect		(29	)		(29	)
Balance, March 31, 2021	$	2,205		$	2,205

The current portion of the contingent consideration in the amount of $1,437 and $750 is included in current installments of other liabilities and the long-term portion in the amount of $0 and $1,455 is included in other liabilities on the condensed consolidated balance ~~sheets.~~sheets as of March 31, 2022 and 2021, respectively.

17. Accumulated Other Comprehensive Loss — The following table lists the beginning balance, quarterly activity and ending balance of accumulated other comprehensive loss, which consists of foreign currency translation adjustments:

18.~~Equity Method Investment~~ —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 BV and Huifeng (Hong Kong) Ltd. made individual capital contributions of $950 to the Hong Kong JV. The Company utilizes the equity method of accounting with respect to this investment. On July 7, 2017, the Hong Kong 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 its wholly owned subsidiary Huifeng (Hong Kong) Ltd).

For the three months ended March 31, 2021 and 2020, the Company recognized losses of $13 in each period, as a result of the Company’s ownership position in the Hong Kong Joint Venture. The Company’s investment in this joint venture amounted to $375 and $500, respectively at March 31, 2021 and 2020 and are included in other assets.

~~19.~~ Equity Investments — In February 2016, AMVAC Netherlands BV made an investment in Biological Products for Agriculture (“Bi-PA”). Bi-PA develops biological plant protection products that can be used for the control of pests and disease of agricultural crops. As of March 31, 2022 and 2021, the Company’s ownership position in Bi-PA was 15%. Since this investment does not have readily determinable fair value, the Company has elected to measure the investment at cost less impairment, if any, and also records an increase or decrease for changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Bi-PA. The Company periodically reviews the investment for possible impairment. There was 0 impairment or observable price changes on the investment during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. The investment is recorded within other assets on the condensed consolidated balance sheets and amounted to $2,884 as of March 31, 2022 and December 31, 2021.

On April 1, 2020, AMVAC purchased 6.25 million shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. (TSX Venture Exchange: “CSX”) for $1,190. The shares are publicly traded, have a readily determinable fair value, and are considered a Level 1 investment. The fair value of the stock amounted to ~~$2,973~~$1,599 and $1,516 as of March 31, 2022 and December 31, 2021, respectively, and the Company recorded a gain ~~in the amount~~ of $83 and $1,066 for the ~~three-month period~~three months ended March 31, ~~2021.~~2022 and 2021, respectively.The investment is recorded within other assets on the condensed consolidated balance sheets.

~~20.~~19. Income Taxes — Income tax expense was $4,499 for the three months ended March 31, 2022, as compared to $1,362 for the three months ended March 31, ~~2021, as compared to income tax benefit of $205 for the three months ended March 31, 2020.~~2021. The effective tax rate for the three months ended March 31, ~~2021~~2022 was 31.2% as compared to 30.6%, of the same period last year, and is based on the rates in the ~~territories~~jurisdictions in which the Company operates. The rate has ~~decreased~~increased compared to prior ~~years~~year reflecting mix of income in different ~~jurisdictions.~~jurisdictions and partially offset by an increased benefit from the tax impact of the vesting of certain stock grants. For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act (“TCJA”) of 2017 amends Internal Revenue Code Section 174 costs wherein research and development expenditures will no longer be deducted in the tax year that such costs are incurred but must now be capitalized and amortized over either a five- or fifteen-year period, depending on the location of the activities performed. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

~~For the three months ended~~20. Stock Re-purchase Program— On March ~~31, 2020 the effective rate was 31.0%. In addition, during that period,~~8, 2022, pursuant to a Board of Directors resolution, the Company ~~benefited from two discrete income tax benefits. First, the Company assessed~~ announced its ~~income tax positions~~intention to ~~account for the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020. A provision~~repurchase an aggregate number of ~~the act modified the amount~~up to 1,000,000 shares 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 certainits common stock, ~~grants. These benefits did not recur~~par value $0.10 per share, in the ~~same period of~~open market over the ~~current year.~~succeeding one year at a price not to exceed $20 per share, subject to limitations and restrictions under applicable securities laws.

The ~~Florida Department~~table below summarizes the number of ~~Revenue has completed its audit~~shares 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 at its preliminary stage.

~~21.~~ ~~Product and Business Acquisitions~~—~~The Company did not complete any acquisitions~~common stock that were repurchased during the three months ended March 31, ~~2021 and 2020.~~

During the year ended December 31, 2020, the Company completed 2 acquisitions in exchange for a total cash consideration at closing of $19,342, which was net of cash acquired of $1,970, and contingent consideration of $2,007, and the settlement of a net asset adjustment of $623. In addition, the Company assumed liabilities of $10,288 and recognized a bargain purchase gain in the amount of $4,624. The total asset value of $36,884 was preliminarily allocated as follows: product rights $6,645, trade names $1,195, customer relationships $632, goodwill $8,672, working capital and fixed assets $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 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 October 2, 2020, the Company completed the acquisition of all outstanding stock of the Agrinos Group Companies (Agrinos), except for Agrinos AS. Agrinos has operating entities in the U.S., Mexico, India, Brazil, China, Ukraine, and 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’ net assets acquired resulting in the above-mentioned bargain purchase gain.

On October 8, 2020, the Company completed the acquisition of all outstanding stock of AgNova Technologies Pty Ltd (“AgNova”). AgNova is 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 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.2022. There were 0 ~~adjustments to the preliminary allocations of the total asset value~~such purchases 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.~~

21. ~~Foreign Currency~~ Supplemental Cash Flow Information— The Company incurred net foreign currency transaction losses in the amount of $1,203 and $837 during the 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 Annual Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item ~~1A., Risk factors and Item 7A.~~3., Quantitative and Qualitative Disclosures about Market Risk, and Part II, Item 1A., Risk Factors, in ~~the Company’s Annual~~this Quarterly Report on Form ~~10-K for the year ended December 31, 2020.~~10-Q.

~~The Company’s Operations in the Context~~Overview of the ~~COVID-19 Pandemic~~Company’s Performance

~~In March 2020,~~For the ~~World Health Organization categorized~~agriculture industry, the first quarter of 2022 marked the entry into the second year of an upcycle, following a multi-year downcycle. Domestic commodity prices were buoyed up by this upcycle, and the farm economy showed marked improvement, in spite of supply chain disruptions that carried over from 2021. Further, the invasion of Ukraine, which is a major exporter of corn, wheat and sunflower oil, coupled with likely restrictions on Russia’s export of fertilizers (primarily ammonia and urea) have provided an additional updraft to agricultural commodity pricing globally and the farm economy domestically. At the same time, the novel coronavirus (COVID-19) aspandemic has receded significantly in many countries. As more fully described below, the Company’s domestic crop business net sales surged 61% with strong commodity prices, 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 provisionspositive outlook for the ~~workforce to work remotely where possible,~~farm economy 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 (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 CEO and the leader of the Pandemic Work Group is holding 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 usedrobust procurement activity by the food and agriculture industry, including pesticides, herbicides etc.”), the “Chemical” sector (“supporting the operation . . . of facilities (particularly those with high risk chemicals . . . whose work cannot be done remotely and requires the presence of highly trained personnel to ensure safe operations”) and the “Public Works and Infrastructure Support Services” sector (in support of 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.

