UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For The Year Ended December 31, 20192021

OR

For The Transition Period From                      To                      

Commission file number 001-13795

AMERICAN VANGUARD CORPORATION

(949) 260-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.    Yes  ☐    No  ☒

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒

The aggregate market value of the voting stock of the registrant held by non-affiliates is $446.4$523.8 million. This figure is estimated as of June 30, 20192021 at which date the closing price of the registrant’s Common Stock on the New York Stock Exchange was $15.41$17.51 per share. For purposes of this calculation, shares owned by executive officers, directors, and 5% stockholders known to the registrant have been deemed to be owned by affiliates. The number of shares of $.10 par value Common Stock outstanding as of June 30, 2019,2021, was 30,148,629.31,200,611. The number of shares of $.10 par value Common Stock outstanding as of February 24, 2020March 1, 2022 was 30,159,277.30,944,838.

AMERICAN VANGUARD CORPORATION

AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

December 31, 20192021

i

AMERICAN VANGUARD CORPORATION

AND SUBSIDIARIES

(Dollars in thousands, except per share data)

PART I

Unless otherwise indicated or the context otherwise requires, the terms “Company,” “we,” “us,” and “our” refer to American Vanguard Corporation and its consolidated subsidiaries (“AVD”).

Forward-looking statements in this report, including without limitation, statements relating to the Company’s plans, strategies, objectives, expectations, intentions, and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties. (Refer to Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation, included in this Annual Report.)

All dollar amounts reflected in the consolidated financial statements are expressed in thousands, except per share data.

American Vanguard Corporation (“AVD”) was incorporated under the laws of the State of Delaware in January 1969 and operates as a holding company. Unless the context otherwise requires, references to the “Company” or the “Registrant,” in this Annual Report refer to AVD. The Company conducts its business through its principle operating subsidiaries, including AMVAC Chemical Corporation (“AMVAC”), for its domestic business and AMVAC Netherlands BV (“AMVAC BV”) for its international business.

The subsidiaries in the U.S. include: AMVAC, GemChem, Inc. (“GemChem”), Envance Technologies, LLC (“Envance”), TyraTech Inc. (“TyraTech”) and OHP Inc. (“OHP”).

Internationally, the Company operates its business through the following subsidiaries: AMVAC BV, AMVAC Hong Kong Limited (“AMVAC Hong Kong”), AMVAC Mexico Sociedad de Responsabilidad Limitada (“AMVAC M”), AMVAC de Costa Rica Sociedad de Responsabilidad Limitada (“AMVAC CR Srl”), AMVAC C.V. (“AMVAC CV”), AMVAC Hong Kong Limited (“AMVAC Hong Kong”), AMVAC Netherlands BV (“AMVAC BV”), Envance Technologies, LLC (“Envance”), TyraTech Inc. (“TyraTech”), AMVAC Singapore Pte, Ltd (“AMVAC Sgpr”), Huifeng AMVAC Innovation Co. Limited (“Hong Kong JV”), OHP Inc. (“OHP”), Grupo AgriCenter (including the parent AgriCenter S.A. and its subsidiaries) (“AgriCenter”), AMVAC do Brasil Representácoes Ltda (“AMVAC do Brasil”), Agrovant Comércio de Produtos Agrícolas Ltda.AMVAC do Brazil 3p LTDA (“Agrovant”AMVAC 3p”), American Vanguard Australia PTY Ltd (“AVD Australia”), AgNova Technologies PTY Ltd (“AgNova”), and Defensive – Indústria, Comérico & Representação Comerial Ltda.the Agrinos group (“Defensive”Agrinos”).

Based on similar economic and operational characteristics, the Company’s business is aggregated into one reportable segment. Refer to Part II, Item 7 for selective enterprise information.

AVD operates its business through its principle operating subsidiaries including AMVAC for its domestic business and AMVAC BV for its international business.

AMVAC is a California corporation that traces its history from 1945 and is a specialtymanufacturer of chemical, manufacturerbiological and biorational products that develops and markets productssolutions for agricultural, commercial and consumer uses. It manufacturessynthesizes and formulates chemicals and ferments and extracts microbial products for crops, turf and ornamental plants, and human and animal health protection. These chemicals,products, which include insecticides, fungicides, herbicides, soil health, plant nutrition, molluscicides, growth regulators, and soil fumigants, are marketed in liquid, powder, and granular forms. In prior years, AMVAC considered itself a distributor-formulator, but now AMVAC primarily synthesizes, formulates, and distributes its own proprietary products or custom manufactures, formulates or distributes for others. In addition, the Company has carved out a leadership position in closed delivery systems, currently offers certain of its products in SmartBox, Lock ‘n Load and EZ Load systems, and is commercializing a precision application technology known as SIMPAS (see “Intellectual Property” below) which permits the delivery of multiple products (from AMVAC and/or other companies) at variable rates in a single pass. AMVAC has historically expanded its business through both the acquisition of established chemistries, the development and commercialization of new formulations or compounds through licensing arrangements, self-funded research and by expandingdevelopment of precision application technology and the expansion of its global distribution network to gain broader market access.

AMVAC BV is a Netherlands Corporation that was established in 2012 and is based in HoutenUtrecht, near Amsterdam in the Netherlands. AMVAC BV sells product both directly and through its network of subsidiaries in various international territories.

Below is a description of the Company’s acquisition/licensing activity over the past fourthree years.

On July 1, 2021, the Company completed the purchase of certain assets from Syngenta Crop Protection related to the herbicide trifloxysulfuron (Envoke), including end-use registrations, data compensation claims, trademarks, formulation know-how, and books and records.

2

On October 8, 2020, the Company’s Australian subsidiary, AVD Australia, completed the purchase of all the outstanding shares of AgNova, an Australian company that sources, develops, and distributes specialty crop protection and production solutions for agricultural and horticultural producers and for selected non-crop users. AgNova has an established reputation for cost-effective product development from original concept through evaluation, registration, marketing, and sales, with new technologies flowing from its development pipeline. AgNova is committed to the provision of innovative, value-adding solutions for agriculture and related industries. The acquired assets included product registration, trade names and trademarks, customer lists, workforce, fixed assets, and existing working capital.

On October 2, 2020, the Company’s principal operating subsidiary, AMVAC, completed the purchase of all the outstanding shares of the Agrinos Group Companies (Agrinos) from  Agrinos AS, a Norwegian holding company, from a liquidation proceeding of that entity before a Norwegian bankruptcy court in Oslo, Norway. In addition to the shares of Agrinos, AMVAC acquired a bank of microbial and micronutrients, as well as about 150 pending or issued patents. Agrinos is a fully integrated biological input supplier with proprietary technology, manufacturing facilities, and global distribution capabilities. Its High Yield Technology® product platform works in conjunction with other nutritional crop inputs to increase crop yield, improve soil health and reduce the environmental footprint of traditional agricultural practices. The acquired assets included product registration, trade names and trademarks, customer lists, workforce, fixed assets, two factories and existing working capital.

On April 1, 2020, the Company’s principal operating subsidiary, AMVAC, acquired 6,250,000 common shares of Clean Seed Capital Group Ltd. (Clean Seed), representing an ownership of approximately 8%. In addition, AMVAC licensed from Clean Seed certain intellectual property rights related to Clean Seed’s SMART planting technologies.

On December 20, 2019, the Company’s principal operating subsidiary, AMVAC, Chemical Corporation, completed the purchase of certain assets related to four herbicide products from E.I. du Pont de Nemours and Company doing-business-as Corteva Agriscience and Dow Agrosciences, LLC., for use in the U.S.. The purchased assets includeincluded end-use registrations, registration data, trademarks (specifically, Classic®, First Rate®, Python® and Hornet®), on-hand inventory, commercial sales information, know-how and certain product supply arrangements.

2

On July 1, 2019, the Company completed the acquisition of three crop protection products for the U.S. market from Raymat Crop Science, Inc. and its affiliate, Esstar Crop Science, Inc. The acquired products are the miticide etoxazole (Stifle), the insect growth regulator Diflubenzuron,diflubenzuron (Cavalier), and a rice herbicide bispyribac sodium.sodium (Arroz). The acquired assets included product registrations, trademarks and trade names, customer lists and associated on-hand inventory.   

On January 10, 2019, the Company’s international subsidiary AMVAC BVdo Brazil completed the purchase of Defensivethe shares of Agrovant and Agrovant,Defensive, two distribution companies based in Brazil. DefensiveAgrovant and AgrovantDefensive market and distribute crop protection products and micronutrients with focus on the fruit and vegetable market segments throughout Brazil. The acquired assets included all of the outstanding stock of those companies, which holdentities held assets that consist in part, of product registration,registrations, trade names and trademarks, customer lists, workforce, fixed assets, and existing working capital.

On December 28, 2018, the Company’s international subsidiary Agrovant and Defensive were merged in 2020 and renamed to AMVAC BV completed the purchase of certain assets related to the Quizalofop product family from E.I. du Pont de Nemours and Company. Quizalofop is an herbicide marketed under the name Assure II for use on canola, soybeans and pulse (among other things) in Canada and the U.S.. The acquired assets include product rights, registration data, trademarks, and inventory.  Subsequently, AMVAC BV transferred the acquired assets related to the U.S. market to AMVAC.

On December 14, 2018, AMVAC completed the purchase of certain assets related to the trichlorfon product family from Bayer AG and Bayer CropScience AG (“Bayer”). Trichlorfon is an insecticide marketed under the name Dylox in turf, ornamental and other markets. This transaction includes product registrations, trademarks and manufacturing know-how. AMVAC will manufacture and supply formulated end use products to Bayer for the latter’s distribution.

On November 9, 2018, AMVAC completed the purchase of all of the outstanding shares of TyraTech, Inc. and, in the process, delisted TyraTech from the AIM market of the London Stock Exchange. TyraTech develops non-toxic insecticides and green solutions for pest control. Their patented technology platform leverages synergistic essential oil combinations to target invertebrate pest receptors that are not active in humans and other mammals.

On June 20, 2018, AMVAC completed the purchase of certain intangible assets related to the bromacil product family including end use registrations in the U.S.. The assets were purchased from Bayer AG. Bromacil is a broad-spectrum residual herbicide used for non-agricultural industrial vegetation control and on many crops such as pineapples, citrus, agave and asparagus. Marketed under the Hyvar^® and Krovar^® brands, bromacil herbicides are valued and long-established weed control tools. AMVAC previously purchased these brands from DuPont Crop Protection in 2015 for markets outside of US and Canada including Japan, Thailand, Mexico, Costa Rica and Brazil.

On October 27, 2017, the Company’s international subsidiary, AMVAC BV, completed the purchase of several affiliated companies operating under AgriCenter S.A., a distribution company based in Costa Rica. AgriCenter markets and distributes end-use chemical and biological products throughout Central America, primarily for crop applications. The acquired assets included product registration, trade names and trademarks, customer lists, personnel, fixed assets, goodwill and working capital.

On October 2, 2017, AMVAC acquired substantially all of the assets of OHP, a US-based distribution company specializing in the greenhouse and nursery production markets. The acquired assets included product rights, trade names, customer relationships, personnel, goodwill, fixed assets and working capital.

On August 22, 2017, AMVAC BV, completed the acquisition of certain selective herbicides and contact fungicides including chlorothanonil, ametryn, and isopyrazam, sold in the Mexican agricultural market. The assets were purchased from Syngenta AG and are used on various crops such as sugarcane, tomatoes, potatoes and hot peppers. The acquired assets included product registrations, trademarks and trade names, customer lists, and associated inventory.  

On June 6, 2017, AMVAC, completed an acquisition of certain herbicides, fungicides and insecticides assets relating to the abamectin, chlorothalonil and paraquat product lines from a group of companies, including Adama Agricultural Solutions, Ltd. These products are used on a wide range of crops such as citrus, cotton, nuts, fruits and vegetables. The acquired assets included product registrations, trademarks and trade names, customer lists, and associated inventory.

On January 13, 2017, AMVAC acquired from The Andersons, Inc. certain assets relating to proprietary formulations containing PCNB, chlorothalonil and propiconazole which are marketed under the name FFII and FFIII. The acquired assets included end use registrations.  

On June 27, 2017, both AMVAC BV and Huifeng made individual capital contributions of $950 to the Hong Kong JV. On July 7, 2017, the Hong Kong JV purchased 100% of the shares of Profeng Australia Pty Ltd. (“Profeng”), for a total consideration of $1,900.

3

On February 29, 2016, AMVAC BV purchased shares constituting a 15% interest in BiPA NV/SA, a Belgian company specializing in the development and early commercialization of biological products for use in agriculture. Through this investment, AMVAC BV obtained possible future access to a pipeline of new biological products for potential commercialization either individually in certain territories or in combination with the Company’s existing product portfolio.3p.

Seasonality

The agricultural chemical industry, in general, is cyclical in nature. The demand for AVD’s products tends to be seasonal. Seasonal usage, however, does not necessarily follow calendar dates, but more closely follows growing patterns, weather conditions, geography, weather related pressure from pests and customer marketing programs. WithFurther, growing seasons vary by geographical region; thus, there is no single seasonal cycle affecting our sales. Rather, multiple seasons transpire over the expansioncourse of the Company’s global footprint, seasonal effects have become more attenuated on a full-year basis.calendar year.

Backlog

AVD primarily sells its products based on the basis of purchase orders. The purchase orders are typically fulfilled within a short time frame. As a result, backlog is not considered a significant factor of, or a valid metric for, AVD’s business. The 2021 year, however, did end with a significantly larger than normal backlog of orders that is expected to result in a strong start to the 2022 financial year as demand for the Company’s products remains high.

Customers

The Company’s largest three customers accounted for 18%17%, 14% and 7%8% of the Company’s sales in 2019;2021; 17%, 12%, 9% and 8% in 2018; and 13%, 10% and 10% in 2017.2020; and 18%, 14% and 7% in 2019.

3

Distribution

AVD manages itsIn the U.S. business through its principal operating subsidiary, AMVAC. AMVAC predominantly distributes its products domestically through national distribution companies and buying groups or co-operatives, which purchase AMVAC’s goods on a purchase order basis and, in turn, sell them to retailers/growers/end-users. AVD manages its international sales through

Internationally, AMVAC BV which has sales offices or wholly owned distributors in Mexico, Costa Rica, several other countries in Central America, Brazil, Australia, and India, and sales force executives or sales agents in several other territories. The Company’s domestic and international distributors, agents and customers typically have long-established relationships with retailers/end-users, far-reaching logistics, transportation capabilities and/or customer service expertise. The markets for AVDAVD’s products vary by region, target crop, use and type of distribution channel. AVD’s customers are experts at addressing these various markets.

Competition

In its many marketplaces, AVD faces competition from both domestic and foreign manufacturers. Many of our competitors are larger and have substantially greater financial and technical resources than AVD. AVD’s capacity to compete depends on its ability to develop additional applications (including delivery systems and precision application technologies) for its current products and/or expand its product lines and customer base. AVD competes principally based on the basis of quality, product efficacy, price, technical service and customer support. In some cases, AVD has positioned itself in smaller niche markets, which are no longer addressed by larger companies. In other cases, for example in the Midwest corn market,and soybean markets, the Company competes directly withagainst larger competitors.

Manufacturing

Through its foursix manufacturing facilities (see Item 2, Properties), AVD synthesizes many of the technical grade active ingredients that are in its end-use products. Further, the Company formulates and packages its end useend-use products at four of its own facilities or at the facilities of third-party formulators in the U.S. and at various international locations. In addition, the Company owns two biological fermentation sites, one site in the U.S., and one in Mexico, and, in addition, has a product manufacturing arrangement at a third-party facility in India.

Raw Materials

AVD utilizes numerous companies to supply the various raw materials and components used in manufacturing its products. Many of these materials are readily available from domestic sources. In those instances where there is a single source of supply or where the source is not domestic, AVD seeks to secure its supply by either long-term (multi-year) arrangements or purchasing on long lead times from its suppliers. Further, where the availability or cost of certain raw materials may be subject to the effect of tariffs and/or supply chain disruption, the Company may order goods at times or in volumes out of the ordinary course in order to optimize pricing and to ensure supply.

4

Intellectual Property

AVD’s proprietary product formulations are protected, to the extent possible, as trade secrets and, to a lesser extent, by patents. Certain of the Company’s closed delivery systems are patented, and the Company has made applications for related inventionsboth pending and issued patents relating to expand its equipment portfolio, particularly with respect to its SIMPAS and ULTIMUS technology. In addition, the Company owns multiple issued patents relating to both its low-impact Envance solutions as well as its Agrinos biological and microbial solutions. Further, AVD’s trademarks bring value to its products in both domestic and foreign markets. AVD considers that, in the aggregate, its product registrations, trademarks, licenses, customer lists and patents constitute valuable assets. While it does not regard its current business as being materially dependent upon any single product registration, trademark, license, or patent, it believes that patents will play an increasingly important role in its developmental equipment technology in future years.and green solution technologies.

EPA Registrations

In the U.S., AVD’s products also receive protection afforded by the terms of the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”), pursuant to which it is unlawful to sell any pesticide in the U.S., unless such pesticide has first been registered by the U.S. Environmental Protection Agency (“USEPA”). Substantially allMost of the Company’s products that are sold in the U.S. are subject to USEPA registration and periodic re-registration requirements and are registered in accordance with FIFRA. This registration by USEPA is 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. In addition, each state requires a specific registration before any of AVD’s products can be marketed or used in that state. State registrations are predominantly renewed annually with a smaller number of registrations that are renewed on a multiple year basis. Foreign jurisdictions typically have similar registration requirements by statute.

4

In addition, certain of the Company’s biological products are labeled organic under the Organic Materials Review Institute (“OMRI”), Washington State Department of Agriculture (“WSDA”) and/or California Department of Food and Agriculture (“CDFA”) and, as such, are subject to the requirements of those certification standards, including with respect to raw materials and processes. As is the case with synthetic products, these biological products are also subject to specific labeling requirements that may vary from state to state.