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 impact during the reporting period.

While the first quarter of 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.distribution channel. Within this context, the Company’s overall operating results for the first three months of ~~2021~~2022 improved considerably, ~~(both domestically and abroad),~~ as compared with those of the same period of ~~2020.~~2021. Net sales increased by ~~21 %~~29% ($~~116,155~~149,435 as compared to ~~$95,962)~~$116,155) and net income increased ~~by a factor of six~~more than threefold (to ~~$3,071~~$9,935 from ~~$520)~~$3,071).

On a consolidated basis, domestic sales rose ~~18%~~41% and international sales increased ~~27%~~9%, resulting in an overall net sales improvement of ~~about 21%~~29%. ~~The domestic net sales include an increase in royalty and license fees from our Envance proprietary solutions business of approximately $3,000. Cost~~In comparison, cost of sales increased by ~~23%~~24% or ~~$13,443 due not only~~$17,218. This lower comparative increase was a result of a favorable mix of higher-margin products in the first quarter of 2022, as compared to ~~increased sales but also to changes in mix related to both products and territories and factory performance (including~~ the ~~addition of two new factory operations acquired as part~~same period of the ~~Agrinos group).~~prior year. Cost of sales were ~~61%~~59% of sales in ~~2021,~~2022, as compared to ~~60%~~61% for the same period of ~~2020.~~2021. These factors, taken together, yielded a ~~18%~~36% increase in gross profit (to ~~$45,131~~$61,193 from ~~$38,381~~$45,131 in the comparable quarter of ~~2020)~~2021), while ~~average~~overall gross margin percent improved to 41% from 39% quarter-over-quarter.

Operating expenses declined to ~~39% from 40% quarter-over-quarter. Operating expenses on an absolute basis increased by about 13%~~31% of net sales (or $46,444), as compared to 36% (or $41,444) in the ~~comparable quarter (to $41,444 from $36,545), largely due to the expanded scope~~same period of the Company’s global footprint following the acquisition of Agrinos biological products and the AgNova business in Australia. However, operating expenses as a percent of net sales dropped to 35% from 38% for the quarterprior year indicating greater economies of scale for the period.

Operating income for the period ~~doubled~~increased four-fold (to ~~$3,654~~$14,749 from ~~$1,836)~~$3,654), driven by the strong sales ~~increase.~~increase, improved gross margin percentage and proportionately lower operating expenses. The Company recorded significantly lower interest expense during the quarter on significantly lower average levels of debt, as a result of working capital management in part driven by strong support from some of our biggest customers participating in early pay programs. These factors ~~coupled with a beneficial fair-value adjustment of an equity investment,~~ yielded net income for the period of ~~$3,071,~~$9,935, a ~~six-fold~~three-fold increase compared to ~~$520~~$3,071 in the first quarter of ~~2020.~~2021. Details on our financial performance are set forth below.

	For the three months ended March 31,												For the three months ended March 31,
	2021			2020			Change			% Change			2022			2021			Change			% Change
Net sales:
US crop	$	54,755		$	50,362		$	4,393			9	%
US non-crop		17,453			10,993			6,460			59	%
Total US		72,208			61,355			10,853			18	%
U.S. crop													$	88,193		$	54,755		$	33,438			61	%
U.S. non-crop														13,396			17,453			(4,057	)		-23	%
Total U.S.														101,589			72,208			29,381			41	%
International		43,947			34,607			9,340			27	%		47,846			43,947			3,899			9	%
Total net sales:	$	116,155		$	95,962		$	20,193			21	%	$	149,435		$	116,155		$	33,280			29	%
Cost of sales:
US crop	$	33,484		$	26,117		$	7,367			28	%
US non-crop		8,070			6,274			1,796			29	%
Total US		41,554			32,391			9,163			28	%
U.S. crop													$	47,848		$	33,484		$	14,364			43	%
U.S. non-crop														7,431			8,070			(639	)		-8	%
Total U.S.														55,279			41,554			13,725			33	%
International		29,470			25,190			4,280			17	%		32,963			29,470			3,493			12	%
Total cost of sales:	$	71,024		$	57,581		$	13,443			23	%	$	88,242		$	71,024		$	17,218			24	%
Gross profit:
US crop	$	21,271		$	24,245		$	(2,974	)		-12	%
US non-crop		9,383			4,719			4,664			99	%
Total US		30,654			28,964			1,690			6	%
U.S. crop													$	40,345		$	21,271		$	19,074			90	%
U.S. non-crop														5,965			9,383			(3,418	)		-36	%
Total U.S.														46,310			30,654			15,656			51	%
International		14,477			9,417			5,060			54	%		14,883			14,477			406			3	%
Total gross profit:	$	45,131		$	38,381		$	6,750			18	%	$	61,193		$	45,131		$	16,062			36	%
Gross margin:
US crop		39	%		48	%
US non-crop		54	%		43	%
Total US		42	%		47	%
U.S. crop														46	%		39	%
U.S. non-crop														45	%		54	%
Total U.S.														46	%		42	%
International		33	%		27	%								31	%		33	%
Gross margin:		39	%		40	%								41	%		39	%

Our domestic crop business recorded net sales that were ~~about 9%~~61% higher than those of the first quarter ~~2020~~2021 ($~~54,755~~88,193 as compared to ~~$50,362)~~$54,755). ~~When viewed by type of product and crop, sales were mixed.~~ During the first quarter, we saw ~~an improved procurement pattern~~strong demand in the domestic market, as ~~rising~~elevated crop commodity prices caused growers and retailers to increase their purchases

of crop protection inputs. In addition, in response to significant increases in freight costs, we have collected freight surcharges from our customers. 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 Counter®, were up 8%significantly as ~~compared~~growers sought to control rootworm and nematode pressure. Sales of our Impact® herbicide brands increased sharply, as the ~~prior year. Soybean~~introduction of two new products, ~~such as Scepter®~~ImpactCore and ~~our post-emergent products Hornet® and Python®~~Sinate, broadened the application window for managing hard-to-control weeds. Our expanded portfolio of soybean herbicides recorded higher sales, as compared to the same quarter in ~~2020.~~2021, and our soil insecticide Thimet also posted stronger sales for use in sugarcane, peanuts and sugar beets. By contrast, we experienced a ~~drop~~decline in net sales of ~~Bidrin® due to carryover of inventory from last season when weather was dry and insect pressure was low. Further,~~our soil fumigants ~~posted a somewhat softer performance than~~versus the prior year due ~~primarily~~in part to continuing water allocation restrictions in California.