The USEPA, state, and foreign agencies have required, and may require in the future, that certain scientific data requirements be performed on registered products sold by AVD. AVD, on its own behalf and in joint efforts with other registrants, has furnished, and is currently furnishing, required data relative to specific products. Under FIFRA, the federal government requires registrants to submit a wide range of scientific data to support U.S. registrations.registrations, including in the case of adding labeled uses. This requirement results in operating expenses in such areas as regulatory compliance, with USEPA and other such bodies in the markets in which the Company sells its products. In addition, at times, the Company is required to generate new formulations of existing products and/or to produce new products in order to remain compliant. The Company expensed $16,568, $15,613 and $13,989, $16,047during 2021, 2020 and $14,232, during 2019, 2018 and 2017, respectively, on these activities.

 Environmental

Environmental

Commerce Site

During 2019, AMVAC continued activities to address environmental issues associated with its facility in Commerce, CA. (the “Facility”). An outline of the history of those activities follows.

In 1995, the California Department of Toxic Substances Control (“DTSC”) conducted a Resource Conservation and Recovery Act (“RCRA”) Facility Assessment (“RFA”) of those facilities having hazardous waste storage permits. In March 1997, the RFA culminated in DTSC accepting the Facility into its Expedited Remedial Action Program. Under this program, the Facility was required to conduct an environmental investigation and health risk assessment. This activity then took two paths: first, the RCRA permit closure and second, the larger site characterization.

With respect to the RCRA permit closure, in 1998, AMVAC began the formal process to close its hazardous waste permit at the Facility (which had allowed AMVAC to store hazardous waste longer than 90 days) as required by federal regulations. Formal regulatory closure actions began in 2005 and were completed in 2008, as evidenced by DTSC’s October 1, 2008 acknowledgement of AMVAC’s Closure Certification Report.

5

With respect to the larger site characterization, soil and groundwater characterization activities began in December 2002 in accordance with the Site Investigation Plan that was approved by DTSC. Additional activities were conducted from 2003 to 2014, with oversight provided by DTSC. In 2014, the Company submitted a remedial action plan (“RAP”) to DTSC, under the provisions of which, the Company proposed not to disturb sub-surface contaminants, but to continue monitoring, maintain the cover above affected soil, enter into restrictive covenants regarding the potential use of the property in the future, and to continue to provide financial assurances relating to the requirements of the RAP.  In January 2017, the RAP was circulated for public comment.  DTSC responded to those comments and, on September 29, 2017, approved the RAP as submitted by the Company. The Company continues to conduct groundwater monitoring and maintain the cover above affected soil and is working with DTSC to prepare an operation and maintenance plan, to record covenants on certain affected parcels and to obtain further clarification on financial assurance obligations relating to the RAP.  At this stage, the Company does not believe that costs likely to be incurred in connection with the RAP will be material and has not recorded a loss contingency for these activities.

Brazil

AMVAC do Brasil leases a facility, located in the municipality Jaboticabal, in the state of São Paulo, Brazil, that was used for storage of packaged pesticide and fertilizer products in warehouses and storage of mineral oil in above ground storage tanks. As lessee of the facility, AMVAC do Brasil is required to assess the environmental condition of the site and conduct remediation, if necessary and therefore contracted an environmental consultant to perform a preliminary environmental site assessment in December 2019. The assessment indicated possible subsurface contamination in limited areas and recommends a Phase II confirmatory investigation, which may or may not indicate the need for additional investigation and/or remediation.  

Other Environmental

AMVACAVD is subject to numerous federal and state laws and governmental regulations concerning environmental matters and employee health and safety at its foursix manufacturing facilities both in the U.S..U.S. and abroad. The Company continually adapts its manufacturing, processstorage, transportation, handling and disposal processes to the environmental control standards of the various regulatory agencies.and other agencies to which it is subject. The USEPA and other foreign, federal and state agencies have the authority to promulgate regulations that could have an impact on the Company’s operations.

AMVACAVD expends substantial funds to minimize the risk of discharge of materials in the environment and to comply with the governmental regulations relating to protection of the environment. Wherever feasible, AMVACthe Company recovers and recycles raw materials and increases product yield in order to partially offset increasing pollution abatement costs.

The Company is committed to a long-term environmental protection program that reduces emissions of hazardous materials into the environment, as well as to the remediation of identified existing environmental concerns.

EmployeesHuman Capital Resources

We believe that, beyond being essential to our operations, our people have inestimable worth independent of our business. As outlined in our Human Rights Policy (see, www.american-vanguard.com under ESG tab), we believe that it is fundamental to our corporate responsibility and, indeed, to our humanity, that we recognize, respect and nurture the freedom and dignity of December 31, 2019,all persons. Accordingly, we have insinuated that belief throughout the Company employed 671fabric of our operations in our approach toward our employees. Indeed, the first two core values underlying our commitment to sustainability (see, Update to Corporate Sustainability Report, www.american-vanguard.com under ESG tab) are “Safety First” – which is a culture that begins with highly-regulated manufacturing plants, continues into the design of science-backed products and extends into market-leading delivery systems – and “Making a Difference” – under which, by rewarding achievement and giving our employees a voice, we attract diverse employees who want to make a difference in their careers, in the company and in the communities that we serve.

Our Human Capital program consists of the following elements:

5

The Company employed 624804 employees as of December 31, 20182021, and 605771 employees as of December 31, 2017.2020. From time to time, due to the seasonality of its business, AVD uses temporary contract personnel to perform certain duties primarily related to packaging of its products. None of the Company’s employees are subject to a collective bargaining agreement. The Company believes it maintains positive relations with its employees.

Domestic operations

AMVAC is a California corporation that was incorporated under the name of Durham Chemical in August 1945. The name of the corporation was subsequently changed to AMVAC in January 1971. As the Company’s main operating subsidiary, AMVAC owns and/or operates the Company’s domestic manufacturing facilities. AMVAC manufactures, formulates, packages and sells its products in the U.S. and is a wholly owned subsidiary of AVD.

GemChem is a California corporation that was incorporated in 1991 and was subsequently purchased by the Company in 1994. GemChem sells into the pharmaceutical, cosmetic and nutritional markets and, in addition, purchases of key raw materials for the Company. GemChem is a wholly owned subsidiary of AVD.

DAVIE owns real estate for corporate use only. See also Part I, Item 2 of this Annual Report on Form 10-K.The site is the home to the Company’s research center and provides accommodation for the Company’s production control team. DAVIE is a wholly owned subsidiary of AVD.

6

Envance is a Delaware Limited Liability Company and is a wholly owned subsidiary of the Company. It was formed in 2012 with joint venture partner, TyraTech. AMVAC’s initial shareholding was 60% which increased to 87% in 2015. Prior to November 8, 2018 the Company also owned 34.38% of TyraTech. On November 8, the Company acquired the remaining 65.62% of the shares of TyraTech Inc. and, as a result, TyraTech became a wholly owned subsidiary of the Company on November 9, 2018. Also, as a result of acquiring 100% of TyraTech, Envance became a wholly owned subsidiary of the Company. Envance has the rights to develop and commercialize pesticide products and technologies made from natural oils in global consumer, commercial, professional, crop protection and seed treatment markets and has begun bringing products to market and license its intellectual property to third parties.

On October 2, 2017, AMVAC purchased substantially all of the assets of OHP, a domestic distribution company specializing in products for the turf and ornamental market. OHP markets and sells end use products for third parties, either under third-party brands or else as its own label products.

Envance is a Delaware Limited Liability Company that was formed in 2012 by AMVAC and joint venture partner TyraTech. Envance and TyraTech became wholly owned subsidiaries of the Company on November 9, 2018. Envance has the rights to develop and commercialize pesticide products and technologies based on TyraTech’s intellectual property. Products are made from natural oils in global consumer, commercial, professional, crop protection and seed treatment markets. Envance is taking products to market primarily by licensing its intellectual property to third parties.

International operations

In July 2012, the Company formed AMVAC CV, which is incorporated in the Netherlands, for the purpose of managing foreign sales on behalf of the Company. AMVAC CV is owned jointly by AMVAC as the general partner, and AVD International, LLC (also formed in July 2012 as a wholly owned subsidiary of AMVAC), as the limited partner, and is therefore a wholly owned subsidiary of AVD. In November 2019, AMVAC Hong Kong was formed and is wholly owned subsidiary of AMVAC. AMVAC Hong Kong took over the role of AMVAC CV as of January 1, 2020.

6

AMVAC BV is a registered Dutch private limited liability company that was formed in July 2012. AMVAC BV is located in the Netherlands and is wholly owned by AMVAC CV. During 2019,2021, the international business sold the Company’s products in 5554 countries, as compared to 5455 countries in 2018.

AMVAC Hong Kong was formed in November 2019 and is wholly owned by AMVAC. AMVAC Hong Kong took over the role of AMVAC CV as of January 1, 2020.

AMVAC M is a wholly owned subsidiary of AMVAC BV and was originally formed in 1998 (as Quimica Amvac de Mexico S.A. de C.V and subsequently changed to AMVAC Mexico Sociedad de Responsabilidad Limitada “AMVAC M”) to conduct the Company’s business in Mexico.  

AMVAC Sgpr is a wholly owned subsidiary of AMVAC BV and was formed on April 12, 2016. This new entity was formed to conduct the Company’s business in the Asia Pacific and China region.

Hong Kong JV is a 50% owned joint venture with Huifeng (Hong Kong) Limited, a wholly owned subsidiary of Huifeng Agrochemical Company, Ltd, (“Huifeng”) a China based, basic chemical manufacturer. The Hong Kong JV was formed on August 2, 2016. The purpose of the joint venture is to be a technology transfer platform between the co-owners, including the development of proprietary agrochemical formulations and precision application systems for crop protection. Furthermore, it is intended to be used to develop both partners’ business in the region. This included, in 2017, the acquisition of 100% of the shares of Profeng.

On October 27, 2017, AMVAC BV purchased 100% of the stock of AgriCenter, which owned shares in subsidiaries located in Costa Rica, Panama, Nicaragua, Honduras, the Dominican Republic, Mexico, Guatemala, and El Salvador. These affiliated entities, collectively known as AgriCenter, market, sell and distribute end-use chemicalchemicals, including the Company’s own products, and biological products throughout Central America primarily for crop applications.

On January 10, 2019, AMVAC BV acquired 100% of the stock of DefensiveAgrovant and Agrovant,Defensive, two distribution companies based in Brazil. DefensiveAgrovant and AgrovantDefensive market and distribute crop protection products and micronutrients with focus on the fruit and vegetable market segments throughout Brazil. On December 31, 2020, Agrovant and Defensive merged and renamed the resulting entity, AMVAC 3p.

On October 8, 2020, American Vanguard Australia Pty Ltd acquired 100% of the stock of AgNova, an Australian company that sources, develops, and distributes specialty crop protection and production solutions for agricultural and horticultural producers, and for selected non-crop users.

On October 2, 2020, the Company’s principal operating subsidiary, AMVAC, completed the purchase of all outstanding shares of Agrinos and certain intellectual property rights. Agrinos is a fully integrated biological input supplier with proprietary technology, internal manufacturing, and global distribution capabilities and has operating entities in the U.S., Mexico, India, Brazil, China, Ukraine, and Spain.

The Company classifies as international sales all products bearing foreign labeling shipped to a foreign destination.

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Risk ManagementThe Company’s Operations in a Pandemic

Since the start of the coronavirus pandemic early in 2020, the Company has made sustained efforts to ensure the health and safety of the workforce while ensuring continuity of the business, which, under applicable federal guidelines (https://ww.cisa.gov) is part of the nation’s critical infrastructure (as part of the “Food and Agriculture,” “Chemical” and “Public Works and Infrastructure Support Services” sectors). Our network of international subsidiaries is accorded similar status by governments in the territories in which they operate. In the workplace, the Company has designed and implemented protocols for social distancing, made provisions for the workforce to work remotely where possible, and established quarantine policies for those who present COVID-like symptoms or may have been in contact with those who have. Further, the Company keeps current with local, state, federal and international laws and restrictions that could affect the business and provide real-time information to the workforce. The Company regularly monitors matters, whether insurable or not, that could pose material riskhas also prepared contingency plans to its operations,permit the safetycontinued operation of its employeesfactories, in the event that there are critical staffing issues due to attrition. Further, the Company continuously monitors supply chain, transport, logistics and neighbors,border closures and its financial performance. The Risk Committee of the Board of Directors (“Board”) was formed in 2010, consists of four members of the Board and meets regularly. However, all members of the Board are invitedhas reached out to and regularly attend Risk Committee meetings. Working with senior management, the committee continuously evaluates the Company’s risk profile, identifies mitigation measures and ensuresthird parties to make clear that the Company is prudently managing these risks.continuing to operate, and that it has its own policies relating to health and is committed to compliance with COVID-19 policies of its business partners.

Further, in supportAs has been the case with many other employers, since the start of 2021, the Company has encouraged its workforce to receive vaccinations against COVID-19 through various means, including incentive programs. The surge of the Risk Committee, senior management has appointedDelta variant in early 2021 had a risk manager and designated several senior executivescomparatively low impact on the Company’s workforce. However, the Omicron variant, which began to lead teams focused on addressing eachspread throughout the world in late 2021, proved to be transmissible to people who were vaccinated or unvaccinated. As a result, like many employers, the Company experienced a surge in COVID-19 infections at the end of the fourth quarter in 2021 carrying over into the first quarter of 2022. Based upon tracking and tracing, we believe that most material risks facingof these cases came from community (as opposed to workplace) transmission. Further, compared to the Company;Delta surge and earlier variants, these groups perform analysiscases typically presented with mild symptoms. All told, the benefitCompany has been able to manage its business with minimal impact during the years ended December 31, 2021 and 2020.

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As of operational knowledge. The top risks identified by managementthis writing, the Omicron surge is dropping dramatically in many regions, including the U.S. Barring the advent of another variant, between natural immunity from infection and being addressed by risk teams (in no particular order) include: adverse politicalvaccine immunity, populations in many countries will be increasingly less vulnerable to coronavirus. However, the efficacy of boosters, variability in social restrictions and regulatory climate; managing inventoryevolution of the virus are not yet known. Consequently, the Company is unable to predict the ultimate impact that the pandemic may have on its future financial condition, results of operations and optimizing manufacturing efficiency; succession planning and bench strength; maintaining a competitive edgecash flows in the marketplace; the possibility of an environmental event; undervaluationnear- to mid-term. The Company continues to monitor its business for adverse impacts of the Company; availabilitypandemic, including volatility in the foreign exchange markets, demand, supply-chain disruptions in certain markets, and increased costs of acquisition and licensing targets and cyber-terrorism. In addition, the Company continually evaluates insurance levels for product liability, property damage and other potential areas of risk.employee safety, among others.

Risk Management believes its facilities and equipment are adequately insured against loss from usual business risks including cyber-terrorism.

The Company’s Environmental, Social and Corporate Governance (“ESG”)

As outlined in its strategy is fully described on our website (www.american-vanguard.com); just click on the “ESG” tab. The reader will also find the Company’s updated Corporate Sustainability Reports (“CSR”) (from 2012 and 2017/2018),Report (dated February 2022) under the Company believes that sustainability is an essential corporate value. We have a responsibility to multiple stakeholders, including investors, employees, neighbors, governments and even future generations, to use resources wisely, to contribute to the improvement of the environment, to foster human rights and to operate our business in a manner that is responsible. We also believe that it is important to investors and other stakeholders that we make this commitment clear and transparent and that we inculturate these values into our workforce.  

Accordingly, director Émer Gunter, has been appointed as ESG (Environmental, Social and Governance) liaison between the Nominating and Corporate Governance Committee and management. In that capacity, Ms. Gunter will lend a more focused oversight of ESG-related matters to the Board, including with respect to identification, measurement and mitigation of risks as well as disclosure of sustainability and related initiatives. Under her direction, senior management will continue to build out and refine its ESG program. Our progress in this endeavor will be documented for the public through CSRs and public financial disclosures during coming reporting periods.same tab.

Available Information

The Company makes available free of charge (through its website, www.american-vanguard.com), its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (“SEC”). All reports filed with the SEC are available free of charge on the SEC website, www.sec.gov. Also available free of charge on the Company’s website are the Company’s Audit Committee, Compensation Committee, Finance Committee and Nominating and Corporate Governance Committee Charters, the Company’s Corporate Governance Guidelines, the Company’s Code of Conduct and Ethics, and the Company’s Employee Complaint Procedures for Accounting and Auditing Matters andMatters. Beneath the ESG tab at that site, you will also find links to the Company’s Corporate Sustainability Reports.Reports, Climate Change Commitment and Human Rights Policy. The Company’s Internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K.

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Regulatory/Legislative/Litigation Risks

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.

8The Russian invasion of the Ukraine may expand into a broader international conflict that could adversely affect multiple channels of commerce and markets. While 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. If such escalation should occur, 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—Over the past several months, multipleMultiple 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, in spite ofdespite significant scientific evidence to the contrary. While the Company hasdoes not soldsell glyphosate, domestically, the theory of these results could put one or more of the Company’s products at risk. ThereFurther, 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. Further,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.

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. Due to the unpredictable nature of these conditions, growers and distributors have become increasingly conservative in procurement practices and the accumulation of inventory. 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.

Tariff Activity—Over the course of the past two years, the U.S. and China have imposed a series of retaliatory tariffs against one another in respect of various products, ranging from metals to grains to chemicals. During that period, the Company was not materially adversely affected by these tariffs. While the two countries have apparently reached a détente on the issue, it is possible that either the U.S. or China could recommence the imposition of tariffs on one or more products that would cause either a disruption in the markets of the Company’s customers or an increase in the Company’s cost of goods which, either individually or in the aggregate, could have a material adverse effect upon the Company’s financial performance.    

The COVID-19 outbreak may interfere with the Company’s business—As reported over the past several weeks, an outbreak of coronavirus cases originating from Wuhan Province in China has spread into many regions of that country as well as into other parts of the world, including the U.S.. While governments, including that of China, are taking measures to contain further spread of the virus, the epidemic has led to quarantines within that country and has begun to affect scheduling of certain manufacturing facilities in China as well as the travel schedules of persons traveling to or from China. It is not clear at this point whether and to what extent this virus, which can be deadly, will spread further. Also, while the supply of goods and services from China to the Company has not been materially affected by the spread of this virus to date, it is possible that further spread of the COVID-19 could delay or interrupt such supply, in which case, the Company’s financial performance could be adversely affected.