Cost of sales within the domestic crop business increased ~~significantly both~~by 43% (from $33,484 in 2021 to $47,848 in 2022) as a result of ~~the~~ increased volumes ~~just discussed,~~ and ~~as a result of both a mix change and lower factory output,~~raw material cost increases as compared to the first quarter of ~~2020. This~~2021. Included in raw material price increases were significant increases in in-bound freight costs. Nevertheless, with significant price increases and favorable factory performance, domestic crop generated a ~~reduction of 12%~~90% increase in gross profit (from ~~$24,245~~$21,271 in the first quarter of ~~2020~~2021 to ~~$21,271~~$40,345 this year).

Our domestic non-crop business ~~increased~~posted lower net sales ~~by 59% (to $17,453~~in the first quarter 2022 compared to the same period in the prior year (down 23% to $13,396 from ~~$10,993) quarter-over-quarter.~~$17,453). In this category, our Dibrom® mosquito adulticide and our pest strips business sales both ~~grew, influenced by timing shifts in customer procurement.~~posted relatively flat sales compared to the same quarter of the prior year. Royalty and license fees for our Envance proprietary solutions ~~increased by approximately~~were $3,000 ~~as compared to~~lower than the first quarter of last ~~year.~~year, during which the Company received an up-front license payment; in later periods, payments will take the form of either a minimum royalty or a royalty based upon product sales. In addition, we recorded ~~improved~~slightly lower net sales from our nursery and ornamental business ~~as demand for homeowner garden~~ and ~~landscape~~the pharmaceutical products ~~in big box stores recovered following the lifting~~ of ~~pandemic-related stay-at-home restrictions at certain locations.~~our GemChem business.

Cost of sales within the domestic non-crop business ~~rose~~declined by about ~~21% (from $6,274 to $8,070) quarter-over-quarter. This increase was volume driven. As indicated~~8% in the ~~table, our costs increased at a slower rate than sales primarily because of~~first quarter 2022 compared to the ~~strong performance on royalty and license fees of~~same period in the ~~Envance technology business.~~prior year (from $8,070 to $7,431). As a result of ~~these dynamics,~~the decline in net sales, gross profit for domestic non-crop ~~increased~~decreased by ~~99%~~36% (from ~~$4,719 in 2020 to~~ $9,383 in ~~2021)~~2021 to $5,965 in 2022).

Net sales of our international businesses rose by about ~~27%~~9% during the period ($~~34,607~~47,846 in ~~2020 to~~2022 vs. $43,947 in 2021). ~~Several factors contributed~~These businesses benefited from sales increases in soil fumigants, foliar insecticides, soil insecticides and fungicides offset somewhat by chain disruption affecting shipments of bromacil herbicides to ~~this result. The addition of~~Japan. We posted sales ~~from~~increases in the Central American market through our ~~recently acquired AgNova business, an established crop protection business, effectively increased our Australian sales by seven times quarter over quarter. Mexico posted strongly~~AgriCenter group and enjoyed improved ~~sales with increased~~ demand for ~~granular insecticides, herbicides,~~our Assure II herbicide in Canada. Our Australian and soil fumigants for use on high-value vegetable crops. In Brazil, net sales increased significantly despite delays in customer procurement arising from economic uncertainty and continued widespread COVID-19 limitations. Partially offsetting these gains, sales performance wasBrazilian businesses both delivered slightly lower ~~in Central America due~~sales versus the prior year, but the gross profit margins of both businesses improved, as they focused on a more profitable product mix. The international business of Agrinos continued to ~~consolidation by certain AgriCenter suppliers, logistical difficulties arising from~~grow approximately 25%, contributing to the ~~pandemic and hurricane activity in Honduras.~~ overall expansion of our Green Solutions portfolio.

Cost of sales in our international business increased by ~~17%~~12% (from ~~$25,190 in 2020 to~~ $29,470 in ~~2021)~~2021 to $32,963 in 2022), primarily driven by ~~the addition~~cost increases of ~~AgNova~~third-party products that we distribute, and ~~by the strong growth of our other businesses in North~~increased logistics and ~~Central America.~~freight costs. Gross profit for the international businesses increased by about ~~54% (from $9,417~~3% (to $14,883 in ~~2020 to~~2022 from $14,477 in 2021).

On a consolidated basis, gross profit for the first quarter of ~~2021~~2022 increased by ~~18%~~36% (from ~~$38,381 in 2020 to~~ $45,131 in ~~2021)~~2021 to $61,193 in 2022). ~~The change in~~Increased sales volume, improved product mix and ~~mix, described above, had the impact of increasing absolute gross profit~~price increases, partially offset by ~~18%~~raw material cost increases and ~~reducing gross margin percentage by approximately 1%. As mentioned above, overall~~supply chain challenges, all factored into shaping this improved profitability. Overall gross margin percentage ended at ~~39%~~41% in the first quarter of ~~2021,~~2022, as compared to ~~40%~~39% in the first quarter of the prior year.

Operating expenses increased by ~~$4,899~~$5,000 or ~~13%~~12% to ~~$41,444~~$46,444 for the three months ended March 31, ~~2021,~~2022, as compared to the same period in ~~2020.~~2021. The differences in operating expenses by department are as follows:

	2021		2020		Change		% Change			2022		2021		Change			% Change
Selling	$	11,133	$	10,474	$	659		6	%	$	11,085	$	11,133	$	(48	)		0	%
General and administrative		15,848		12,504		3,344		27	%		18,433		15,848		2,585			16	%
Research, product development and regulatory		6,616		6,154		462		8	%		6,970		6,616		354			5	%
Freight, delivery and warehousing		7,847		7,413		434		6	%		9,956		7,847		2,109			27	%
	$	41,444	$	36,545	$	4,899		13	%	$	46,444	$	41,444	$	5,000			12	%

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~~The Company recorded positive fair value adjustments in the amount of ~~$1,066.~~$83 and $1,066 for the three months ended March 31, 2022 and 2021, respectively.

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. There was no similar adjustment in the three months ended March 31, 2022.

Interest costs net of capitalized interest were ~~$946~~$398 in the first three months of ~~2021,~~2022, as compared to ~~$1,508~~$946 in the same period of ~~2020.~~2021. Interest costs are summarized in the following table:

	Q1 2021								Q1 2020								Q1 2022								Q1 2021
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	125,299	$	860			2.7	%	$	165,076	$	1,496			3.6	%	$	85,756	$	401			1.9	%	$	125,299	$	860			2.7	%
Amortization of deferred loan fees		—		80			—			—		59			—			—		69			—			—		80			—
Amortization of other deferred liabilities		—		18			—			—		3			—			—		6			—			—		18			—
Other interest (income) expense		—		48			—			—		30			—			—		9			—			—		48			—
Subtotal	$	125,299	$	1,006			3.2	%	$	165,076	$	1,588			3.8	%	$	85,756	$	485			2.3	%	$	125,299	$	1,006			3.2	%
Capitalized interest		—		(60	)		—			—		(80	)		—			—		(87	)		—			—		(60	)		—
Total	$	125,299	$	946			3.0	%	$	165,076	$	1,508			3.7	%	$	85,756	$	398			1.9	%	$	125,299	$	946			3.0	%

The Company’s average overall debt for the three months ended March 31, ~~2021~~2022 was ~~$125,299,~~$85,756, as compared to ~~$165,076~~$125,299 for the three months ended March 31, ~~2020.~~2021. Our borrowings in the three months ended March 31, ~~2021~~2022 were lower mainly due to the increased participation from our biggest customers in our ~~2020~~2021 year-end early pay program ~~partially offset by~~and the comparatively lower level of acquisition activity over the last 12twelve months, ~~and~~as compared to the ~~associated~~twelve months to March 2021. These positive cash changes were partly offset by investment in expanded working ~~capital.~~capital as our business continues to grow strongly. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was ~~2.7%~~1.9% for the three months ended March 31, ~~2021,~~2022, as compared to ~~3.6%~~2.7% in ~~2020.~~2021.

Income tax expense increased by ~~$1,567~~$3,137 to ~~$1,362~~$4,499 for the three months ended March 31, ~~2021,~~2022, as compared to ~~income tax benefit of $205~~$1,362 for the comparable period in ~~2020.~~2021. The ~~underlying~~ effective tax rate for the three months ended March 31, 2022 and 2021 was 31.2% and ~~2020 was~~ 30.6% ~~and 31.0%~~, respectively. D~~uring the three months ended March 31, 2020, the Company benefited from two discrete~~The rate has increased compared to prior year reflecting a mix of income ~~tax benefits. First, the Company assessed its income tax positions to account for the Coronavirus Aid Relief~~in different jurisdictions 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 benefitedpartially offset by an increased benefit from the tax impact of the vesting of certain stock grants. ~~These benefits~~For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act (“TCJA”) of 2017 amends Internal Revenue Code Section 174 costs wherein research and development expenditures will no longer be deducted in the ~~prior~~tax year ~~did not recur in~~that such costs are incurred but must now be capitalized and amortized over either a five- or fifteen-year period, depending on the ~~current year.~~location of the activities performed. The effective tax rate for all interim periods is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

~~During the three months ended March 31, 2021 and 2020 we recognized a loss of $13 in each period, on our investment in the Hong Kong joint venture which is a 50% owned equity investment.~~

Our overall net income for the first three months of ~~2021~~2022 was $9,935 or $0.33 per basic and diluted share, as compared to $3,071 or $0.10 per basic and diluted share ~~as compared to $520 or $0.02 per basic and diluted share~~ in the ~~same~~first quarter of ~~2020.~~2021.

The Company used cash of ~~$32,600~~$32,315 in operating activities during the three months ended March 31, ~~2021,~~2022, as compared to ~~$14,069~~$32,536 during the three months ended March 31, ~~2020.~~2021. Included in the ~~$32,600~~$32,315 are net income of ~~$3,221,~~$9,935, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of ~~$6,621,~~$6,403, loss on sales of property, plant and equipment of $77, accretion of discounted liabilities and amortization of deferred loan fees of ~~$81~~$75 and provision for bad debts in the amount of ~~$682.~~$494. Also included are stock-based compensation of ~~$1,792, losses from equity method investment of $13,~~$1,563, decrease in deferred income taxes of ~~$269,~~$207, change in equity investment fair value of ~~$1,066, forgiveness~~$83, adjustment in fair value of ~~a PPP loan~~contingent consideration of ~~$672,~~$599 and annet change in foreign currency adjustment ~~to the bargain purchase gain~~ of ~~$33.~~$261. These together provided net cash ~~outflows~~inflows of ~~$10,436,~~$19,009, as compared to ~~$7,131~~$10,480 for the same period of ~~2020.~~2021. The TCJA amendment requires taxpayers to capitalize and amortize all research and development expenditures over five years for domestic and fifteen years for foreign, for tax years beginning after December 31, 2021. Therefore, the Company anticipates paying more in taxes due to aforementioned provision. There is congressional support in proposed legislation to retroactively postpone the effective date of capitalizing and amortizing the research and development expenditures, but it is uncertain if such deferral will pass.

During the first three months of ~~2021,~~2022, the Company increased net working capital by ~~$38,589,~~$55,031, as compared to ~~$14,161~~$38,589 during the same period of the prior year. Included in this change: inventories increased by ~~$9,615 (normal at this point in the season),~~$11,738, as compared to ~~$16,446~~$9,615 for the first quarter of ~~2020. Deferred revenue~~2021. Customer prepayments decreased by ~~$11,293,~~$44,528, as compared to ~~$2,342~~$11,293 in the same period of ~~2020,~~2021, driven by customer decisions regarding demand, payment timing and our cash incentive programs. Our accounts payable balances increased by ~~$2,293,~~$9,677, as compared to ~~$1,617~~$2,223 in the same period of ~~2020.~~2021. Accounts receivables increased by ~~$30,422,~~$33,660, as compared to ~~$6,578~~$30,482 in the same period of ~~2020.~~2021. This is primarily driven by ~~increased group~~the strong growth in domestic consolidated net sales, ~~and strong international growth.~~as compared to the same period of the prior year. Prepaid expenses increased by ~~$1,052,~~$800, as compared to ~~$776~~$1,052 in the same period of ~~2020.~~2021. Income tax receivable decreased by ~~$638,~~$3,046, as compared to ~~increasing by $597~~$638 in the prior year. Accrued programs increased by ~~$7,770,~~$24,601, as compared to ~~$6,016~~$7,770 in the prior year, ~~which is normal at this point~~as a result of both higher sales and the mix of those sales including products with higher program elements incorporated in ~~the growing season.~~pricing. Finally, other payables and accrued expenses ~~decreased~~increased by ~~$1,187,~~$2,145, as compared to ~~$2,094~~a decrease of $1,187 in the prior year.

With regard to our program accrual, the increase (as noted above) primarily reflects our level and mix of sales and customers in the first quarter of ~~2021,~~2022, 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 quarter of ~~2021,~~2022, the Company made accruals for programs in the amount of ~~$18,815~~$40,469 and made payments in the amount of ~~$11,060.~~$15,752. During the first quarter of the prior year, the Company made accruals in the amount of ~~$17,189~~$18,815 and made payments in the amount of ~~$11,192.~~$11,060.

Cash used for investing activities was ~~$2,904~~$4,250 for the three months ended March 31, ~~2021,~~2022, as compared to ~~$2,980~~$2,945 for the three months ended March 31, ~~2020.~~2021. The Company spent ~~$2,904~~$3,294 on fixed assets acquisitions primarily focused on continuing to invest in manufacturing infrastructure, partly offset by proceeds on sale of property, plant and ~~$41~~equipment of $54. In addition, the Company made a payment of $1,000 to Clean Seed to amend a license agreement whereby ongoing sales-based royalty payments were replaced by fully paid, royalty-free rights, and spent $10 on patents for the Envance technology business.