The Company’s business may be adversely affected by weather effects—Demand for the Company’s products tends to vary with weather conditions and weather-related pressure from pests. This was true, for example, in the domestic market during planting season in 2019, when excessive rains and cold delayed and/or prevented planting and the use of many at-plant products. 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.

USEPA has proposed further limitations 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. 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.

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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 ground 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.

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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.profitability and cash flows. Substantially all of 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. 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 threefive manufacturing facilities which are located in Los Angeles, California; Axis, Alabama; Hannibal, Missouri; Marsing, Idaho; Clackamas, Oregon; and Marsing, Idaho and owns and has manufacturing services provided in a fourth facility in Hannibal, MissouriEtchojoa, 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.

Pandemic/Climate Risks

The COVID-19 pandemic is creating risk, uncertainties and adverse conditions in many industries both here and abroad.  The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how the pandemic will impact its customers, business partners, and employees. While the Company did not incur significant disruptions from the COVID-19 pandemic during the years ended December 31, 2021 and 2020, the Company is unable to predict the impact that the pandemic will 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 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 and cash flows will not be materially adversely affected by the pandemic in future periods.

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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 beyond 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. Further, 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. Further, these various governmental agencies could, among other things, impose potential civil and criminal liability arising under RCRA for the Company’s importation (transportation, handling, and storage) of depleted Thimet containers (see, “Legal Proceedings” below). 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.

Acquisition/Investment Risks

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.

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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 acquisitions 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. ThereIn 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.

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Newly acquired businesses or product lines may not generate forecasted results—While the Company conducts due diligence on acquisitions and employs rigorous investment criteria 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 in evaluating the acquisition. There are many factors that could affect the performance of a newly acquired business or product line. While the Company uses conservative assumptions 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 and, in particular, with the businesses acquired in Central America in 2017 and Brazil in 2019, the Company now carries on business at a material level in some jurisdictions that have a history of political or economic instability and customers with a potentially higher risk profile regarding 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 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, essential 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 for a substantial period of time. 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 commercialization of a new technology.

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, availability of raw materials, equipment failures, 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.

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 genetically modified (“GMO”) seeds and other similar technologies (e.g., RNA interference) 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.

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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.

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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—In 2019, 2018 and 2017,Our top three customers accounted for 39%, 29% and 33%, respectively, of the Company’s sales.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.

General Risks

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 partythird-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 performanceperformance.

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 boththe 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 needs.

The Company’s growth has been fueled in part by acquisitions—Over the past few decades, the Company’s growth has been driven by acquisitions 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 record consistent growth in future years.

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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, (“OECD”), 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, or 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 is subjectrelies heavily on a small number of key employees to possible adverse impacts from the United Kingdom’s decisionmanage ongoing operations and to end its membershipperform strategic planning. In some cases, there are no internal candidates who are qualified to succeed these key personnel in the EU—short term. In June 2016, a majoritythe 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 voters inkey personnel could adversely affect the United Kingdom (“UK”) elected to withdraw from the European Union (“EU”) in a national referendum (“BREXIT”). Following a great dealoperation of political activity, the government’s BREXIT bill passed both the House of Commons and the House of Lords and has obtained royal assent. The results of the UK’s BREXIT may cause volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty. Although it is unknown what the terms of the UK’s future relationship with the EU will be, it is possible that there will be higher tariffs or greater restrictions on imports and exports between the UK and the EU and increased regulatory complexities. The effects of BREXIT could potentially impact the Company’s operations primarily in mainland Europe, including financial, legal, tax, and trade.  our business.

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None

AMVAC owns in fee the Facility constituting approximately 152,000 square feet of improved land in Commerce, California (“Commerce”) on which its West Coast manufacturing, some of its warehouse facilities and some of its manufacturing administrative offices are located.

DAVIE owns in fee approximately 72,000 square feet of warehouse, office and laboratory space on approximately 118,000 square feet of land in Commerce, California, which is leased to AMVAC. In 2013, the Company made a significant investment in the Glenn A. Wintemute Research Center, which houses the Company’s primary research laboratory supporting synthesis, formulation and other new product endeavors.

In 2001, AMVAC completed the acquisition of a manufacturing facility (the “Axis Facility”) from E.I. DuPont de Nemours and Company (“DuPont”). The Axis Facility was one of three such units located on DuPont’s 510-acre complex in Axis, Alabama. The acquisition consisted of a long-term ground lease of 25 acres and the purchase of all improvements thereon. The facility is a multi-purpose plant designed for synthesis of active ingredients and formulation and packaging of finished products. In 2018, FMC Corporation acquired from DuPont a business unit, which held, among other things, the Axis Facility. Prior to expiration of the lease, AMVAC and FMC negotiated the terms of a new lease, which has a term of 15 years and the option to renew for two, 5-year periods.

On December 28, 2007, AMVAC purchased certain manufacturing assets relating to the production of Thimet and Counter and located at BASF’s multi-plant facility situated in Hannibal, Missouri (the “Hannibal Site”). Subject to the terms and conditions of the Agreement, AMVAC purchased certain buildings, manufacturing equipment, office equipment, fixtures, supplies, records, raw materials, intermediates and packaging constituting the “T/C Unit” of the Hannibal Site. The parties entered into a ground lease and a manufacturing and shared services agreement, under which BASF continues to supply various shared services to AMVAC for the Hannibal Site.

On March 7, 2008, AMVAC acquired from Bayer CropScience Limited Partnership, (“BCS LP”), a U.S. business of Bayer CropScience GmbH, a facility (the “Marsing Facility”) located in Marsing, ID,Idaho, which consists of approximately 17 acres of improved real property. The Marsing Facility is engaged in the blending of liquid and powder raw materials and the packaging of some of the Company’s finished goods inventory in liquid, powder and pelletized formulations which are sold both in the U.S. and internationally. In addition, during 2019, the Company purchased approximately three acres of unimproved real estate immediately adjacent to the Marsing Facility for potential storage and operational use in the future.  

In 2001,On October 2, 2020, AMVAC completed the acquisition of a manufacturing facility (the “Axis Facility”) from E.I. DuPont de Nemours and Company (“DuPont”). The Axis Facility is one of three such units located on DuPont’s 510 acre complex in Axis, Alabama. The acquisition consisted of a long-term ground lease of 25 acres and the purchase of all improvements thereon. The facilityoutstanding shares of Agrinos which is a multi-purpose plant designedfully integrated biological input supplier with proprietary technology, internal manufacturing, and global distribution capabilities. Its High Yield Technology® product platform works in conjunction with other nutritional crop inputs to increase crop yield, improve soil health and reduce the environmental footprint of traditional agricultural practices. Agrinos has two primary biological production facilities, a state-of-the-art microbial fermentation facility based in Clackamas, Oregon, and a facility in Sonora, Mexico. The Clackamas and Sonora facilities are used as both manufacturing sites, and operational centers for synthesis of active ingredientsglobal supply chain and formulation and packaging of finished products. In 2018, FMC Corporation acquired from DuPont a business unit which held, among other things, the Axis Facility. Prior to expiration of the lease, AMVAC and FMC negotiated the terms of a new lease, which has a term of 15 years and the option to renew for two, 5-year periods.logistics. 

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AVD regularly adds chemical processing equipment to enhance or expand its production capabilities. The Company believes its facilities are in good operating condition, are suitable and adequate for current needs and have flexibility to change products, and can produce at greater rates as required.products. Facilities and equipment are insured against losses from fire as well as other usual business risks. The Company knows of no material defects in title to, or encumbrances on, any of its properties except that substantially all of the Company’s assets are pledged as collateral under the Company’s credit facility agreements with its primary lender group. For further information, refer to note 2Note 3 of the Notes to the Consolidated Financial Statements in Part IV,II, Item 158 of this Annual Report on Form 10-K.

AVD owns approximately 42 acres of unimproved land in Texas for possible future expansion.

The Company leases approximately 19,953 square feet of office space located at 4695 MacArthur Court in Newport Beach, California. In September 20152020, the lease was amended and was extended to expire on June 30, 2021.2026. The premises have served as the Company’s corporate headquarters since 1994.1995.

The facilities occupied by GemChem, OHP, Envance and TyraTech (Envance and TyraTech are co-located), AMVAC BV’s, GemChem’s,BV, AMVAC M’s,M, AMVAC CR Srl’s,Srl, AMVAC Sgpr’s, OHP’sSgpr, AgNova, Agrinos, AMVAC 3p and AgriCenter’s facilitiesAgriCenter, consist of administration, development centers (in the case of Envance and TyraTech) and/or sales offices which are leased. In addition, Defensive and Agrovant (the Company’s indirect, wholly-owned subsidiaries in Brazil) own and/or lease administration and sales offices andAMVAC 3p leases warehouse space in Jaboticabal, Brazil.

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Please refer to NotesNote 5 of Consolidated Financial Statements – Description of Business, Basis of Consolidation, Basis of Presentation and Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for legal proceedings.in Part II, item 8 of this Annual Report on Form 10-K.  

Not Applicable

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PART II

Market Information

Effective March 7, 2006, the Company listed its $0.10 par value common stock (“Common Stock”) on the New York Stock Exchange under the ticker symbol AVD. From January 1998 through March 6, 2006, the Common Stock was listed on the American Stock Exchange under the ticker symbol AVD. The Company’s Common Stock traded on The NASDAQ Stock Market under the symbol AMGD from March 1987 through January 1998. 

Holders

As of February 14, 2020,March 3, 2022, the number of stockholders of the Company’s Common Stock was approximately 4,496,6,296, which includes beneficial owners with shares held in brokerage accounts under street name and nominees.

Dividends

The Company has issued a cash dividend in each of the last twenty-four years dating back to 1996. Cash dividends declared during the past three years are summarized in the table below.

Share Repurchase ProgramPrograms

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.

On August 30, 2021, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate number of 300,000 shares of its common stock, par value $0.10 per share, in the open market over the succeeding six months. During 2021, the Company purchased 300,000 shares of its common stock for a total of $4,579 at an average price of $15.26 per share.

On November 5, 2018, pursuant to a Board of Directors resolution, the Company announced its intention to repurchase an aggregate amountnumber of shares with a total purchase price not to exceed $20,000 of its common stock, par value $0.10 per share, in the open market, depending upon market conditions over the shortat a price not to mid-term.exceed $17 per share, subject to limitations and restrictions under applicable securities laws. The Shares Repurchase Program expired on March 8, 2019. During 2019, and 2018, the Company purchased a total of 610,406158,048 shares for a total of $9,891 at an average price of $16.20$16.48 per share.  share, for a total of $2,604. During 2018, the Company purchased 452,358 shares at an average price of $16.11 per share, for a total of $7,287.

Securities Authorized for Issuance under Equity Compensation Plans

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Stock Performance Graph

The following graph presents a comparison of the cumulative, five-year total return for the Company, the S&P 500 Stock Index, and a peer group (Specialty Chemical Industry). The graph assumes that the beginning values of the investments in the Company, the S&P 500 Stock Index, and the peer group of companies each was $100 on December 31, 2014.2016. All calculations assume reinvestment of dividends. Returns over the indicated period should not be considered indicative of future returns.

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The following table set forth the Company’s selected consolidated financial data as of and for each of the five years ended December 31, 2019 and should be read in conjunction with our audited consolidated financial statements and notes thereto included under Part II, Item 8 of this annual report.

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FORWARD-LOOKING STATEMENTS/RISK FACTORS:

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. Generally, “may,” “could,” “will,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue” and similar words identify forward-looking statements. Forward-looking statements appearing in this Report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. SEC.Security and Exchange Commission (“SEC”). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Report.

The discussion and analysis of our financial condition and results of operations for 20192021, as compared to 20182020 appears below. As permitted by SEC rules, we have omitted the discussion and analysis of our financial condition and results of operations for 20182020 compared to 2017.2019. See Item 7, “Management’s Discussions and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the year ended December 31, 2018,2020, for this discussion.

MANAGEMENT OVERVIEW

The Company’s operating resultsperformance in 2019 were mixed. With respect2021 was stronger in most all respects as compared to the top line, netprior year. The domestic agricultural economy continued an upcycle that started at the end of 2020 following several years in a downcycle. With that trend, commodity prices for many crops, including corn, soybeans and cotton, rose and remained strong. Both growers and the distribution channel, which had previously worked down inventory to very low levels, began to replenish their stocks of crop inputs. At the same time, pandemic restrictions were relieved in many regions and were only partially reinstated with the emergence at the end of 2021 of the Omicron variant of the coronavirus. Despite supply chain disruptions and some associated cost escalation, particularly on in-bound freight, and the year-end pandemic surge, the markets for the Company’s products were more robust. Net sales were up 3%for 2021 rose 21%, as compared to 20182020 ($468,186556,872, as compared to $454,272); however, gross profit declined by 3% year over year ($177,354 as compared to $182,631)$458,704), and net income was down 44%up about 22% ($13,60118,587, as compared to $24,195)$15,242). It is also interesting to note that operating income rose 35% (to $30,946 in 2021 from $22,908 in 2020) and that, but for the one-time benefit in 2020 of $4,657 arising from a bargain purchase gain relating to the Agrinos acquisition, the improvement in operating income would have been 65% year-over-year.

Top lineIn summary, our results for 2021 were as follows. Net sales performance was drivenimproved across all our businesses. The top line of our U.S. Crop segment was up by 25%, led by strong demand for soil insecticides and cotton products. Sales of our U.S. Non-Crop business was up 30% due largely byto strong demand for our mosquito adulticide product, as customers replenished channel inventory. International sales rose with the addition of businesses that had been acquired late in 2020 (Agrinos and AgNova), continued strong performance in Mexico and overall strong performance in other regions.  

As a result of the sales from newly acquired businesses, including Defensive and Agrovant in Brazil, and newly acquired product lines, such as the Assure II herbicide in Canada and several domestic products. Grossdynamics just described, gross profit during 2021 was approximately 24% above that of 2020 ($213,243 vs. $172,590). Further, gross profit when expressed as a percentage of sales declined from 40%was 38%, which was in 2018 to 38% in 2019. There were two factors driving that change. First, our factory performance in 2019 returned toline with the historical norm with lower utilization compared to 2018 (which was a record-setting year for factory output). Second, our mix of sales included higher volume of lower-margin products from our newly acquired Brazilian distribution businesses, and from our expanding sales in Central America through the AgriCenter group of distribution businesses.

prior year. Operating expenses rose on an absolute basis ($151,133 in 2019,increased by 18% ending at $182,468, as compared to $143,610$154,339 in 2018) due primarily to higher amortization costs and the addition of2020; however, operating expenses (including salaries and other marketing expenses) relating to newly acquired businesses and product lines, partially offset by reduced expenses in both legal activities and global regulatory activities as a result of mix of specific studies conducted in the year. Notwithstanding this net increase, operating expenses(which include outbound freight) as a percent of net sales remained flat at 32% year-over-year.decreased to 33% from 34% compared to 2020.

In lightWith a lower average debt level and a decrease in the effective interest rate, our interest expense dropped by about 29% (to $3,687 in 2021 from $5,178 in 2020) due to timing of lower gross profitour borrowings, continued strong cash generated from increased sales, customer prepayment programs and higher operating expenses described above, operatinga reduction in effective interest rates. For 2021, we reported income before provision for the 2019 year declined by 33%,income taxes and loss on equity method investment of $27,141, as compared to 2018 (to $26,221 from $39,021). Due to$18,447 in 2020. Despite a higher effective tax rate and income taxes, our acquisition activities principallynet income was $18,587 in the second half of 2018 and early in 2019, our average borrowings increased in 2019,2021 as compared to 2018. As a result, net interest expense was $7,209 in 2019, as compared to $4,024 in 2018. During 2019, our effective tax rate remained flat at 27.4%, as compared to 27.2% in 2018. Net income decreased to $0.46 per diluted share ($0.47 per basic share), as compared to $0.81 per diluted share ($0.83 per basic share) in 2018.  $15,242, which represents an increase of about 22%.

When considering the consolidated balance sheet, long-term debt increased by $52,095decreased to $148,766 at$52,240 as of December 31, 2019,2021, from $107,442 as compared to $96,671 atof December 31, 2018.2020. The increaseddecreased level of debt was driven by the acquisitions completedCompany’s strong cash management during 2019.2021, including a continued strong response from the Company’s biggest customers to our early-pay programs. The Company’s liquidity position improved with a closing borrowing capacity was $26,977availability of $178,705 as of December 31, 2019,2021, as compared to $112,150 at$86,736 as of December 31, 2018.2020. Furthermore, inventory increased by $3,418 ($163,313,inventories decreased to $154,306, as of December 31, 2021, as compared to $159,895) at year-end. This was driven primarily by inventory associated with acquisitions, partially offset by underlying reductions in inventory related to products and businesses owned prior to the startinventories of 2019.$163,784, as of December 31, 2020.

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Results of Operations

20192021 Compared with 2018:2020:

DomesticNet sales of our U.S. crop business were about 25% higher than those of the prior year ($263,632 vs. $211,357). Reopening of the economy, transportation needs fueling ethanol, and improving grower profitability due to higher crop commodity prices, all contributed to strong demand for AVD’s crop protection products. Despite the second year of challenging COVID-19 pandemic conditions characterized by the Delta variant and, at the end of the year, ended December 31, 2019the Omicron variant and supply chain disruptions, overall demand in the U.S. crop segment continued the steady improvement that had started with the 2019-2020 crop season, and our customers in the distribution channel gradually returned to more normal procurement practices. We had very strong performance in corn, with sales of soil insecticides and post-emergent herbicides posting a 45% year-over-year increase.  Similarly in cotton, a strong commodity price stimulated demand for our foliar insecticides and harvest defoliant which generated sales that were $282,225,up 84%, as compared to $300,314those of 2020. We also recorded stronger sales in 2018,our soybean products, Thimet for peanuts, and Dacthal for a decreasewide range of 6%. Sales were adversely affected by several factors. Unusually hotfruits and dry autumn weather in the Southeastern U.S. followed by an early frost in Texas resulted in much lower demand for our U.S. cotton defoliant Folex®. In addition,vegetables. Partially offsetting these increases, sales of our soil fumigant productsbusiness declined slightly due to year-end logistics difficulties in light of record-setting rainfall across multiple regions,transporting this large volume liquid product, particularly in California and the Pacific Northwest duringregion.