During the three months ended March 31, ~~2021,~~2022, financing activities provided ~~$32,853, from borrowings on the Company’s senior credit facility,~~$37,449, as compared to ~~$16,641 for~~$32,854 during the same period of the prior year. InNet borrowings under the Credit Agreement amounted to $46,000 in the first quarter of ~~2021, we~~2022, as compared to $35,900 in the same period of the prior year. The Company paid dividends to stockholders amounting to ~~$593,~~$594 during the three months ended March 31, 2022, as compared to ~~$582~~$592 in the same period of ~~2020.~~ 2021. The Company paid $6,219 for the repurchase of 332,404 of shares of its common stock during the three months ended March 31, 2022. There were no such purchases during the three months ended March 31, 2021. Lastly, in exchange for shares of common stock returned by employees, we paid $2,174 and $2,861 for tax withholding on stock-based compensation awards during the three months ended March 31, 2022 and 2021, respectively.

The Company has a revolving line of credit shown as long-term debt in the condensed consolidated balance sheets at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. The debt is summarized in the following table:

Long-term indebtedness	March 31, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Revolving line of credit	$	143,800		$	107,900		$	99,300		$	53,300
Deferred loan fees		(377	)		(458	)		(991	)		(1,060	)
Total indebtedness	$	143,423		$	107,442		$	98,309		$	52,240

AtAs of March 31, ~~2021,~~2022, the Company is compliant with all covenants toin its ~~Senior~~ Credit ~~Facility. Based~~Agreement. As of March 31, 2022, based on its performance against the most restrictive covenants in the Credit Agreement (see Note 10), the Company had the capacity to increase its borrowings by up to ~~$50,993,~~$166,165, according to the terms thereof. This compares to an available borrowing capacity of ~~$86,736~~$178,705 as of December 31, ~~2020~~2021 and ~~$39,552~~$50,993 as of March 31, ~~2020.~~2021. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing twelve-month period and proforma basis arising from acquisitions, (2) net borrowings, (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, ~~2020,~~2021, 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, ~~2020.~~2021.

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 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, ~~2020.~~2021.

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 March 31, ~~2021,~~2022, 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 March 31, ~~2021,~~2022, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, ~~has~~had 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 Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, filed on March ~~31, 2021. In preparing this document, we have reviewed all the~~14, 2022. The following disclosure amends and supplements those risk factors ~~included in that document~~ and, ~~find that~~except to the extent restated below, there are no material changes to ~~those~~the risk factors ~~except~~as so stated.

The regulatory climate remains challenging to the Company’s interests both domestically and internationally—Various agencies within the U.S. (both federal and state) and foreign governments continue to exercise increased scrutiny in permitting continued uses (or the expansion of such uses) of many chemistries, including several of the Company’s products and, in some cases, have initiated or entertained challenges to these uses. The challenge of the regulatory climate is more pronounced in certain geographical regions (outside the U.S.) where the Company faces resistance to the continued use of certain of its products. For example, the European Union (“EU”) employs a hazard-based analysis when considering whether product registrations can be maintained; under this approach, EU regulatory authorities typically do not weigh benefit against risk in their assessments and routinely cancel products for which a safer alternative is available, notwithstanding the benefit of the cancelled product. There is no guarantee that this regulatory climate will change in the near term or that the Company will be able to maintain or expand the uses of many of its products in the face of such regulatory challenges.

The impending contested election of directors and related matters associated with our engagement by activist hedge fund Cruiser Capital Management may create a disruption among our employees and customers, may result in a material increase in our general and administrative expenses, and may distract management from our day to day operations—On March 7, 2022, we received a letter from an activist investor, Cruiser Capital Master Fund, L.P., and its managing general partner, Keith Rosenbloom (collectively “Cruiser”), notifying us of an attempt to nominate four individuals (“Cruiser Nominees”) to replace four of our nine existing directors. After an extensive interview of the Cruiser Nominees that consumed most of two days on April 11-12, 2022, our board of directors (“Board”) determined that none of the Cruiser Nominees possessed skills and qualifications superior to our existing directors, and on April 19, 2022, we notified Cruiser and its affiliates (the "Cruiser Parties") that we did not intend to nominate any of the Cruiser Nominees for election to our Board. We filed a preliminary proxy statement that same day, and on April 29, 2022, we filed a definitive proxy statement nominating nine incumbent directors for election at our Annual Meeting of Shareholders to be convened on June 1, 2022. Cruiser, which owned a total of 0.19% of our common stock as of the date it submitted its nominations, has been highly critical of the Company’s performance over certain specified periods.

A proxy contest or other activist campaign and related actions, such as the one discussed above, could have a material and adverse effect on our results of operations and our financial condition and cash flows for the ~~following:~~following reasons:

Our stock repurchase program may not enhance our long-term shareholder value—On March 8, 2022, we announced that the Board of Directors approved a stock repurchase program for up to one million shares of our outstanding common stock at a price of up to $20 per share. As noted in Part II, Item 2., Purchases of Equity Securities by the Issuer, we acquired approximately 332,000 shares at an average price of $18.71 per share between the announcement date and the end of our first fiscal quarter on March 31, 2022. We cannot be assured that our stock repurchase program will enhance long-term shareholder value. The timing and actual number of shares repurchased, depend on a variety of factors including price, corporate and regulatory requirements, and other market conditions. In addition, while we expect to conduct this repurchase plan pursuant to Rules 10b-18 and Rule 10b5-1, which allows for trading in closed windows, it cannot be adopted or modified except in an open window period. The program may be suspended or discontinued at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect our stock price and increase its volatility. The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially affect the liquidity of our stock. Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which may adversely impact our ability to pursue possible future strategic opportunities and acquisitions and may result in lower overall returns on our cash balances. There can be no assurance that any stock repurchases will enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock. Although our stock repurchase program is intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce the program's effectiveness.

The Russian invasion of the Ukraine may expand into a broader international conflict that could adversely affect multiple channels of commerce and markets—While the occupation of Ukraine has had an effect on commodity prices and fertilizer supply (primarily ammonia and urea from Russia) and business operations relating to the Ukraine constitute an immaterial part of the Company’s overall business, there is no guarantee that the current conflict will not draw military intervention from other countries or retaliation from Russia, which, in turn, could lead to a much larger conflict. It is possible that supply chain, trade routes and markets currently served by the Company could be adversely affected, which, in turn, could materially, adversely affect the Company’s business operations and financial performance.

Product liability judgments on glyphosate and cases involving other pesticides by domestic courts present a litigation risk to companies in this industry—Multiple judgments have been rendered by domestic courts in product liability cases against Bayer/Monsanto in connection with injuries allegedly arising from exposure to the herbicide product, glyphosate. The basis was purported carcinogenicity based largely upon the findings of a certain international organization, despite significant scientific evidence to the contrary. While the Company does not sell glyphosate, the theory of these results could put one or more of the Company’s products at risk. Further, a number of product liability cases involving paraquat have been filed in domestic courts. While the Company is not a party to these cases and discontinued its limited sales of this herbicide shortly after acquiring an end-use registration as part of a larger acquisition, there is no guarantee that one or more product liability actions would not be brought against the Company on a similar basis, and it is possible that adverse rulings in any such actions could have a material adverse effect upon the Company’s financial performance in future reporting periods.