Cost of sales within the first half of the year, followed by snow and rain in the upper Midwest during the second half of the year. Additionally, full-year sales of several products (paraquat, abamectin and chlorothalonil) acquired in 2017 declined as a result of unfavorable weather, supply chain disruptions and competitive market pressures. In addition, we experienced a slight decline in sales of our mosquito adulticide Dibrom® to more normal annual levels, following the exceptional hurricane-driven demand of 2017 and 2018. These declines were partially offset by strong demand for our cotton foliar insecticide Bidrin® and certain of our premium Midwest corn products.

International sales increased 21% ($185,961 in 2019 as compared to $153,958 in 2018). The improved sales performance was driven by our new Brazilian distribution businesses that were acquired in January 2019. In addition, the AgriCenter businesses in Central America recorded a 14% growth in sales led by increased mineral oil sales (into high-value fruit crops), fungicides (to control black sigatoka), Mocap® (for use on pineapples), nematicide sales in Panama, and herbicides (primarily for use on rice crops in Panama and Nicaragua). Further, sales of the Assure II herbicide largely into canola, pulse and soybeans in Canada also contributed to the international top-line growth. These gains were partially offset by decreased sales of granular nematicides into banana crops as part of the multi-year rotation typically employed by large plantations and by challenging market conditions and slightly declining year-over-year sales of our products Mocap (due to non-renewal of its registration in the EU), Nemacur®, Counter® and Thimet®.

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The relative sales performance of our crop and non-crop businesses is as follows: Net sales of ourdomestic crop business was higher in 2019 were $402,400, which constitutes an increase of 3%2021 (up 30% to $154,064 from $118,634 in 2020), as compared to neton sales of $392,305that increased 25%, gross profit improved by 18% ($109,568 in 2018. Net sales of our non-crop products2021 vs. $92,723 in 2019 were $65,786, which is an increase of approximately 6%2020), as compared to $61,967 in 2018. A more detailed discussion of our sales performance in 2019, as compared to 2018, for each of the crop and non-crop businesses appears below.

In our crop business, net sales of insecticides in 2019 ended up $2,853 at $153,448, as compared to sales of $150,595 in 2018. This sales performancegross margin was driven primarily by the addition of sales of our Brazilian distribution businesses (Defensive and Agrovant) that were acquired on January 2019, the increased sales of our Central American distribution business and the strong 2019 performance of our Bidrin foliar insecticide for cotton in the U.S. due to increased cotton acres. These gains were offset by a reduction in net sales of several granular soil insecticides, most particularly Mocap and Nemacur sold primarily in our international markets, particularly in the countries of the EU. Despite lower planted corn acres in the U.S., we recorded improved year-over-year sales of Aztec® and SmartChoice®, arising largely from corn rootworm pressure in the Midwest coupled with low channel inventories at the start of the year. Sales of our nematicide Counter were down slightly year-over-year due to decreased corn acreage in the U.S.. Similarly, Thimet experienced a slight decline in sales due to lower peanut plantings in the Southeast U.S.

Within the product group of herbicides/soil fumigants/fungicides, our crop net sales ended at $181,686 in 2019, as compared to $183,350 in 2018 (a reduction of 1%). Our fumigant product line decreased slightly as unfavorable wet weather conditions inhibited seasonal applications in both the Pacific Northwest and North Central regions. In the herbicide portion of this group, we had stronger performance from our traditional post-emergent corn herbicide Impact® and the addition of sales from our newly acquired Assure II herbicide, which were partially offset by slightly reduced sales of Dacthal® in a variety of crops. Further, in the category of fungicides, chlorothalonil sales declined year-over-year as dry weather during late spring reduced demand in peanuts and potatoes, while supply in the channel was unusually high, following industry-wide imports in advance of tariffs on Chinese products in 2018. These changes were effectively offset by the addition of sales of our newly acquired Brazilian distribution businesses.

Within our other product group (which includes plant growth regulators, molluscicides, third party manufacturing activity, we experienced an increase of 15% with net sales ending at $67,266 in 2019, as compared to $58,360 in 2018. The main drivers of this performance were the inclusion of the Brazilian businesses, and increased toll manufacturing in 2019. These increases were partially offset by a 2019 decline in our Folex® cotton defoliant, as covered above.

Within our non-crop business, net sales in 2019 increased by 6% to $65,786, as compared to $61,967 in 2018. This improved performance benefited from growth in sales of OHP, our niche horticultural business, and from our traditional commercial and consumer pest strip product lines. Finally, sales of our Dibrom brand mosquito adulticide were reduced in comparison to sales recorded in 2018 and 2017, which experienced exceptionally heavy demand following the significant hurricanes of 2017. Notwithstanding those market pressures, sales were solid in comparison to the usual level of annual sales of this premium product range.

Our cost of sales for 2019 was $290,832 or 62% of sales. This compared to $271,641 or 60% of sales for 2018. The Company aggregates a number of key variable, semi-variable and fixed cost components within reported cost of sales. The raw materials element of our cost of sales increased slightly (up 0.4%), as compared to last year. The overall increased cost of sales was expected and relates to the change in sales mix driven by the products and distribution businesses acquired in December 2018 and in January 2019 (that recorded essentially a full year of sales in 2019), as compared to 2018. In general terms the cost of sales related to the products and businesses acquired in the last 2-3 years tends to be higher than those of our pre-existing portfolio, because those businesses are selling fully marked up, third-party products, while the Company’s core portfolio benefits from the upstream manufacturing activity. Our manufacturing performance for the year was in-line with our targets; however, output was down (as expected), as compared to 2018. In 2019, factory cost amounted to 2.6% of sales, which is in line with our long-term target. This compared to the 0.4% of sales achieved in 2018.   

Gross profit decreased by $5,277 or 3% to end at $177,354 for the year ended December 31, 2019 as compared to $182,631 for the prior year. Gross margin as a percent of net sales was 38% for 2019, as compared to 40% in 2018. In 2019, the Company experienced lower factory output (noted above) and the strong growth of lower margin sales in Central and South America. These negative trends were partially offset by a strong performance managing raw material purchases.

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Operating expenses in 2019 increased by $7,523 to $151,133 or 32%42% of sales as compared to $143,61044% last year.

Net sales of our U.S. non-crop business were up about 30% ($78,605 in 2021 vs. $60,367 in 2020) largely due to our Dibrom® mosquito adulticide sales, which nearly doubled in 2021, as demand from mosquito control distributors was driven by significant tropical storm and hurricane activity and the normal need to refill channel inventory in readiness for the next season. Net sales of pest strips and other commercial pest control products increased strongly in 2021, as restaurants, schools, malls, and many other commercial enterprises reopened with the lifting of pandemic restrictions. Net sales from our OHP nursery and ornamental business were 19% higher than 2020, as demand for homeowner garden and landscape products accelerated during the year at retail locations around the country. Finally, our TyraTech/Envance revenues grew over 71% driven by both direct product sales and royalty income which exceeded prior year performance.

Cost of sales in our U.S. non-crop business rose by 27% in comparison to the prior year ($41,162 in 2021 vs. $32,525 in 2020), gross profit increased by 34% (from $27,842 in 2020 to $37,443 in 2021), and gross margin percentage increased to 48% in 2021, as compared to 46% in 2020.

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Operating expenses (which include outbound freight costs) increased by $28,129 in 2021, to $182,468 or 32%33% of sales, as compared to $154,339 or 34% in 2018.2020. The differences in operating expenses by department are as follows:

Selling expenses increased by 14%In July 2020, the Company made a strategic investment in Clean Seed Inc., in the amount of $1,190. Subsequent to $45,121the initial investment, the Company recorded a loss to its fair value in the amount of $391 in 2021 and gain in the amount of $717 in 2020, respectively.

In February 2016, AMVAC BV made an equity investment of $3,283 in Biological Products for Agriculture (“Bi-PA”). The Company has elected to measure the investment at cost less impairment, if any, and to record 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 recorded an impairment in the amount of $399 during the year ended December 31, 2021. No impairment was recorded for the year ended December 31, 2019, as compared to $39,585 in 2018. The main drivers were an increase in activities from the products and businesses acquired in late 2018 and during 2019 including the distribution businesses in Brazil, and the Assure II business in Canada and the U.S.. Included in this increase are the costs related to the transitional service agreement on one of the acquired businesses. We are continuing to invest in the growth of our international businesses and increased advertising and marketing activities in both our domestic and international regions.2020.

Net interest expense was $7,209$3,687 in 2019,2021, as compared to $4,024$5,178 in 2018.2020. Interest costs are summarized in the following table:

The Company’s average overall debt for the year ended December 31, 20192021, was $166,828,$142,238, as compared to $93,346$170,801 for the year ended December 31, 2018.2020. On a gross basis, our effective interest rate increased on our working capital revolver to 4.1%, as compared to 3.6% in 2018. This increase was driven by increases in the LIBOR rate. Afterafter adjustments related to capitalized interest and expenses related to the amortization of deferred liabilities, our effective interest rate on our working capital revolver decreased to 2.6%, as compared to 3.0% in 2020. This improvement was driven by U.S. fiscal policy and decreases in the overall effectiveLIBOR rate, was 4.3% for 2019 and 2018.improved cash management.