The trend of passing pesticide “ban-bills” in various states could put one or more of the Company’s products at risk—In certain states, including Maryland and New York, state and/or local legislatures have passed legislation banning the use of specific pesticides, such as chlorpyrifos, or pesticide in general, in spite of valid registrations at USEPA and/or the equivalent state agency. While the Company does not sell chlorpyrifos products, there is no guarantee that one or more of its registered products would not be targeted in state or local legislation of this nature. Further, such legislation could have a material adverse effect upon the Company’s financial performance in future reporting periods.

Use of the Company’s products is subject to continuing challenges from activist groups—Use of agrochemical products, including the Company’s products, is regularly challenged by activist groups in many jurisdictions under a multitude of federal, state and foreign statutes, including FIFRA, the Food Quality Protection Act, Endangered Species Act (“ESA”) and the Clean Water Act, to name a few. These challenges typically take the form of lawsuits or administrative proceedings against the USEPA and/or other federal, state or foreign agencies, the filing of amicus briefs in pending actions, the introduction of legislation that is inimical to the Company’s interests, and/or adverse comments made in response to public comment invited by regulatory agencies in the course of registration, re-registration or label expansion. The most prominent of these actions include a line of cases under which environmental groups have sought to suspend, cancel or otherwise restrict the use of pesticides that have been approved by USEPA on the grounds that that agency failed to confer with the National Marine Fishery Service and/or the Fish and Wildlife Service under the ESA with respect to biological opinions relating to the use of such products. While industry has been active in defending registrations and proposing administrative and legislative approaches to address serious resource issues at the affected agencies, these cases continue to be brought. It is possible that one or more of these challenges could succeed, resulting in a material adverse effect upon one or more of the Company’s products and consolidated financial statements.

USEPA has proposed further limitations and taken action on the continued registration of organophosphates— In September 2015, the USEPA published in the Federal Register a memorandum entitled, “Literature Review on Neurodevelopmental Effects & FQPA Safety Factor Determination for the Organophosphate Pesticides,” in which it adopted a position recommending the application of a 10X safety factor under the FQPA (Food Quality Protection Act) in light of the alleged possibility of neurodevelopmental harm to women and children based on epidemiological data. Since that time, in the face of objection from industry, the agency has applied this safety factor to all registered Organophosphate Pesticides (“Ops” or “OP”), including those owned by the Company, as they have come up for review or renewal. The Company, like many in our industry, believes that applying this safety factor is not based upon sound science and that the limited studies upon which the agency is relying (for which raw data is not available even to the agency) do not establish a causal link between the perceived harm and the use of its products. In addition, finding that the tolerances for chlorpyrifos (an organophosphate not sold by the Company) that had been established under FFDCA could not be deemed with reasonable certainty to cause no harm, USEPA revoked those tolerance factors and consequently cancelled the registrations for chlorpyrifos. There is no guarantee that USEPA will not employ a similar standard of review against one or more of the Company’s organophosphates. Accordingly, the Company intends to take all action necessary to defend its registrations. We have been joined in this effort by other companies that are similarly concerned about the potential impact of USEPA’s action. Nevertheless, there is no guarantee that the Company’s actions will alter the course that USEPA has proposed; if the agency’s position becomes final, some uses of the Company’s OP products could be limited or cancelled. Such action could have a material adverse effect upon the Company’s financial performance in future reporting periods.

The distribution and sale of the Company’s products are subject to prior governmental approvals and thereafter ongoing governmental regulation—The Company’s products are subject to laws administered by federal, state and foreign governments, including regulations requiring registration, approval and labeling of its products. The labeling requirements restrict the use of, and type of, application for our products. More stringent restrictions could make our products less available, which would adversely affect our revenues and profitability and cash flows. Substantially all the Company’s products are subject to the USEPA (and/or similar agencies in the various territories or jurisdictions in which we do business) registration and re-registration requirements and are registered in accordance with FIFRA or similar laws. Such registration requirements are based, among other things, on data demonstrating that the product will not cause unreasonable adverse effects on human health or the environment when used according to approved label directions. All states, where any of the Company’s products are used, also require registration before products, such as the Company sells, can be marketed or used in that state. Governmental regulatory authorities have required, and may require in the future, that certain scientific data requirements be fulfilled on the Company’s products. The Company, on its behalf and also in joint efforts with other registrants, has furnished, and is currently furnishing certain required data relative to its products. There can be no assurance, however, that the USEPA or similar agencies will not request that certain tests or studies be repeated, or that more stringent legislation or requirements will not be imposed in the future. For example, in April 2022, after the period covered by this Quarterly Report on Form 10-Q, the USEPA issued a notice of intent to suspend the use of one of our products, the pesticide dimethyl tetrachloroterephthalate (DCPA). We have been regularly engaged in discussions with the USEPA regarding DCPA, and we anticipate providing additional test results in June 2022 that we believe will persuade the USEPA that DCPA remains suitable for its intended uses. However, initiatives such as these can increase our general and administrative expense and, in some cases, can increase the costs of producing our products or can impair the value of our investment in related intellectual property, and if not resolved, the issue could result in our loss of the ability to produce or sell DCPA in the United States. We do not believe the loss of permit authority regarding DCPA would pose a material risk to our business, operations, or financial condition, but events such as these can create significant administrative burdens for our management and sales teams and, in protracted circumstances or those involving our most critical products, may pose a material risk of adverse effects upon our results of operations, financial condition, or cash flows. The Company can provide no assurance that any testing approvals or registrations will be granted on a timely basis, if at all, or that its resources will be adequate to meet the costs of regulatory compliance.

The manufacturing of the Company’s products is subject to governmental regulations—The Company currently owns and operates five manufacturing facilities which are located in Los Angeles, California; Axis, Alabama; Hannibal, Missouri; Marsing, Idaho; Clackamas, Oregon; and Etchojoa, Mexico (the “Facilities”). The Facilities operate under the laws and regulations imposed by relevant country, state and local authorities. The manufacturing of key ingredients for certain of the Company’s products occurs at the Facilities. An inability to renew or maintain a license or permit, or a significant increase in the fees for such licenses or permits, could impede the Company’s manufacture of one or more of its products and/or increase the cost of production; this, in turn, would materially and adversely affect the Company’s ability to provide customers with its products in a timely and affordable manner.

The Covid-19 pandemic is creating risk, uncertainty and adverse conditions in many industries both here and ~~abroad.~~ abroad~~The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how the pandemic will impact its customers, business partners, and employees.~~ —While the Company did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, ~~2021,~~2022, the Company is unable to predict the impact that the pandemic will have on its 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 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.

Disruption in the global supply chain is creating delays, unavailability and adverse conditions for our industry, including significant price increases especially with regard to ocean bound shipments—With the prolongation of the coronavirus pandemic, the global supply chain has been under increased stress stemming from container shortages, a lack of domestic truck drivers and a shift in consumer buying habits. Consequently, ocean cargo both inbound to, and, in some cases, outbound from, the U.S. has experienced significant delays, while domestic ports and regional warehouses have been filled to capacity. To date, while experiencing disruptions in the supply of raw materials, intermediates, finished goods and packaging, the Company has been able to carry on business without a material adverse effect upon its overall operations or financial performance. There is no guarantee that the supply chain condition will materially improve any time soon or that the Company will continue to avoid material disruption. Such disruption could have a material adverse effect on the Company’s operations, financial condition or cash flows.

Climate Change may adversely affect the Company’s business—Over the course of the past several years, global climate conditions have become increasingly inconsistent, volatile and unpredictable. Many of the regions in which the Company does business have experienced excessive moisture, cold, drought and/or heat of an unprecedented nature at various times of the year. In some cases, these conditions have either reduced or obviated the need for the Company’s products, whether pre-plant, at-plant, post-emergent or at harvest. Further, the random nature of climactic change has made it increasingly difficult to forecast market demand and, consequently, financial performance, from year-to-year. There is no guarantee that climate change will abate in the near future, and it is possible that such change will continue to hinder the Company’s ability to forecast its sales performance with accuracy and otherwise adversely affect the Company’s financial performance.

The Company’s business may be adversely affected by weather effects and commodity prices—Demand for many of the Company’s products tends to vary with weather conditions and weather-related pressure from pests. Adverse weather conditions, then, may reduce the Company’s revenues and profitability. In light of the possibility of adverse seasonal effects, there can be no assurance that the Company will maintain sales performance at historical levels in any particular region. Similarly, demand for the Company’s products used in row crops tends to vary with the commodity prices of those crops in the U.S., particularly corn, soybeans and cotton. These prices may be driven in part by weather, pest pressure, the domestic farm economy and international markets (e.g., yield and pricing from similar crops grown in Brazil). There is no guarantee that the U.S. farm economy and row crop commodity prices will maintain sufficient strength and stability to support the Company’s products at or above historical levels.

The Company may be subject to environmental liabilities—The Company is fully committed toward minimizing the risk of discharge of materials into the environment and to complying with governmental regulations relating to protection of the environment, its neighbors and its workforce. Nevertheless, federal and state authorities may seek fines and penalties for any violation of the various laws and governmental regulations. In addition, while the Company continually adapts its manufacturing processes to the environmental control standards of regulatory authorities, it cannot entirely eliminate the risk of accidental contamination or injury from hazardous or regulated materials. In short, the Company may be held liable for significant damages or fines relating to any environmental contamination, injury, or compliance violation which could have a material adverse effect on the Company’s consolidated financial condition, statements of operations and cash flows.

Newly acquired businesses or product lines may not generate forecasted results—While the Company conducts due diligence using a combination of internal and third-party resources and applies what it believes to be appropriate criteria for each transaction before making acquisitions, there is no guarantee that a business or product line acquired by the Company will generate results that meet or exceed results that were forecasted by the Company when evaluating the acquisition. There are many factors that could affect the performance of a newly acquired business or product line. While the Company uses assumptions that are based upon due diligence and other market information in valuing a business or product line prior to concluding an acquisition, actual results generated post-closing could vary widely from the Company’s forecast and, as such, could have a material effect upon the Company’s overall financial performance.

The Company’s investment in foreign businesses may pose additional risks—With the expansion of its footprint internationally, the Company now carries on business at a material level in some jurisdictions that have a history of political, economic or currency-related instability and customers with a potentially higher risk profile regarding accounts receivable collectivity compared to the Company’s legacy business. While such instability may not be present at the current time, there is no guarantee that conditions will not change in one or more jurisdictions quickly and without notice, nor is there any guarantee that the Company would be able to recoup its investment in such territories in light of such changes and potential losses due to political factors, economic factors, devaluation of local currencies, or the collectability risk from customers. Adverse changes of this nature could have a material effect upon the Company’s overall financial performance.

The Company’s investment in technology may not generate forecasted returns—The Company has had a history of investing in technological innovation, including with respect to product delivery systems, natural oil technology and biologicals, as one of its core strategies. These investments are based upon the premise that new technology will allow for safer handling or lower overall toxicity profile of the Company’s product portfolio, appeal to regulatory agencies and the market we serve, gain commercial acceptance, and command a return that is sufficiently in excess of the investment. However, there is no guarantee that a new technology will be successfully commercialized, generate a material return or maintain market appeal. Further, many types of development costs must be expensed in the period in which they are incurred. This, in turn, tends to put downward pressure on period profitability. There can be no assurance that these expenses will be recovered through successful long-term commercialization of a new technology.

The Company’s growth has been fueled in part by acquisitions—Over the past few decades, the Company’s growth has been driven by the acquisitions of established businesses and the acquisition and licensing of both established and developmental products from third parties. There is no guarantee that acquisition targets or licensing opportunities meeting the Company’s investment criteria will remain available or will be affordable. If such opportunities do not present themselves, then the Company may be unable to duplicate historical growth rates in future years.

The Company is dependent upon sole source suppliers for certain of its raw materials and active ingredients—There are a limited number of suppliers of certain important raw materials used by the Company in a number of its products. Certain of these raw materials are available solely from single sources either domestically or overseas. In connection with supply chain disruptions in 2021, phosphorus and related compounds were increasingly difficult to source for our entire industry; ensuring a continuous supply required extraordinary efforts both with respect to sourcing and production planning. That said, there is no guarantee that any of our suppliers will be willing or able to supply these products to the Company reliably, continuously and at the levels anticipated by the Company or required by the market. If these sources prove to be unreliable and the Company is not able to supplant or otherwise second source these products, it is possible that the Company will not achieve its projected sales which, in turn, could adversely affect the Company's consolidated financial statements.

The Company faces competition in certain markets from new technologies and demand for organically produced food— The Company faces competition from larger companies that market new chemistries and other similar technologies in certain of the crop protection sectors in which the Company competes. There is no guarantee that the Company will maintain its market share or pricing levels in sectors that are subject to competition from companies that market new technologies. Further, it is possible that increased demand for organic crops may, over time, reduce the demand for the Company’s products.

The Company faces competition from generic competitors that source product from countries having lower cost structures—The Company continues to face competition from competitors around the globe that may enter the market through either offers to pay data compensation, or similar means in foreign jurisdictions, and then subsequently source material from countries having lower cost structures (typically India and China). These competitors typically tend to operate at thinner gross margins and, with low costs of goods, tend to drive pricing and profitability of subject product lines downward. There is no guarantee that the Company will maintain market share and pricing when facing such generic competitors, or that such competitors will not offer generic versions of the Company’s products in the future.

The Company’s key customers typically carry competing product lines and may be influenced by the Company’s larger competitors—A significant portion of the Company’s products are sold to national distributors in the U.S., which also carry product lines of competitors that are much larger than the Company. Typically, revenues from the sales of these competing product lines and related program incentives constitute a greater part of our distributors’ income than do revenues from sales and program incentives arising from the Company’s product lines. With the recent consolidation among domestic distribution companies, these considerations have become more pronounced. In light of these facts, there is no assurance that such customers will continue to market our products aggressively or successfully, or that the Company will be able to influence such customers to continue to purchase our products instead of those of our competitors.