Our provision for income taxes for 20192021 was $5,202,$8,166, as compared to $9,145$3,080 for 2018.2020. The effective tax rate for 20192021 was 27.4%30.0%, as compared to 27.2%16.7% in 2018.2020. The increase of the effective tax rate in 2021 was due to a non-cash charge related to a valuation allowance associated with a deferred tax asset in Brazil.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for the 20162018 through 20182020 tax years. State income tax returns are subject to examination for the 20152017 through 20182020 tax years. The Company has other foreign income tax returns subject to examination.

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For the yearyears ended December 31, 2019,2021 and 2020, the Company recorded net losses on its equity investments of $209. For 2018, the Company recorded losses on its equity investments of $389.

Non-controlling interest represents the share of net income or loss that is attributable to the non-controlling stockholder of our majority owned subsidiary, Envance. During the period from January 1, 2018 to November 8, 2018, a loss of $133 was attributed to non-controlling interest. Envance became a wholly owned subsidiary on November 9, 2018.$388 and $125, respectively.

Net income attributable to American Vanguard ended was $13,601$18,587 or $0.46$0.62 per basic share and $0.61 per diluted share in 20192021 as compared to $24,195$15,242 or $0.81$0.52 per basic share and $0.51 per diluted share in 2018.2020.

Liquidity and Capital Resources

The Company generated $9,403$86,361 of cash from operating activities during the year ended December 31, 2019,2021, as compared to $11,346$90,324 in the prior year. Included in the $9,403$86,361 are net income of $13,601,$18,587, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of $22,922,$26,164, loss on disposal of property, plant and equipment of $194, amortization of deferred loan fees of $367, revision of contingent consideration of $758, and provision for bad debts in the amount of $1,035, less reassessment of deferred compensation of $4,120.$649. In addition, stock-based compensation of $7,160,$6,880, loss from equity method investments of $209 and$388, change in fair value of investments of $790, change in value of deferred income taxes of $2,616, present further$2,090, change in reserves for uncertain tax positions of $1,783, adjustment to bargain purchase gain on business acquisition in the amount of $171, decrease in environmental liability of $167, and net adjustments to reconcile net income toforeign currency adjustment of $225, resulted in net cash provided by operating activities of $43,567,$49,669, as compared to $48,995$39,931 for the same period of 2018.2020.

During 2019,2021, the Company increaseddecreased working capital by $32,901,$39,987, as compared 2018. This increase excluded working capital related to the products and businesses acquired during 2019.position at December 31, 2020. Included in this change: accounts receivables net increased by $11,383,$24,347, inventories decreased by $3,817, income taxes$8,130, tax receivable, net increased by $6,855,$6,051, and prepaid expenses increased by $876.$3,354. Deferred revenue increased by $13,355,$19,280, as compared to December 31, 2018,2020, driven by individual customer decisions to make early payments in return for early cash incentive programs. Our accounts payable balances decreasedincreased by $7,977,$8,783, program accruals were increased by $5,797$17,877 and other payables and accrued expenses decreasedincreased by $3,337.$3,986.  

With regard to our program accrual, the year-over-year change is primarily reflects acquired liabilities as part of acquisitions agreements anddriven by ourthe mix of sales and customers in 2019,2021, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Most of our programs relate to domestic sales. Typically, domestic crops have a growing season that ends on September 30^th of each year. During 2019, the Company made accruals for programs in the amount of $63,579, acquired liabilities as part of domestic acquisitions in the amount of $7,247 and made payments in the amount of $60,476. During 2018,2021, the Company made accruals in the amount of $61,114$99,482 and made payments in the amount of $62,819.$81,678. During 2020, the Company made accruals in the amount of $66,622 and made payments in the amount of $68,880.

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Because the estimate for the program accrual is a material component of the presentation of the Company’s overall financial performance, the Company believes that the process it uses is critical in setting the accrual at the appropriate level. The Company’s process for developing the estimate involves a detailed review of each related transaction and includes the input of a significant number of senior employees to enable the Company to set the accrual using consistently applied judgements, subject to the particular circumstances of any individual transaction.  

Cash used for investing activities amounted to $54,837$20,042 for the year ended December 31, 2019,2021, as compared to $27,697$35,795 in 2018. The2020. In 2021, the Company spent $41,852$10,524 in business and product acquisitions and on patents applications associated with its TyraTech and Envance technology solutions. In addition, in 2021, $9,518 was spent on capital expenditures primarily focused on continuing to invest in manufacturing infrastructure to expand production efficiency and capabilities. In 2020, the Company spent $23,356 in business and product acquisitions including intangible assets, goodwill, working capital and fixed assets as well as patent application costs.  In addition, $12,985 was spentcosts, and $11,249 on capital expenditures primarily focused on continuing to investour manufacturing facilities. Furthermore in manufacturing infrastructure.2020, the Company spent $1,190 on an equity investment.

During the year ended December 31, 2019,2021, financing activities provided $46,406, principally fromused $65,871, as compared to $44,440 during the borrowingsprior year. This included making repayments on the Company’s senior credit facility as compared to providing $11,133 forin the amount of $55,569 during the year ended December 31, 2018. This included net borrowings2021. During 2020, the Company made similar repayments in the amount of $51,900 from our credit facility in 2019, as compared to net borrowings of $18,975 in 2018.$41,624.  During 2021, the year, weCompany paid dividends to stockholders amounting to $2,323,$2,382, as compared to $2,199$1,168 in 2018. The2020. Furthermore, the Company paid $850 deferredfor contingent consideration relating toin the acquisition made duringamount of $1,301 and $1,227 for the year.years ended December 31, 2021 and 2020, respectively. Finally, the Company repurchasedused $4,579 to repurchase common stock at market for $2,604, as compared to $7,287 in prior year.  2021. The Company did not repurchase stock in 2020.

The Company has various loans in place that together constitute the long-term loan balances shown in the consolidated balance sheets as atof December 31, 20192021 and 2018.2020. These are summarized in the following table:

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

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AsThe Company and certain of June 30, 2017,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, Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliatesBorrower Agent (including the Company AMVAC CV and AMVAC BV), as  guarantors and/or borrowers, entered into a Third Amendment to Second AmendedBorrowers, on the one hand, and Restated Credit Agreement with a group of commercial lenders led by Bank of the West as administrative agent, swing line lenderdocumentation agent, syndication agent, collateral agent, sole lead arranger and Letter of Credit issuer. As of November 27, 2019, AMVAC, as borrower and certain affiliates,book runner, on the one hand, entered into a Fourth Amendment to Second Amended and Restated Credit Agreement with a group of commercial lenders led by Bank of the West as agent, swing line lender and Letter of Credit under the terms of which the maximum limits for both Permitted Acquisitions and Investments in Foreign Subsidiaries were increased and new language was added with respect to Eurocurrency Rates, LIBOR Rates and ERISA. The Third and Fourth Amendments, taken together, constitute the Credit Agreement.

other hand. The Credit Agreement is a senior secured lending facility, consistingconsists 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 amends and restates the previous credit facility, which had a maturity date of June 30, 2022. TheWith respect to key financial covenants, the Credit Agreement contains two key financial covenants;two: namely, borrowers are required to maintain a Consolidated Funded DebtTotal 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 CovenantCoverage 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.

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 DebtTotal Leverage (“TL”) Ratio (“Eurocurrency RateLIBOR 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 RateMargin (“AlternateAdjusted Base Rate Revolver Loan”). Interest payments for Eurocurrency RateLIBOR Revolver Loans are payable on the last day of each interest period (either one, two, threeone-, three- or sixsix- months, as selected by the borrower) and the maturity date, while interest payments for AlternateAdjusted Base Rate Revolver Loans are payable on the last business day of each month and the maturity date. The interest rate on December 31, 20192021, was 3.74%1.98%.

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At December 31, 2019,2021, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $26,977.$178,705. This compares to an available borrowing capacity of $112,150$86,736 as of December 31, 2018.2020. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for trailing twelve-month period, (2) the inclusion of proforma EBITDA related to acquisitions completed during the preceding twelve months and (3) the leverage covenant (being the number of times EBITDA the Company may borrow under its credit facility agreement). The Company was in compliance with all theits debt covenants as of December 31, 2019.2021.

We believe that the combination of our cash flows from future operations, current cash on hand and the availability under the Company’s credit facility will be sufficient to meet our working capital and capital expenditure requirements and will provide us with adequate liquidity to meet our anticipated operating needs for at least the next 12 months from the issuance of the Annual Report. Although operating activities are expected to provide cash, to the extent of growth in the future, our operating and investing activities will use cash and, consequently, this growth may require us to access some or all of the availability under the credit facility. It is also possible that additional sources of finance may be necessary to support additional growth.

Contractual Obligations and Off-Balance Sheet Arrangements

The following summarizes our contractual obligations at December 31, 2019, andSubstantially all the effects such obligationsCompany’s assets are expected to have on cash flows in future periods:pledged as collateral under the Credit Agreement, as amended.