Industry consolidation may threaten the Company’s position in various markets—The global agricultural chemical industry continues to undergo significant consolidation. Many of the Company’s competitors have grown or are expected to grow through mergers and acquisitions. As a result, these competitors will tend to be in position to realize greater economies of scale, offer more diverse portfolios and thereby exert greater influence throughout the distribution channels. Consequently, the Company may find it more difficult to compete in various markets. While such merger activity may generate acquisition opportunities for the Company, there is no guarantee that the Company will benefit from such opportunities. Further, there is a risk that the Company’s future performance may be hindered by the growth of its competitors through consolidation.

The Company is dependent on a limited number of customers, which makes it vulnerable to the continued relationship with and financial health of those customers—Our top three customers accounted for 39% of the Company’s sales in 2021, 2020 and 2019. The Company’s future prospects may depend on the continued business of such customers and on our continued status as a qualified supplier to such customers. The Company cannot guarantee that these key customers will continue to buy products from us at current levels. The loss of a key customer could have a material adverse effect on the Company’s consolidated financial statements.

The carrying value of certain assets on the Company’s consolidated balance sheets may be subject to impairment depending upon market trends and other factors—The Company regularly reviews the carrying value of certain assets, including long-lived assets, inventory, fixed assets and intangibles. Depending upon the class of assets in question, the Company takes into account various factors including, among others, sales, trends, market conditions, cash flows, profit margins and the like. Based upon this analysis, where circumstances warrant, the Company may leave such carrying values unchanged or adjust them as appropriate. There is no guarantee that these carrying values can be maintained indefinitely, and it is possible that one or more such assets could be subject to impairment which, in turn, could have an adverse impact upon the Company’s consolidated financial statements.

The Company’s computing systems are subject to cyber security risks—In the course of its operations the Company relies on its computing systems, including access to the internet, the use of third-party applications and the storage and transmission of data through such systems. While the Company has implemented security measures to protect these systems, there is no guarantee that a third-party will not penetrate these defenses through hacking, phishing or otherwise and either compromise, corrupt or shut down these systems. Further, in the event of such incursion it is possible that confidential business information and private personal data could be taken. Such an event could adversely affect both the Company’s ability to operate, its reputation with key stakeholders and its overall financial performance.

Reduced financial performance may limit the Company’s ability to borrow under its credit facility—The Company has historically grown net sales and net income through the expansion of current product lines, the acquisition of product lines from third parties and the acquisition of both domestic and international distributors with strong niche market positions. In order to finance such acquisitions, the Company has drawn upon its senior credit facility. However, the Company’s borrowing capacity under the senior credit facility depends, in part, upon its satisfaction of a negative covenant that sets a maximum ratio of borrowed debt to earnings (as measured over the trailing 12-month period). There is no guarantee that the Company will continue to generate earnings necessary to ensure that it has sufficient borrowing capacity to support future acquisitions or that, when necessary, the lender group will amend the senior credit facility to provide for such borrowing capacity. Further, despite the Company’s long-standing relationship with its lenders, in light of the uncertainties in global financial markets, there is no guarantee that the Company’s lenders will be either willing or able to continue lending to the Company at such rates and in such amounts as may be necessary to meet the Company’s working capital and operational needs.

The Company is subject to taxation related risks in multiple jurisdictions—The Company is a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In 2017, the U.S. enacted significant tax reform, and in the long-term certain provisions of the new law may adversely affect us. In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the EU, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are

actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. If U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition, results of operations, or cash flows may be adversely impacted.

To the extent that capacity utilization is not fully realized at its manufacturing facilities, the Company may experience lower profitability—While the Company endeavors continuously to maximize utilization of it manufacturing facilities, our success in these endeavors is dependent upon many factors, including fluctuating market conditions, product life cycles, weather conditions in our key markets, availability of raw materials, manufacturing equipment performance, retention of the workforce and regulatory constraints, among other things. There can be no assurance that the Company will be able to maximize the utilization of capacity at its manufacturing facilities. Underutilization of such manufacturing resources could have a material adverse effect upon the Company’s financial performance.

The Company’s continued success depends, in part, upon a limited number of key employees—Within certain functions, the Company relies heavily on a small number of key employees to manage ongoing operations and to perform strategic planning. In some cases, there are no internal candidates who are qualified to succeed these key personnel in the short term. In the event that the Company were to lose one or more key employees, there is no guarantee that Company could replace them with people having comparable skills. Further, the loss of key personnel could adversely affect the operation of our business.

On March 8, 2022, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate number of up to 1,000,000 shares of its common stock, par value $0.10 per share, in the open market over the succeeding one year at a price not to exceed $20 per share, subject to limitations and restrictions under applicable securities laws.

The table below summarizes the number of shares of our common stock that were repurchased during the three months ended March 31, 2022. There were no such purchases during the three months ended March 31, 2021. The shares and respective amount are recorded as treasury shares on the Company’s condensed consolidated balance sheet.

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	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2423

Item 4.	Controls and Procedures	2423

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	2524

Item 1A.	Risks Factors	2524

Item 2.	Purchases of Equity Securities by the Issuer	30

Item 6.	Exhibits	2631

SIGNATURES		2732

	Stock-Based Compensation for the Three months Period		Unamortized Stock-Based Compensation as of March 31		Remaining Weighted Average Period (years)
March 31, 2021
Time-Based Restricted Stock	$	1,057	$	5,703		1.8
Unrestricted Stock		110		73		0.2
Performance-Based Restricted Stock		625		2,698		1.8
Total	$	1,792	$	8,474

March 31, 2020
Time-Based Restricted Stock	$	776	$	4,555		1.5
Unrestricted Stock		123		82		0.2
Performance-Based Restricted Stock		458		2,288		1.7
Total	$	1,357	$	6,925

	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

Month ended	Total number of shares purchased		Average price paid per share		Total amount paid		Maximum number of shares that may yet be purchased under the plan
January 31, 2022		-		-		-		-
February 28, 2022		-		-		-		-
March 31, 2022		332,404	$	18.71	$	6,219		667,596
Total number of shares repurchased		332,404	$	18.71	$	6,219		667,596

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

	For the three months ended March 31
Cash paid during the period:	2022		2021
Interest	$	387	$	890
Income taxes, net	$	1,454	$	1,254
Non-cash transactions:
ROU assets in exchange for lease liabilities	$	926	$	376
Deferred consideration in connection with business acquisitions:	$	599	$	—
Cash dividends declared and included in accrued expenses	$	736	$	596

Exhibit No.		Description

10.1		Employment Agreement between American Vanguard Corporation and Eric G. Wintemute dated April 1, 2022 (filed with the Securities Exchange Commission on April 7, 2022, and incorporated herein by reference).

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 March 31, ~~2021,~~2022, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive ~~Income (Loss);~~Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

	american vanguard corporation

Dated: May ~~7, 2021~~4, 2022	By:	/s/ eric g. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: May ~~7, 2021~~4, 2022	By:	/s/ david t. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer