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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value—~~30,199,867~~30,163,787 shares as of ~~July 30, 2019.~~

	For the Three Months Ended June 30,				For the Six Months Ended June 30,				For the three months ended March 31
	2019		2018		2019		2018		2020			2019
Net sales	$	113,104	$	107,046	$	212,780	$	211,154	$	95,962		$	99,676
Cost of sales		71,451		63,749		129,425		126,806		57,581			57,974
Gross profit		41,653		43,297		83,355		84,348		38,381			41,702
Operating expenses		35,362		34,718		70,162		68,418		36,545			34,800
Operating income		6,291		8,579		13,193		15,930		1,836			6,902
Interest expense, net		1,925		966		3,537		1,803		1,508			1,612
Income before provision for income taxes and loss on equity method investments		4,366		7,613		9,656		14,127
Income tax expense		1,224		1,748		2,584		3,440
Income before loss on equity method investments		3,142		5,865		7,072		10,687
Loss from equity method investments		36		301		60		518
Income before provision for income taxes (benefit) and loss on equity method investment										328			5,290
Income tax (benefit) expense										(205	)		1,360
Income before loss on equity method investment										533			3,930
Loss from equity method investment										13			24
Net income		3,106		5,564		7,012		10,169	$	520		$	3,906
Net income attributable to non-controlling interest		—		35		—		85
Net income attributable to American Vanguard	$	3,106	$	5,599	$	7,012	$	10,254
Earnings per common share—basic	$	.11	$	.19	$	.24	$	.35	$	0.02		$	0.13
Earnings per common share—assuming dilution	$	.11	$	.19	$	.24	$	.34	$	0.02		$	0.13
Weighted average shares outstanding—basic		29,001		29,330		28,989		29,309		29,288			28,977
Weighted average shares outstanding—assuming dilution		29,540		30,190		29,560		30,113		29,948			29,579

		June 30, 2019			December 31, 2018				March 31, 2020			December 31, 2019
Current assets:
Cash and cash equivalents		$	6,307		$	6,168			$	5,544		$	6,581
Receivables:
Trade, net of allowance for doubtful accounts of $1,707 and $1,263, respectively			118,351			123,320
Trade, net of allowance for doubtful accounts of $2,606 and $2,297, respectively										141,509			136,075
Other			12,679			10,709				13,134			16,949
Total receivables, net			131,030			134,029				154,643			153,024
Inventories, net			193,393			159,895
Inventories										175,861			163,313
Prepaid expenses			11,717			10,096				11,149			10,457
Income taxes receivable			445			—				3,406			2,824
Total current assets			342,892			310,188				350,603			336,199
Property, plant and equipment, net			53,637			49,252				57,599			56,521
Operating lease right-of-use assets			12,420			—				10,731			11,258
Intangible assets, net of amortization			194,337			186,583
Intangible assets, net of applicable amortization										193,823			198,377
Goodwill			39,436			25,790				41,974			46,557
Other assets			23,087			21,774				19,511			21,186
Total assets		$	665,809		$	593,587			$	674,241		$	670,098

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	1,320		$	1,609			$	227		$	1,513
Accounts payable			62,220			66,535				64,333			64,881
Deferred revenue			751			20,043				4,448			6,826
Accrued program costs			49,172			37,349				53,696			47,699
Accrued expenses and other payables			11,085			15,962				11,720			12,815
Operating lease liabilities, current			4,749			—				4,883			4,904
Income taxes payable			—			4,030
Total current liabilities			129,297			145,528				139,307			138,638
Long-term debt, net of deferred loan fees			164,574			96,671
Operating lease liabilities, long-term			7,744			—
Long-term debt, net										168,225			148,766
Operating lease liabilities, long term										5,996			6,503
Other liabilities, excluding current installments			10,982			6,795				10,963			12,890
Deferred income tax liabilities			19,364			15,363				15,543			19,145
Total liabilities			331,961			264,357				340,034			325,942
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued			—			—				—			—
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,204,191 shares at June 30, 2019 and 32,752,827 shares at December 31, 2018			3,321			3,276
Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,188,421 shares at March 31, 2020 and 33,233,614 shares at December 31, 2019										3,319			3,324
Additional paid-in capital			85,614			83,177				89,757			90,572
Accumulated other comprehensive loss			(5,619	)		(4,507	)			(14,761	)		(5,698	)
Retained earnings			268,692			262,840				274,052			274,118
			352,008			344,786
Less treasury stock at cost, 3,061,040 shares at June 30, 2019 and 2,902,992 shares at December 31, 2018			(18,160	)		(15,556	)
Less treasury stock at cost, 3,061,040 shares at March 31, 2020 and December 31, 2019										(18,160	)		(18,160	)
Total stockholders’ equity			333,848			329,230				334,207			344,156
Total liabilities and stockholders' equity		$	665,809		$	593,587			$	674,241		$	670,098

For The Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and 2018~~

Common Stock

Additional

Accumulated
Other

Treasury Stock

Non-

Shares

Amount

Paid-in
Capital

Comprehensive
Loss

Retained
Earnings

Shares

Amount

AVD
Total

Controlling Interest

Total

Balance, December 31, 2018

32,752,827

$
3,276

$
83,177

$
(4,507
)

$
262,840

2,902,992

$
(15,556
)

$
329,230

$
—

$
329,230

Common stock issued under ESPP

22,441

2

336

—

—

—

—

338

—

338

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(580
)

—

—

(580
)

—

(580
)
Foreign currency translation adjustment,
   net

—

—

—

(1,769
)

—

—

—

(1,769
)

—

(1,769
)
Stock based compensation

—

—

1,485

—

—

—

—

1,485

—

1,485

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

419,295

42

(930
)

—

—

—

—

(888
)

—

(888
)
Shares repurchased

—

—

—

—

—

158,048

(2,604
)

(2,604
)

—

(2,604
)
Net income

—

—

—

—

3,906

—

—

3,906

—

3,906

Balance, March 31, 2019

33,194,563

3,320

84,068

(6,276
)

266,166

3,061,040

(18,160
)

329,118

—

329,118

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(580
)

—

—

(580
)

—

(580
)
Foreign currency translation adjustment,
   net

—

—

—

657

—

—

—

657

—

657

Stock based compensation

—

—

1,510

—

—

—

—

1,510

—

1,510

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

9,628

1

36

—

—

—

—

37

—

37

Net income

—

—

—

—

3,106

—

—

3,106

—

3,106

Balance, June 30, 2019

33,204,191

$
3,321

$
85,614

$
(5,619
)

$
268,692

3,061,040

$
(18,160
)

333,848

$
—

$
333,848

	Common Stock															Treasury Stock
	Shares			Amount			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Shares		Amount			Total
Balance, December 31, 2019		33,233,614		$	3,324		$	90,572		$	(5,698	)	$	274,118			3,061,040	$	(18,160	)	$	344,156
Stocks issued under ESPP		22,776			2			350			—			—			—		—			352
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(586	)		—		—			(586	)
Foreign currency translation adjustment, net		—			—			—			(9,063	)		—			—		—			(9,063	)
Stock based compensation		—			—			1,357			—			—			—		—			1,357
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		(67,969	)		(7	)		(2,522	)		—			—			—		—			(2,529	)
Net income		—			—			—			—			520			—		—			520
Balance, March 31, 2020		33,188,421		$	3,319		$	89,757		$	(14,761	)	$	274,052			3,061,040	$	(18,160	)	$	334,207

Balance, December 31, 2018		32,752,827		$	3,276		$	83,177		$	(4,507	)	$	262,840			2,902,992	$	(15,556	)	$	329,230
Stocks issued under ESPP		22,441			2			336			—			—			—		—			338
Cash dividends on common stock ($0.02 per share)		—			—			—			—			(580	)		—		—			(580	)
Foreign currency translation adjustment, net		—			—			—			(1,769	)		—			—		—			(1,769	)
Stock based compensation		—			—			1,485			—			—			—		—			1,485
Stock options exercised; grants, termination and vesting of restricted stock units (net of shares in lieu of taxes)		419,295			42			(930	)		—			—			—		—			(888	)
Shares repurchased		—			—			—			—			—			158,048		(2,604	)		(2,604	)
Net income		—			—			—			—			3,906			—		—			3,906
Balance, March 31, 2019		33,194,563		$	3,320		$	84,068		$	(6,276	)	$	266,166			3,061,040	$	(18,160	)	$	329,118

Common Stock

Additional

Accumulated
Other

Treasury Stock

Non-

Shares

Amount

Paid-in
Capital

Comprehensive
Loss

Retained
Earnings

Shares

Amount

AVD
Total

Controlling Interest

Total

Balance, December 31, 2017

32,241,866

$
3,225

$
75,658

$
(4,507
)

$
238,953

2,450,634

$
(8,269
)

$
305,060

$
254

$
305,314

Adjustment to recognize new revenue
   recognition standard, net of tax

—

—

—

—

2,214

—

—

2,214

—

2,214

Adjustment to recognize new standard
   on taxes on foreign asset transfers

—

—

—

—

(180
)

—

—

(180
)

—

(180
)
Common stock issued under ESPP

17,078

1

298

—

—

—

—

299

—

299

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(586
)

—

—

(586
)

—

(586
)
Foreign currency translation adjustment,
   net

—

—

—

672

—

—

—

672

—

672

Stock based compensation

—

—

1,309

—

—

—

—

1,309

—

1,309

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

409,979

41

470

—

—

—

—

511

—

511

Net income

—

—

—

—

4,655

—

—

4,655

(50
)

4,605

Balance, March 31, 2018

32,668,923

3,267

77,735

(3,835
)

245,056

2,450,634

(8,269
)

313,954

204

314,158

Cash dividends on common stock ($0.02
   per share)

—

—

—

—

(587
)

—

—

(587
)

—

(587
)
Foreign currency translation adjustment,
   net

—

—

—

(898
)

—

—

—

(898
)

—

(898
)
Stock based compensation

—

—

1,469

—

—

—

—

1,469

—

1,469

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

74,581

8

517

—

—

—

—

525

—

525

Net income

—

—

—

—

5,599

—

—

5,599

(35
)

5,564

Balance, June 30, 2018

32,743,504

$
3,275

$
79,721

$
(4,733
)

$
250,068

2,450,634

$
(8,269
)

$
320,062

$
169

$
320,231

	For the Six Months Ended June 30,						For the three months ended March 31
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	7,012		$	10,169		$	520		$	3,906
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		9,233			9,516
Amortization of other long term assets		2,146			2,313
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed and intangible assets								4,762			4,609
Amortization of other long-term assets and debt issuance costs								1,026			1,082
Amortization of discounted liabilities		—			202			4			—
Provision for bad debts		445			181			359			1,034
Revision of deferred compensation		(2,888	)		(1,468	)		—			(1,543	)
Stock-based compensation		2,995			2,778			1,357			1,485
Change in deferred income taxes		(572	)		(26	)
Loss from equity method investments		60			518
Decrease in deferred income taxes								(910	)		(742	)
Loss from equity method investment								13			24
Net foreign currency adjustment								823			172
Changes in assets and liabilities associated with operations:
Decrease in net receivables		7,841			5,297
Decrease (increase) in net receivables								(5,472	)		6,812
Increase in inventories		(27,635	)		(40,194	)		(16,446	)		(23,763	)
Increase in prepaid expenses and other assets		(1,844	)		(707	)		(776	)		(2,724	)
Increase in net operating lease liability		73			—
Increase in income tax receivable/payable, net		(4,480	)		(271	)
Decrease (increase) in income tax receivable/payable, net								(597	)		750
(Decrease) increase in accounts payable		(10,138	)		11,309			(189	)		4,788
Decrease in deferred revenue		(19,438	)		(7,254	)		(2,342	)		(16,036	)
Increase in accrued program costs		11,823			15,039			6,016			2,391
Decrease in other payables and accrued expenses		(6,719	)		(3,683	)		(2,094	)		(2,508	)
Net cash (used in) provided by operating activities		(32,086	)		3,719
Net cash used in by operating activities								(13,946	)		(20,263	)
Cash flows from investing activities:
Capital expenditures		(7,216	)		(3,230	)		(2,980	)		(3,369	)
Acquisition of business, product lines, and intangible assets		(24,302	)		(1,631	)
Acquisitions of businesses, product lines and intangible assets								—			(24,246	)
Net cash used in investing activities		(31,518	)		(4,861	)		(2,980	)		(27,615	)
Cash flows from financing activities:
Payments under line of credit agreement		(54,200	)		(62,125	)
Borrowings under line of credit agreement		122,000			58,800
Net (payments) receipts from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)		(513	)		1,335
Net borrowings under line of credit agreement								19,400			52,600
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings)								(2,177	)		(550	)
Repurchase of common stock		(2,604	)		—			—			(2,604	)
Payment of cash dividends		(1,160	)		(1,024	)		(582	)		(581	)
Net cash provided by (used in) financing activities		63,523			(3,014	)
Net decrease in cash and cash equivalents		(81	)		(4,156	)
Net cash provided by financing activities								16,641			48,865
Net (decrease) increase in cash and cash equivalents								(285	)		987
Effect of exchange rate changes on cash and cash equivalents		220			(82	)		(752	)		(498	)
Cash and cash equivalents at beginning of period		6,168			11,337			6,581			6,168
Cash and cash equivalents at end of period	$	6,307		$	7,099		$	5,544		$	6,657

Non-cash investing activities:
Deferred consideration in connection with business acquisitions:							$	—		$	2,645

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

The Company is closely monitoring the impact of the novel coronavirus (COVID-19) pandemic on all aspects of its business, including how the pandemic will impact its customers, business partners, and employees. The Company is considered an essential business by most governments in the jurisdictions and territories in which the Company operates and, as a result, did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2020. However, the Company is unable to predict the impact that the pandemic may have on its future financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its customers in the near term will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The Company continues to monitor its business for adverse impacts of the pandemic, including volatility in the foreign exchange markets, demand, supply-chain disruptions in certain markets, and increased costs of employee safety, among others.

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

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

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

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

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

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

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

~~The operating leases of the Company do not contain major restrictions or covenants such as those relating to dividends or additional financial obligations.~~ Finance leases are immaterial to the condensed consolidated financial statements. There were no lease transactions with related parties as of ~~June 30, 2019.~~March 31, 2020.

The operating lease expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 was ~~$1,400~~$1,395 and ~~$2,758,~~$1,227, respectively. Lease expenses related to variable lease payments and ~~short term~~short-term leases were immaterial. ~~Additional~~Other information related to operating leases ~~are as follows:~~

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

Future minimum lease payments under non-cancellable operating leases as of ~~June 30, 2019~~March 31, 2020 were as follows:

3. Revenue ~~Recognition—Effective January 1, 2018, the Company adopted ASC 606, Revenue Recognition.~~ Recognition—The Company recognizes revenue from the sale of its products, which include ~~insecticides, herbicides, soil fumigants,~~crop and ~~fungicides.~~non-crop products. The Company sells its products to customers, which include distributors, retailers, and ~~retailers.~~growers. In addition, the Company recognizes royalty income from ~~the sale of intellectual property.~~licensing agreements. Based on similar economic and operational characteristics, the Company’s business is aggregated into one reportable segment. Selective enterprise information of sales disaggregated by category and geographic region is as follows:

	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019				Three Months Ended March 31,
	As reported		Without adoption of ASC 606		As reported		Without adoption of ASC 606		2020		2019
Net sales:
Crop:
Insecticides	$	36,509	$	36,515	$	76,692	$	76,722
Herbicides/soil fumigants/fungicides		37,203		37,203		68,738		68,738
Other, including plant growth regulators and distribution		22,173		22,173		37,843		37,843
		95,885		95,891		183,273		183,303
Non-crop, including distribution		17,219		17,219		29,507		29,507
Total net sales:	$	113,104	$	113,110	$	212,780	$	212,810
Net sales:
US	$	64,530	$	64,536	$	126,067	$	126,097
US crop									$	50,362	$	50,270
US non-crop										10,993		11,267
Total US										61,355		61,537
International		48,574		48,574		86,713		86,713		34,607		38,139
Total net sales:	$	113,104	$	113,110	$	212,780	$	212,810	$	95,962	$	99,676
Timing of revenue recognition:
Goods transferred at a point in time	$	113,104	$	113,110	$	212,401	$	212,810	$	95,776	$	99,297
Goods and services transferred over time		—		—		379		—		186		379
Total net sales:	$	113,104	$	113,110	$	212,780	$	212,810	$	95,962	$	99,676

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

As of June 30, 2019, the Company had $751 of remaining performance obligations, which is comprised of deferred revenue and services not yet delivered. The Company expects to recognize approximately all of its remaining performance obligations as revenue in fiscal 2019.

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

Revenue recognized for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, that was included in the deferred revenue balance at the beginning of ~~2019 were $3,408 and $19,349, respectively.~~

2020 was $2,378. The Company expects to recognize all its remaining deferred revenue in fiscal 2020.

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

The Company recognized depreciation expense related to property ~~plant~~ and equipment of ~~$1,577~~$1,517 and ~~$2,055~~$1,648 for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. During the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~the Company did not eliminate any assets and accumulated depreciation. During the three months ended June 30, 2018, the Company eliminated $3,219 of fully depreciated assets.~~

The Company recognized depreciation expense related to property, plant and equipment of $3,225 and $4,146 for the six months ended June 30, 2019 and 2018, respectively. During the six months ended June 30, 2019 and 2018, the Company eliminated from assets and accumulated depreciation ~~$710~~$113 and ~~$3,347,~~$710, respectively, of fully depreciated assets.

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

5. ~~As of June 30, 2019, we believe that inventories~~Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The components of inventories consist of the following:

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

	For the six months ended June 30,										For the three Months Ended March 31
	2019		2018		Change			% Change			2020			2019			Change			% Change
Net sales:
US crop	$	96,560	$	108,785	$	(12,225	)		-11	%	$	50,362		$	50,270		$	92			0	%
US non-crop		29,507		25,393		4,114			16	%		10,993			11,267			(274	)		-2	%
US total		126,067		134,178		(8,111	)		-6	%
Total US												61,355			61,537			(182	)		0	%
International		86,713		76,976		9,737			13	%		34,607			38,139			(3,532	)		-9	%
Net sales:	$	212,780	$	211,154	$	1,626			1	%
Total net sales:											$	95,962		$	99,676		$	(3,714	)		-4	%
Gross profit:
US crop	$	42,214	$	50,753	$	(8,539	)		-17	%	$	24,245		$	23,822		$	423			2	%
US non-crop		14,872		12,432		2,440			20	%		4,719			5,846			(1,127	)		-19	%
US total		57,086		63,185		(6,099	)		-10	%
Total US												28,964			29,668			(704	)		-2	%
International		26,269		21,163		5,106			24	%		9,417			12,034			(2,617	)		-22	%
Total gross profit:	$	83,355	$	84,348	$	(993	)		-1	%	$	38,381		$	41,702		$	(3,321	)		-8	%
Gross margin:
US crop												48	%		47	%
US non-crop												43	%		52	%
Total US												47	%		48	%
International												27	%		32	%
Gross margin:												40	%		42	%

7. Accrued Program ~~Costs—~~Costs— The Company offers various discounts to customers based on the volume purchased within a defined time period, other pricing adjustments, some grower volume incentives or other key performance indicator driven payments made to distributors, retailers or growers, at the end of a growing season. The Company describes these payments as ~~“programs.~~“Programs.” Programs are a critical part of doing business in both the US crop and US non-crop chemicals ~~market-places.~~market. These discount ~~programs~~Programs represent variable consideration. ~~Revenue~~In accordance with ASC 606, revenues from sales isare recorded at the net sales price, which is the transaction price net of the impact of Programs and includes estimates of variable consideration. Variable consideration includes amounts expected to be paid to its customers estimated using the expected value method. Each quarter management compares individual sale transactions with ~~programs~~Programs to determine what, if any, estimated ~~program liability has~~Program liabilities have been incurred. Once this initial calculation is made for the specific quarter, sales and marketing management, along with executive and financial management, review the accumulated ~~program~~Program balance and, for volume driven payments, make assessments of whether or not customers are tracking in a manner that indicates that they will meet the requirements set out in agreed upon terms and conditions attached to each ~~program.~~Program. Following this assessment, management makes adjustments to the accumulated accrual to properly reflect the Company’s best estimate of the liability at the balance sheet date. ~~The majority of adjustments are made at, or close to, the end of the crop season, at which time customer performance can be more fully assessed.~~ Programs are paid out predominantly on an annual basis, usually in the final quarter of the financial year or the first quarter of the

following year. No significant changes in estimates were made during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

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

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

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively,~~ no stock options were excluded from the computation of diluted earnings per share.

10. The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. The Company has no short-term debt as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018. Debt~~2019. The debt is summarized in the following table:

As of June 30, 2017, AMVAC Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliates (including the Company, AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment to Second Amended and Restated Credit Agreement ~~(the “Credit Agreement”)~~ with a group of commercial lenders led by Bank of the West ~~(AMVAC’s primary bank)~~ as agent, swing line lender and Letter of Credit ~~(“L/C”)~~ issuer. The ~~Credit Agreement~~agreement is a senior secured lending facility, consisting of a line of credit of up to $250,000, an accordion feature of up to $100,000 and a maturity date of June 30, 2022. The ~~Credit Agreement~~agreement contains two key financial covenants; namely, borrowers are required to maintain a Consolidated Funded Debt Ratio (the “CFD Ratio”) of no more than 3.25-to-1 and a Consolidated Fixed Charge Covenant Ratio of at least 1.25-to-1. The Company’s borrowing capacity varies with its financial performance, measured in terms of EBITDA as defined in the Credit Agreement, for the trailing ~~twelve month~~twelve-month period. Under the ~~Credit Agreement,~~agreement, revolving loans bear interest at a variable rate based, at borrower’s election with proper notice, on either (i) LIBOR plus the “Applicable Rate” which is based upon the Consolidated Funded Debt Ratio (“Eurocurrency Rate Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus ~~0.50%~~0.5%, and (z) the Daily One-Month LIBOR Rate plus 1.00%, plus, in the case of (x), (y) or (z) the Applicable Rate (“Alternate Base Rate Loan”). Interest payments for Eurocurrency Rate Loans are payable on the last day of each interest period (either one, two, three or six months, as selected by the borrower) and the maturity date, while interest payments for Alternate Base Rate Loans are payable on the last business day of each month and the maturity date.

As of November 27, 2019, AMVAC, as borrower, and certain affiliates entered into a Fourth Amendment to Second Amended and Restated Credit Agreement with its senior lenders under the terms of which the maximum limits for both Permitted Acquisitions and Investments in Foreign Subsidiaries were increased and new language was added with respect to Eurocurrency Rates, LIBOR Rates and ERISA. As of April 22, 2020, AMVAC, as borrower, and certain affiliates entered into a Fifth Amendment to the Second Amended and Restated Credit Agreement with its senior lenders (the “Credit Agreement”), having the same term and loan commitments, but under which the maximum permitted CFD Ratio has been increased from 3.25-to-1 to the following schedule: 4.00-to-1 through September 30, 2020, stepping down to 3.75-to-1 through December 31, 2020, 3.5-to-1 through March 31, 2021 and 3.25-to-1 thereafter. In addition, to the extent that it completes acquisitions totaling $15 million or more in any 90-day period, AMVAC may step-up the CFD Ratio by 0.5-to-1, not to exceed 4.25-to-1, for the next three full consecutive quarters. Finally, to the extent that a proposed acquisition is at least $30 million but less than $50 million, the consent of the Lead Agent is required. Larger acquisitions continue to require the consent of a majority of the Lenders.

At ~~June 30, 2019, according~~March 31, 2020, the Company is compliant with all covenants to ~~the terms of the~~its Senior Credit ~~Agreement and based~~Facility. Based on its performance against the most restrictive covenants ~~listed above,~~in the Credit Agreement, the Company had the capacity to increase its borrowings by up to ~~$30,557.~~$39,552, according to the terms thereof. This compares to an available borrowing capacity of ~~$137,047,~~$56,707 as of ~~June 30, 2018.~~March 31, 2019. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA ~~including~~for both the trailing ~~twelve-month~~twelve month period and proforma basis arising from acquisitions, ~~which have declined,~~ (2) net borrowings, ~~which have increased due to recent acquisitions~~ and (3) the leverage covenant ~~(being the number of times EBITDA the Company may borrow under its credit facility agreement)~~(the Consolidated Funded Debt Ratio).

~~As of June 30, 2019, the Company was in compliance with all of its debt covenants.~~

11. ~~Reclassification—~~Reclassifications—Certain items ~~may~~ have been reclassified in the prior period condensed consolidated financial statements to conform with the ~~June 30, 2019~~March 31, 2020 presentation.

12. Total comprehensive ~~income~~loss includes, in addition to net income, changes in equity that are excluded from the condensed consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the condensed consolidated balance sheets. For the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ total comprehensive income (loss) consisted of net income attributable to American Vanguard and foreign currency translation adjustments.

13. ~~Stock Based~~Stock-Based Compensation—The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Share-Based Payment,” which requires the measurement and recognition of compensation for all share-based payment awards made to employees and directors including shares of common stock granted for services ~~employee stock options,~~ and employee stock ~~purchases related to the Employee Stock Purchase Plan (“employee stock purchases”)~~options based on estimated fair values.

The following tables illustrate the Company’s ~~stock based~~stock-based compensation, unamortized stock-based compensation, and remaining weighted average period for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

	Stock-Based Compensation for the Three months ended		Stock-Based Compensation for the Six months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)		Stock-Based Compensation for the Three months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)
June 30, 2019
March 31, 2020
Restricted Stock	$	981	$	1,669	$	8,091		2.2	$	776	$	4,555		1.5
Unrestricted Stock		99		195		385		0.9		123		82		0.2
Performance Based Restricted Stock		430		1,131		3,863		2.2
Performance-Based Restricted Stock										458		2,288		1.7
Total	$	1,510	$	2,995	$	12,339			$	1,357	$	6,925

June 30, 2018
March 31, 2019
Restricted Stock	$	892	$	1,557	$	7,071		2.2	$	688	$	9,238		2.4
Unrestricted Stock		96		193		353		0.9		96		64		0.2
Performance Based Restricted Stock		481		1,028		3,336		2.2
Performance-Based Restricted Stock										701		4,524		2.4
Total	$	1,469	$	2,778	$	10,760			$	1,485	$	13,826

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

Information relating to stock options at ~~June 30, 2019,~~March 31, 2020, summarized by exercise price is as follows:

The weighted average exercise prices for options granted, and exercisable, and the weighted average remaining contractual life for options outstanding as of ~~June 30, 2019,~~March 31, 2020, were as follows:

Common stock grants — A summary of non-vested shares as of and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ is presented below:

Common stock grants — During the ~~six~~three months ended ~~June 30,~~March 31, 2020, the Company issued a total of 4,185 shares of restricted common stock to employees. 2,000 shares will vest in equal tranches on the first, second, and third anniversaries of grant date, 1,000 shares will cliff vest on the first anniversary of employee’s hire date, 685 shares will cliff vest on the third anniversary of employee’s hire date, and the remaining 500 shares will cliff vest on the six month anniversary of the employee’s hire date. The shares granted in 2020 were average fair valued at $18.63 per share. The fair value was determined by using the publicly traded share price at market close as of the date of grant. The Company will recognize as expense the value of restricted shares over the respective required service period.

During the three months ended March 31, 2019, the Company issued a total of ~~338,201~~290,679 shares of restricted common stock to employees and directors of which 31,771 shares vested immediately, 9,000 shares will vest between a range of 95 days to 1,115 days, 6,751 shares will vest in three equal tranches on the employee’s anniversary, and the remainingemployees. The shares will cliff vest after three years of service. The shares granted in 2019 were average fair valued at ~~$16.86~~$17.34 per share. The fair value was determined by using the publicly traded share price ~~as of the~~at market close onas of the date of grant. The Company will recognize as expense the ~~fair value of restricted shares over the required service period.~~

During the six months ended June 30, 2018, the Company issued a total of 277,280 shares of common stock to employees and directors of which 19,313 shares vested immediately, 19,760 shares will vest between a range of 178 days to 1,060 days, and the remaining shares will cliff vest after three years of service. The shares granted in 2018 were average fair valued at $20.27 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the fair value of restricted shares over the required service period.

During the three months ended June 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $981 and $892, respectively. During the six months ended June 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $1,669 and $1,557, respectively.

As of ~~June 30, 2019,~~March 31, 2020, the Company had approximately ~~$8,091~~$4,555 of unamortized stock-based compensation related to unvested restricted shares. This amount will be recognized over the weighted-average period of ~~2.2~~1.5 years. This projected expense will change if any restricted shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

Performance-Based Shares—A summary of non-vested ~~performance based~~performance-based shares as of and for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively is presented below:

Performance-Based Shares — During the ~~six~~three months ended ~~June 30,~~March 31, 2020, the Company did not issue performance-based shares to employees.

As of March 31, 2020, the Company has concluded that the performance measure based on EBIT and net sales for the performance based shares granted in February and April of 2017, when compared to the peer group, were met at 200% of targeted performance and all related additional expenses were recorded as of March 31, 2020. The performance shares based on market price were met at 50% and 125% for February and April 2017, respectively, however, the market condition is reflected in the grant date fair value valuation and no additional expenses were recognized as of March 31, 2020. As a result, 76,445 additional shares were earned since the Company achieved performance targets when compared to the peer group.

During the three months ended March 31, 2019, the Company issued a total of 137,557 performance-based shares to employees. The shares granted during the first quarter of 2019 have an average fair value of $16.47. The fair value was determined by using the publicly traded share price at market close as of the ~~market close on the~~ date of ~~grant.~~grant and Monte Carlo valuation method. The Company will recognize as expense the ~~fair~~ value of the ~~performance based~~performance-based shares over the required service period from grant date. The shares will cliff vest on March 28, 2022 with a measurement period commencing January 1, 2019 and ending December 31, 2021. Eighty percent of these performance-based shares are based upon the financial performance of the Company, specifically, an earnings before income ~~taxes~~tax (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. The remaining 20% of performance-based shares are based upon AVD stock price appreciation over the same performance measurement period. The EBIT and net sales goals measure the relative growth of the Company’s EBIT and net sales for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies, identified in the Company’s 2018 Proxy Statement. All parts of these awards vest in three years but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

~~Performance-Based Shares — During the six months ended June 30, 2018, the Company issued a total of 126,296 performance-based shares to employees.~~ The shares granted have an average fair value of $18.91. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the fair value of the performance-based shares over the required service period from grant date. The majority of the shares will cliff vest on March 9, 2021 with a measurement period commencing January 1, 2018 and ending December 31, 2020. Eighty percent of these performance-based shares are based upon the financial performance of the Company, specifically, an earnings before income taxes (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. The remaining 20% of performance-based shares are based upon AVD stock price appreciation over the same performance measurement period. The EBIT and net sales goals measure the relative growth of the Company’s EBIT and net sales for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies, identified in the Company’s 2017 Proxy Statement. All parts of these awards vest in three years, but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

As of ~~June 30,~~March 31, 2019, performance-based shares related to EBIT and net sales have an average fair value of $17.34 per share. The fair value was determined by using the publicly traded share price ~~as of the~~at market close onas of the date of grant. The ~~performance based~~performance-based shares related to the Company’s stock price have an average fair value of ~~$15.46~~$13.01 per share. The fair value was determined by using the Monte Carlo valuation method. For awards with performance conditions, the Company recognizes share-based compensation cost on a straight-line basis for each performance criteria over the implied service period.

During the three months ended June 30, 2019 and 2018, the Company recognized stock-based compensation related to performance-based shares of $430 and $481, respectively. During the six months ended June 30, 2019 and 2018, the Company recognized stock-based compensation related to performance based shares of $1,131 and $1,028, respectively.

As of ~~June 30, 2019,~~March 31, 2020, the Company had approximately ~~$3,863~~$2,288 of unamortized stock-based compensation expense related to unvested performance-based shares. This amount will be recognized over the weighted-average period of ~~2.2~~1.7 years. This projected expense will change if any performance-based shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

Performance Incentive Stock Options—During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the Company did not grant any employees performance incentive stock options to acquire shares of common stock.

Information relating to stock options ~~at June 30, 2019~~as of March 31, 2020 summarized by exercise price is as follows:

The weighted average exercise prices ~~for~~of options granted and exercisable and the weighted average remaining contractual life for options outstanding as of ~~June 30, 2019~~March 31, 2020 are as follows:

14. Legal ~~Proceedings —~~Proceedings— During the reporting period, there have been no material developments in legal proceedings that were reported in the Company’s Form 10-K for the year ended December 31, ~~2018,~~2019, except as described below.

EPA FIFRA/RCRA Matter. On November 10, 2016, the Company was served with a grand jury subpoena out of the U.S. District Court for the Southern District of Alabama in which the U.S. Department of Justice (“DoJ”) sought production of documents relating to the Company’s reimportation of depleted Thimet containers from Canada and Australia. The Company retained defense counsel to assist in responding to the subpoena and ~~completed production of documents.~~otherwise defending the Company’s interests. Over the course of the past ~~several months,~~three years, government attorneys have interviewed ~~eight~~several individuals who may be knowledgeable of the ~~matter.~~matter and have sought and received documents from the Company. At this stage, ~~however,~~ DoJ has not made clear its intentions with regard to

either its theory of the case or potential criminal enforcement. Thus, it is too early to tell whether a loss is probable or reasonably estimable. Accordingly, the Company has not recorded a loss contingency on this matter.

~~Takings Case.~~ ~~On June 14, 2016, the Company filed~~In a ~~lawsuit against~~matter arising from similar facts, the United States Environmental Protection Agency (“USEPA”) Region 5 contacted the Company’s legal representatives in November 2019 to commence discussions on the ~~U.S. Court~~resolution of ~~Federal Claims, entitled “American Vanguard Corporation v. USEPA” (Case No. 16-694C) under which~~potential civil enforcement claims that could be brought against the Company ~~sought damages~~arising from its reimportation of depleted Thimet containers and the disposition of the contents of such containers in 2015. After negotiation, the Company and USEPA ~~on the ground that that agency’s issuance~~entered into a consent agreement and final order (“CAFO”), including payment of a ~~Stop Sale, Use and Removal Order against the PCNB product line~~civil penalty in ~~August 2010 amounts~~an amount that is not material to a taking without just compensation under the Tucker Act. The court in this matter denied the government’s motion to dismiss for lack of jurisdiction and failure to state a claim, which was brought in September 2016. Fact and expert discovery was completed, and both parties filed motions for summary judgment on the merits. In January 2019, the court denied the Company’s ~~motion for summary judgment, while granting that~~financial performance. The CAFO was finalized and filed with the Regional Hearing Clerk of ~~the government, finding that the Company’s PCNB business did not amount to a cognizable property interest in the context of the Tucker Act. In~~USEPA Region 5 on February 2019, the Company filed a motion for reconsideration on the ground that the court’s decision was based upon an erroneous understanding of the facts. In March 2019, the court denied the motion for reconsideration. The matter was subsequently dismissed without prejudice. The Company has elected not to appeal the trial court’s decision and expects that that court will dismiss the matter with prejudice. Accordingly, the Company did not record a gain or loss for the matter. 3, 2020.

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

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

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement-Reporting Comprehensive Income (ASC 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. On December 22, 2017, the U.S federal government signed into law the Tax Cuts and Jobs Act (the “Tax Reform Act”). The current generally accepted accounting principles (“GAAP”) requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. That guidance is applicable even in situations where the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income (rather than in income from continuing operations). The standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Act, eliminating the stranded tax effects. The update does not affect the requirement that the effect of a change in tax laws or rates be included in income from continuing operations. The Company adopted this update and there has been no impact.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Cuts and Jobs Act (the “Act”). The GILTI provisions imposed a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company has considered options regarding the accounting treatment for any potential GILTI inclusions and has elected to treat such inclusions as period costs.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (ASC 350).~~ The FASB eliminated the Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. This update is effective for fiscal years beginning after December 15, 2019 with early adoption permitted

after January 1, 2017. The Company adopted ASU 2017-04 as of January 1, 2019. The impact of the new standard will be dependent of the facts and circumstances of future individual impairments but did not have any immediate impact.

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

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

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

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

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

The carrying ~~values~~amount of the Company’s financial instruments, which principally include cash ~~receivables~~ and cash equivalents, short-term investments, accounts receivable, long-term investments, accounts payable ~~approximate their~~and accrued expenses approximates fair ~~values~~value because of the relatively short maturity of ~~these~~such instruments. The ~~fair value~~carrying amount of the Company’s short-term and long-term ~~debt payable to the bank is estimated~~borrowings, which are considered Level 2 liabilities, approximates fair value based ~~on the quoted market prices for the same or similar issues or on the~~upon current rates ~~offered~~and terms available to the Company for ~~debt of the same remaining maturities. Such~~similar debt.

We measure our contingent earn-out liabilities in connection with business acquisitions at fair value ~~approximates the respective carrying values~~on a recurring basis using significant unobservable inputs classified within Level 3 of ~~the Company’s long-term debt payable to bank.~~

~~As of June 30, 2019, the Company reassessed~~ the fair value hierarchy. We may use various valuation techniques depending on the terms and conditions of the ~~deferred~~contingent consideration ~~balances relating~~including a Monte-Carlo simulation. This simulation uses probability distribution for each significant input to produce hundreds or thousands of possible outcomes and the ~~2017 AgriCenter and OHP acquisitions, which resulted in a combined reduction~~results are analyzed to determine probabilities of different outcomes occurring. The following table illustrates the ~~deferred~~Company’s contingent consideration balances in the amount of $1,345 and $2,888 for the three and six months ended June 30, 2019. During both the three and six months ended June 30, 2018, the Company recognized $1,468 as reductions in deferred consideration balancesmovements related to the acquisitions. These amounts are reflected as reductions to the general and administrative expenses within operating expenses in the condensed consolidated statements of operations. With regard to the acquisitions of Defensive and Agrovant in Brazil (completed in January 2019), there were no changes associated with deferred consideration during either the three months or six months ended June 30, 2019. ~~The total deferred consideration reflected in the condensed consolidated balance sheets as of June 30, 2019 and 2018 was $978 and $8,267, respectively~~its business acquisitions:

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

18. ~~Investments~~ Equity Method Investment— The Company utilized the equity method of accounting with respect to its investment in TyraTech Inc. (“TyraTech”), a Delaware corporation that specializes in developing, marketing and selling pesticide products containing essential oils and other natural ingredients, until the Company acquired all of TyraTech’s remaining outstanding shares as of November 8, 2018. The Company recognized losses of $347 and $443 on its equity method investment for the three and six months ended June 30, 2018. The Company’s ownership position in TyraTech was approximately 34% prior to the November 8, 2018 acquisition.

On June 27, 2017, both Amvac Netherlands BV and Huifeng Agrochemical Company, Ltd (“Huifeng”) made individual capital contributions of $950 to the Huifeng Amvac Innovation Co. Ltd (“Hong Kong Joint Venture”). As of ~~June 30, 2018,~~March 31, 2020, the Company’s ownership position in the Hong Kong Joint Venture was 50%. The Company utilizes the equity method of accounting with respect to this investment. On July 7, 2017, the Hong Kong Joint Venture purchased the shares of Profeng Australia, Pty Ltd.(“Profeng”), for a total consideration of $1,900. The purchase consists of Profeng Australia, Pty Ltd Trustee and Profeng Australia Unit Trust. Both Trust and Trustee were previously owned by Huifeng via its wholly owned subsidiary Shanghai Biological Focus center. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, the Company recognized losses of ~~$36~~$13 and ~~$60,~~$24, respectively, as a result of the Company’s ownership position in the Hong Kong Joint Venture. ~~For the three months~~The Company’s investment in this joint venture amounted to $500 and ~~six months ended June 30, 2018, the Company recognized gains of $46~~$698, respectively at March 31, 2020 and ~~losses of $75, respectively.~~2019.

In February 2016, AMVAC Netherlands BV made an investment in Biological Products for Agriculture (“Bi-PA”). Bi-PA develops biological plant protection products that can be used for the control of pests and disease of agricultural crops. As of ~~June 30, 2019,~~March 31, 2020, the Company’s ownership position in Bi-PA was 15%. The Company adopted the provisions of ASU 2016-01 on January 1, 2018 and has elected to measure its cost method investment without a readily determinable fair value at its cost minus impairment, if

any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There were no observable price changes in the ~~three~~quarters ended March 31, 2020 and ~~six months ended June 30,~~ 2019. There was no impairment on the investment as of ~~June 30,~~March 31, 2020 and 2019. The investment is not material and is recorded within other assets on the condensed consolidated balance sheets.

19. Income Taxes—Income tax ~~expense~~benefit was ~~$1,224~~$205 for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$1,748~~income tax expense of $1,360 for the ~~comparable period in 2018.~~three months ended March 31, 2019. The annual effective tax rate for the ~~quarter~~three months ended March 31, 2020 was ~~28.1%, as~~31.0%. That rate is the Company’s estimated rate for 2020 based on the rates in the territories that the Company operates. The rate has increased compared to ~~23.0%~~prior years reflecting global changes in ~~the same period of the prior year. Income~~ tax expense was $2,584 for the six months ended June 30, 2019, as compared to $3,440 for the six months ended June 30, 2018. The effective tax rate for the six months ended June 30, 2019 and 2018 was 26.8% and 24.4%, respectively.laws. The effective tax rate is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

For the three months ended March 31, 2020, the Company benefited from two discrete income tax benefits. First, the Company assessed its income tax positions to account for the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020. A provision of the act modified the amount of interest deduction allowed and therefore reduced the Company’s 2019 Global Intangible Low Tax Income (“GILTI”) inclusion. Second, the Company benefited from the tax impact of the vesting of certain stock grants.

For the three months ended March 31, 2019 the effective rate was 25.7%. In 2019 the Company gained from the discrete benefit of the vesting of stock grants.

The Company has been notified by the Florida Department of Revenue of its intent to examine the Company’s state income tax returns for the years ended December 31, 2012 through December 31, 2013 and December 31, 2015 through December 31, 2018. The Company has also been notified by the Mississippi Department of Revenue of its intent to examine the Company’s state income tax returns for the years ended December 31, 2015 through December 31, 2017. Currently the results of these audits are not determinable since the audits are presently in the initial phases.

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

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

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

On January 10, 2019, the Company completed the acquisition of all of the outstanding shares of stock of two affiliated businesses, Defensive and Agrovant, which are located in Jaboticabal in the state of Sao Paul, Brazil. At closing the Company paid cash consideration of ~~$20,695,~~$20,679, which was net of cash acquired of ~~$982,~~$981, deferred consideration of ~~$2,645~~$3,051 including contingent consideration dependent on certain financial results for 2019, and liabilities assumed of ~~$17,040,~~$18,160, including liabilities of ~~$10,098~~$9,111 related to income tax matters. These companies were founded in 2000 and are suppliers of crop protection products and micronutrients with focus on the fruit and vegetable ~~market segments.~~markets The acquisition was accounted for as a business combination and the total asset value of ~~$40,370 has been preliminarily~~$41,890 was allocated as follows: ~~product registrations and product rights $9,451,~~ trade name ~~$1,733,~~$1,010, customer relationships ~~$3,114,~~$5,705, goodwill ~~$14,224,~~$22,652, working capital ~~$8,072,~~and fixed assets ~~$404~~$9,139 and indemnification assets ~~$3,385.~~$3,384. The operating results of the acquired businesses are included in our ~~condensed~~ consolidated statement of operations from the date of acquisition. The goodwill recognized is expected to be deductible for income tax purposes, subject to merging AMVAC do Brasil with Defensive and Agrovant.

~~The~~On July 1, 2019, the Company ~~paid E.I. DuPont et Nemours additional~~completed a product acquisition for cash consideration in the amount of ~~$3,564 related to one product line acquisition made at the end of 2018.~~

~~22. Subsequent event – On July 1, 2019, AMVAC completed the acquisition of certain rights~~$7,293 and the assumption of ~~certain liabilities relating to~~a liability in the amount of $300. The acquisition was accounted for as an asset acquisition and the acquired assets consist of product rights $5,108, trade names $1,200, and inventory $1,293. Costs of $8 incurred in the asset acquisition process were capitalized.

On December 20, 2019, the Company completed a product acquisition for cash consideration in the amount of $10,000 and the assumption of a liability in the amount of $1,407. The acquisition was accounted for as an asset acquisition and the acquired assets consist of product rights $8,171 and trade names $3,242. Costs of $6 incurred in the asset acquisition process were capitalized.

22. Foreign Currency – The Company incurred net foreign currency transaction losses in the amount of $837 and $259 during the three ~~product lines (etoxazole, bispyribac sodium~~months ended March 31, 2020 and ~~diflubenzuron) from Raymat Crop Science, Inc. (and certain of its affiliates). The purchase price was immaterial to~~2019, respectively, included in operating expenses on the condensed consolidated financial statements. ~~With respect~~

23. Subsequent Event – On April 1, 2020, the Company entered into a Subscription Agreement pursuant to ~~etoxazole~~which it purchased 6.25 million shares, an ownership of approximately 8%, of common stock of Clean Seed Capital Group Ltd. (TSX Venture Exchange: “CSX”) for $2,500. As of the same date, AMVAC entered into a License Agreement with Clean Seed Agricultural Technologies Ltd., pursuant to which the latter granted the Company a worldwide, royalty-bearing, non-exclusive license to a suite of patents relating to a system for variable-ratio blending of multiple agricultural products, including an up-front royalty payment of $2,500 and ~~bispyribac sodium, AMVAC obtained registrations, trademarks (“Stifle”~~an ongoing royalty based upon net sales of SIMPAS systems commencing January 1, 2021. Clean Seed develops, markets and ~~“Arroz 80”)~~sells planters featuring row-by-row variable rate technology that utilizes sophisticated electronic metering and ~~inventories. With respect to diflubenzuron, AMVAC became the exclusive distributor of end-use products within the United States.~~intuitive software control.

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company’s operations, future results and prospects. These forward-looking statements are based on current expectations and are subject to a number of risks, uncertainties and other factors. In connection with the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statements identifying important factors which, among other things, could cause the actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company’s reports and filings filed with the U.S. Securities and Exchange Commission (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 1A., Risk factors and Item 7A., Quantitative and Qualitative Disclosures about Market Risk, in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and it continues to spread across the world. To limit the spread of the contagion, governments have taken various actions to slow and otherwise control the spread of the pandemic, including the issuance of stay-at-home orders, social distancing guidelines and border restrictions. At its outset, the Company took swift action to understand, contain and mitigate the risks posed by this pandemic. Specifically, we formed the Pandemic Work Group with a mission to ensure the health and safety of the workforce while ensuring continuity of the business. In the workplace, we have designed and implemented protocols for social distancing, made provisions for the workforce to work remotely where possible, and established quarantine policies for those who present COVID-like symptom or may have been in touch with those who have. Further, the group keeps current with local, state, federal and international laws and restrictions that could affect the business; provides real-time information to the workforce; and draws from political commentary and news statements concrete directions on how best to continue operations. We have also prepared contingency plans to permit the continued operation of our factories, in the event that there are critical staffing issues due to attrition. In addition, in April 2020, we amended our credit facility to support future working capital needs (see note 10). Further, we continuously monitor supply chain, transport, logistics and border closures and have reached out to third parties to make clear that we are continuing to operate, that we have our own policies relating to health (e.g., no third party visitors, no face-to-face meetings) and are committed to compliance with COVID-19 policies of our business partners. Our CEO and the leader of the Pandemic Work Group is holding weekly “state of the company” calls with the functional heads of our businesses across the globe to ensure that our information is shared in a timely manner and that our direction is clear.

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

In keeping with our charge to operate as an essential business and by virtue of our efforts to contain and mitigate the risks posed by the pandemic, we have been able to manage our business with minimal impact during the reporting period.

The Company’s overall operating results for the first three months ~~ended June 30, 2019 were mixed versus~~of 2020 declined as compared with those of the same period of ~~2018. Quarterly net~~2019. Net sales were updown about 6%4% ($~~113,104 v $107,046), while~~95,962 compared to $99,676) and gross profit was down ~~approximately 4%~~8% ($~~41,653 v $43,297)~~38,381 v. $41,702). Gross margin declined to ~~37%~~40% from ~~40%~~42% of net sales, and operating expenses rose by approximately 2%5% ($~~35,362 v $34,718)~~36,545 v. $34,800). Net income ended at $520, as compared to $3,906 for the same period of 2019.

On a consolidated basis, with domestic sales at or near flat and international sales down by about 9%, ~~but declined~~overall net sales were down by about 4% (or $3,714). While cost of sales were flat on an absolute basis, as a percent of net sales, they rose from ~~32%~~58% to ~~31%~~60%. ~~Net income attributable~~These factors, taken together, yielded a decline in gross profit of about $3,321. In the first quarter of 2020 operating expenses increased by about $1,746, due largely to ~~American Vanguard~~unfavorable foreign currency transaction effects (mainly from Brazil and partially offset by Mexico), and the fact that the Company was ~~down about 46% ($3,106 v. $5,599).~~

~~Broadly speaking, during the second~~able to record a gain from accounting for deferred purchase price consideration in first quarter of 2019 that was not repeated in 2020. Consequently, operating income for the ~~Company’s international~~period decreased by approximately $5,000. After slightly lower interest rates and a higher; overall effective tax rate (offset by beneficial discrete items), net income for the period declined to $520. Details on our financial performance are set forth below.

	For the three months ended March 31,
	2020			2019			Change			% Change
Net sales:
US crop	$	50,362		$	50,270		$	92			0	%
US non-crop		10,993			11,267			(274	)		-2	%
Total US		61,355			61,537			(182	)		0	%
International		34,607			38,139			(3,532	)		-9	%
Total net sales:	$	95,962		$	99,676		$	(3,714	)		-4	%
Cost of sales:
US crop	$	26,117		$	26,448		$	(331	)		-1	%
US non-crop		6,274			5,421			853			16	%
Total US		32,391			31,869			522			2	%
International		25,190			26,105			(915	)		-4	%
Total cost of sales:	$	57,581		$	57,974		$	(393	)		-1	%
Gross profit:
US crop	$	24,245		$	23,822		$	423			2	%
US non-crop		4,719			5,846			(1,127	)		-19	%
Total US		28,964			29,668			(704	)		-2	%
International		9,417			12,034			(2,617	)		-22	%
Total gross profit:	$	38,381		$	41,702		$	(3,321	)		-8	%
Gross margin:
US crop		48	%		47	%
US non-crop		43	%		52	%
Total US		47	%		48	%
International		27	%		32	%
Gross margin:		40	%		42	%

Our domestic crop business recorded net sales ~~continued~~that were about equivalent to ~~grow, while domestic~~those of first quarter 2019 ($50,362 v. $50,270). When viewed by type of product and crop, sales were ~~flat. Within that~~mixed. Further, in general, during the first quarter, we saw a very careful procurement pattern in the domestic market, as low crop commodity prices and concerns about near-term demand from Asia caused growers and retailers to purchase crop protection inputs at a very cautious and deliberate pace. Soil fumigants posted a strong performance ~~quarterly~~as drier weather conditions in California and the Pacific Northwest facilitated more widespread product application than had been the case in the first quarter of 2019. With respect to our corn products, net sales of our ~~non-crop product lines grew significantly, due largely to pest strips~~corn soil insecticides, including Aztec®, SmartChoice® and ~~to mosquito products (in light of wet weather). However, these gains~~Force®, were offset by declines in crop product sales, as record precipitation and cold weather delayed, and in some cases prevented, normal crop planting throughout the Midwest and Southeast regions of the United States. Many growers had insufficient time to use the normal measure of pre-plant crop inputs, others were unable to fully plant their intended acreage, and many of the acres that were planted are likely to produce below average yields. By contrast, with solid sales in Central America and the addition of sales from our newly acquired business in Brazil, our international business recorded higher salesflat during the ~~period.~~

~~Gross margin as a percent of sales dropped by 3% due largely to lower factory utilization for the period. During the second~~ quarter, ~~of 2018, factory activity was at a record pace and, by contrast, factory under absorption during second quarter of 2019 amounted to approximately 3.5% of sales,~~while our Impact® herbicide, which ~~is closer to the Company’s long-term strategic manufacturing plan. Quarterly operating expenses, while higher for the period, were lower as a percent of net sales, as the Company~~ continues to ~~realize greater economies of scale in its global business. This change in operating expense included costs necessary to manage the~~exhibit strong brand value, generated increased sales. Soybean products, such as Scepter® and ~~businesses~~our recently acquired ~~at the end of 2018~~post-emergent products (e.g., Hornet® and ~~during the first six months of 2019. Furthermore, the Company recorded increased interest expense,~~Python®), added a strong upside, as compared to the same ~~period~~quarter in 2019. By contrast, with a 10 percent drop in planted cotton acres (relating to lower commodity prices), we experienced a drop in net sales of ~~the prior year, reflecting borrowings related to acquisition activity in the second half of 2018~~Bidrin® and ~~the first half of 2019. These factors, together, yielded~~bifenthrin products. We also saw a decrease in ~~net income~~sales of ~~$2,493 for the quarter.~~

our NAA plant growth regulator which is used primarily on tree nuts and pome fruits; this decrease arose in large part from timing of orders by certain of our larger customers.

~~The Company’s overview~~Cost of sales within the domestic crop business were flat as compared to the first quarter of 2019, while gross profit rose by about 1% (from $23,822 to $24,245). This improvement rose from increased sales of higher margin products, such as soil fumigants and soybean herbicides.

Our domestic non-crop business showed decreased net sales (down about 2% to $10,993 from $11,267) quarter-over-quarter. In this category, our Dibrom® mosquito adulticide sales declined, influenced by timing shifts in customer procurement. In addition, license fees for our Envance essential oil technology were reduced as compared to first quarter of last year; we expect to recognize additional royalties during the later quarters of 2020. Offsetting these declines, we recorded sales under a new cost recovery tolling contract and improved net sales from our nursery and ornamental business, as demand for homeowner garden and landscape products in big box stores remained strong in spite of stay-at-home restrictions at retail locations.

Cost of sales within the domestic non-crop business rose by about 16% (from $5,421 to $6,274) quarter-over-quarter. This increase was entirely due to a supply agreement with a third party for certain newly acquired products that we are planning to produce internally in the future. Gross profit for domestic non-crop decreased by 19% (from $5,846 in 2019 to $4,719 in 2020) due primarily to lower license fees in our natural oil business.

Net sales of our international businesses were down by about 9% during the period ($34,607 in 2020 v. $38,139 in 2019). Several factors contributed to this result. In Europe, sales of our Mocap® insecticide dropped sharply in connection with the phase-out of that product following the cancellation of its registration in the EU. Sales performance was flat in Central America with stronger results from a rotation in the use of our nematicides in pineapple plantations, offset by consolidation by certain suppliers in that region and logistical difficulties arising from the pandemic in both Honduras and Panama. Mexico posted strongly improved sales with increased demand for granular insecticides and bromacil herbicides, coupled with higher soil fumigant sales for use on high-value vegetable crops. In Brazil, net sales declined by about 20% due to lower disease pressure in soybeans (thus reducing demand for our fungicide products), portfolio streamlining (to optimize our sales resources) and delays in procurement arising from economic uncertainty. The performances of our Brazilian and Mexican businesses were further affected by a devaluation in the Brazilian Real and the Mexican Peso. The average exchange rate of the Brazilian Real and the Mexican Peso decreased by approximately 15% and 3% for the period ended March 31, 2020 compared to the same period in the prior year.

Cost of sales in our international business decreased by 4% (from $26,105 in 2019 to $25,190 in 2020) primarily driven by mix and currency changes. Gross profit for the international businesses dropped by about 22% (from $12,034 in 2019 to $9,417 in 2020). This decrease arose from several factors. Sales of certain high margin products, including Mocap (as mentioned above), Impact and pest strips, decreased. In addition, while sales of our Assure II® products into Canada increased, the cost of goods rose significantly. Further, we experienced higher sales of low-margin products from our business in Australia.

On a consolidated basis, gross profit for the first quarter of 2020 decreased by 8% (from $41,702 in 2019 to $38,381 in 2020). The change in mix described above had the impact of reducing gross margin percentage by approximately 2% and included a balanced factory performance quarter-over-quarter. Overall gross margin percentage ended at 40% in the first quarter of 2020, as compared to 42% in the first quarter of the prior year.

Operating expenses increased by $1,745 or 5% to $36,545 for the three months ended ~~June 30, 2019 and 2018 is as follows:~~

For the three months ended
June 30,

2019

2018

Change

% Change

Net sales:

US crop

$
47,311

$
51,760

$
(4,449
)

-9
%
US non-crop

17,219

12,603

4,616

37
%
US total

��
64,530

64,363

167

0
%
International

48,574

42,683

5,891

14
%
Net sales:

$
113,104

$
107,046

$
6,058

6
%
Gross profit:

US crop

$
18,719

$
26,222

$
(7,503
)

-29
%
US non-crop

8,558

6,352

2,206

35
%
US total

27,277

32,574

(5,297
)

-16
%
International

14,376

10,723

3,653

34
%
Total gross profit:

$
41,653

$
43,297

$
(1,644
)

-4
%

Gross margin domestic

42
%

51
%

Gross margin international

30
%

25
%

Gross margin total

37
%

40
%

Our US Crop business recorded 9% lower sales in the three months ended June 30, 2019, as compared to the same period of the prior year. Among our granular soil insecticides, sales of Aztec were up about 26% over the prior year period, as distributors and retailers replenished channel inventories. These dynamics were offset by decreased sales of Counter and Thimet, largely due to wet conditions in the Midwest and Southeast regions of the United States. Sales of our Impact post-emergent corn herbicide, used primarily on row crops, our Dacthal product line, used on high-value vegetable crops, and our Parazone products, used for burn down prior to the start of the season, remained flat to slightly up versus last year, while wet conditions negatively affected demand for Abba herbicide used in tree nut applications.

Net sales of our US non-crop business increased about 37% to $17,219 from $12,603, quarter-over-quarter. This result was due largely to increased sales of our aerial applied mosquito adulticide, Dibrom, as applicators restocked both to address persistent wet weather conditions in the U.S. and to prepare for potential hurricane activity later in 2019. Sales of both our pest strips and our pharmaceutical products increased as compared to the same period of 2018.

Net sales of our international businesses were up nearly 14% during the period ($48,574 v $42,683). A significant part of this increase was due to the addition of sales from our newly acquired Brazilian subsidiaries, Defensive and Agrovant, and the addition of our Assure II herbicide products that were acquired in December 2018. Performance in Brazil met our expectations, despite drought conditions and competitive pressure in certain markets. We experienced solid sales performance from AgriCenter in Central America – with higher granular soil insecticide sales, steady demand for fungicides and miscellaneous products, and somewhat lower foliar insecticide sales. Elsewhere in the international sector, we posted increased sales of Mocap insecticide and bromacil herbicides (despite continuing supply shortages) during this period, while both Nemacur and Thimet sales declined as the result of various weather-related issues. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

2019

2018

Change

% Change

Net sales:

Insecticides

$
36,509

$
38,496

$
(1,987
)

-5
%
Herbicides/soil fumigants/fungicides

37,203

34,747

2,456

7
%
Other, including plant growth regulators

22,173

21,200

973

5
%
Total crop

95,885

94,443

1,442

2
%
Non-crop

17,219

12,603

4,616

37
%

$
113,104

$
107,046

$
6,058

6
%
Cost of sales:

Insecticides

$
22,392

$
23,560

$
(1,168
)

-5
%
Herbicides/soil fumigants/fungicides

24,204

19,947

4,257

21
%
Other, including plant growth regulators

16,194

13,991

2,203

16
%
Total crop

62,790

57,498

5,292

9
%
Non-crop

8,661

6,251

2,410

39
%

$
71,451

$
63,749

$
7,702

12
%
Gross profit:

Insecticides

$
14,117

$
14,936

$
(819
)

-5
%
Herbicides/soil fumigants/fungicides

12,999

14,800

(1,801
)

-12
%
Other, including plant growth regulators

5,979

7,209

(1,230
)

-17
%
Gross profit crop

33,095

36,945

(3,850
)

-10
%
Gross profit non-crop

8,558

6,352

2,206

35
%

$
41,653

$
43,297

$
(1,644
)

-4
%
Gross margin crop

35
%

39
%

Gross margin non-crop

50
%

50
%

Total gross margin

37
%

40
%

Across our crop business, net sales of our insecticides group were down approximately 5% to end at $36,509, as compared to $38,496 during the second quarter of 2018. Within this category, net sales of our non-granular insecticides were aided by our cotton insecticide Bidrin®, which posted higher sales due to higher pest pressure. Net sales of our granular soil insecticides were down approximately 4% due to the weaker performance of our Thimet® (used primarily in peanuts and sugar cane) and Counter (used in corn and sugar beets) largely resulting from weather-related applications challenges. Offsetting this was an increase in Aztec corn soil insecticide sales, as mentioned above.

Within the group of herbicides/fungicides/fumigants used in crop applications, net sales for the second quarter of 2019 increased by approximately 7% to $37,203 from $34,747 in the comparable period of 2018. Net sales of our herbicide products increased approximately 38%, largely due to the addition of the Assure II products purchased in December of 2018. Sales of our post-emergent corn herbicide Impact®, Dacthal® for use on a wide variety of high valued vegetable crops, and our Paraquat burn-down product, all posted flat to slightly increased sales relative to the second quarter of 2018. We also enjoyed increased sales of our international bromacil products Hyvar® and Krovar®. In fungicides, we posted significantly lower sales of chlorothalonil due to abnormally high supply (from expedited, pre-tariff importation of large quantities by many sellers) and pricing pressure in the face of seasonally normal demand.

Within the group of other products (which includes Defensive and Agrovant, parts of the AgriCenter business, plant growth regulators, molluscicides and tolling activity), net sales increased 5%, to $22,173, as compared to $21,200 for the second quarter of 2018. Lower quarterly sales of our Folex® cotton defoliant resulted from shipment delays; however, increased usage is anticipated in the third quarter for harvest defoliation.

Our non-crop sales ended the second quarter of 2019 up 37% at $17,219, as compared to $12,603, for the same period of the prior year. This result was driven largely by increased quarterly sales of our aerial applied Dibrom mosquito adulticide, along with a strong increase in pest strip sales and a modest increase in our OHP horticultural business.

Our international business performed strongly and increased sales by 14%, ending at $48,574, as compared to $42,683 for the second quarter of the prior year. The main growth drivers related to products acquired at the end of 2018 and the Brazilian businesses acquired during 2019. Both business lines contributed strongly to sales growth and overall improvement in gross profit performance.

Our cost of sales for the second quarter of 2019 was $71,451 or 63% of sales. This compared to $63,749 or 60% of sales for the same period of 2018. The increase in cost of sales as a percentage of net sales in 2019 is driven by decisions made to reduce factory output of our Thimet and Counter products in order to reduce those inventories during 2019 responding to lower than expected sales as noted above. Furthermore, cost of goods was affected by a change in product mix, including the effect of acquired products and distribution businesses, which drive high sales at comparatively lower margins than our pre-existing business.

Gross profit for the second quarter of 2019 decreased by $1,644, or 4%, to end at $41,653, as compared to $43,297 for the second quarter of 2018. Gross margin percentage ended at 37% in the three months ended June 30, 2019, as compared to 40% in the same period of the prior year. As previously noted, the change in performance is largely driven by decision made to manage factory output and inventory levels and the new products and businesses acquired in late 2018 and year to date in 2019.

~~Operating expenses increased by $644 to $35,362 for the three months ended June 30, 2019,~~March 31, 2020, as compared to the same period in ~~2018.~~2019. The differences in operating expenses by department are as follows:

Interest costs net of capitalized interest were ~~$1,925~~$1,508 in the first three months ~~ended June 30, 2019,~~of 2020, as compared to ~~$966~~$1,612 in the same period of ~~2018.~~2019. Interest costs are summarized in the following table:

	Three months ended June 30, 2019								Three months ended June 30, 2018								Q1 2020								Q1 2019
	Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate			Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	178,616	$	1,908			4.3	%	$	100,928	$	878			3.5	%	$	165,076	$	1,496			3.6	%	$	143,144	$	1,576			4.4	%
Amortization of deferred loan fees		—		53			—			—		58			—			—		59			—			—		50			—
Amortization of other deferred liabilities		—		—			—			—		52			—			—		3			—			—		—			—
Other interest (income) expense		—		47			—			—		(5	)		—			—		30			—			—		13			—
Subtotal		178,616		2,008			4.5	%		100,928		983			3.9	%	$	165,076	$	1,588			3.8	%	$	143,144	$	1,639			4.6	%
Capitalized interest		—		(83	)		—			—		(17	)		—			—		(80	)		—			—		(27	)		—
Total	$	178,616	$	1,925			4.3	%	$	100,928	$	966			3.8	%	$	165,076	$	1,508			3.7	%	$	143,144	$	1,612			4.5	%

The Company’s average overall debt for the three months ended ~~June 30, 2019~~March 31, 2020 was ~~$178,616,~~$165,076, as compared to ~~$100,928~~$143,144 for the three months ended ~~June 30, 2018. During~~March 31, 2019. Our borrowings in the ~~quarter, we continued to focus on managing our~~three months ended March 31, 2020 were higher than the same period of the prior year primarily driven by the acquisition activity over the last 12 months and the associated investment in expanded working ~~capital for our expanded business and controlling our usage of revolving debt.~~capital. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was ~~4.3%~~3.6% for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~3.5%~~4.4% in ~~2018.~~2019.

Income tax expense ~~was $1,224~~decreased by $1,565 to end at a benefit of $205 for the three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$1,748~~income tax expense of $1,360 for the comparable period in ~~2018.~~2019. The underlying effective tax rate for the three months ended March 31, 2020 was 31.0%. In addition, during the quarter, the Company benefited from two discrete income tax benefits. First, the Company assessed its income tax positions to account for the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which was ~~28%, as compared to 23% in the same period~~signed into law on March 27, 2020. A provision of the ~~prior year. The effective~~act modified the amount of interest deduction allowed and therefore reduced the Company’s 2019 Global Intangible Low Tax Income (“GILTI”) inclusion. Second, the Company benefited from the tax ~~rate for all interim periods is based on~~impact of the ~~projected income for the full year and is subject to ongoing review and adjustment by management. The increase in effective tax rate is primarily driven by the mix~~vesting of ~~our domestic and international income.~~

certain stock grants. During the three months ended ~~June 30,~~March 31, 2019, and 2018, we recognized gains of $36 and $46, respectively, on our investment in the Hong Kong joint venture, which is a 50% owned equity investment. Furthermore, during the three months ended June 30, 2018, we recognized a loss of $347 on our investment in TyraTech. TyraTech became a wholly owned and consolidated subsidiary on November 9, 2018.

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

~~Our overall net income for the three months ended June 30, 2019 was $3,106 or $0.11 per basic and diluted share, as compared to $5,599 or $0.19 per basic and diluted share in the same period of 2018.~~

The Company’s overall operating results for the first half of 2019 were flat or down, as compared to those of the same period of 2018. Six month net sales were essentially flat ($212,780 v $211,154), gross profit was down slightly ($83,355 v 84,348), and gross margin declined to 39% from 40% of net sales. Operating expenses rose by approximately 3% ($70,162 v $68,418) and increased as a percent of net sales to 33% from 32%. Net income was down about 32% ($7,012 v. $10,254).

Gross margin as a percent of sales dropped by 1% during the first half of 2019, due largely to lower factory utilization for the period. Operating expenses during the six-month period increased primarily as a result of the addition of products and businesses acquired in late 2018 and year to date in 2019. Further, we recorded higher interest expense, arising from borrowing due largely to acquisition activity in 2018 and 2019. These factors, together, resulted in a decrease in net income of $3,242 for the first half of the year. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

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

For the six months ended
June 30,

2019

2018

Change

% Change

Net sales:

US crop

$
96,560

$
108,785

$
(12,225
)

-11
%
US non-crop

29,507

25,393

4,114

16
%
US total

126,067

134,178

(8,111
)

-6
%
International

86,713

76,976

9,737

13
%
Net sales:

$
212,780

$
211,154

$
1,626

1
%
Gross profit:

US crop

$
42,214

$
50,753

$
(8,539
)

-17
%
US non-crop

14,872

12,432

2,440

20
%
US total

57,086

63,185

(6,099
)

-10
%
International

26,269

21,163

5,106

24
%
Total gross profit:

$
83,355

$
84,348

$
(993
)

-1
%

Gross margin domestic

45
%

47
%

Gross margin international

30
%

27
%

Gross margin total

39
%

40
%

Our US crop business recorded net sales that were about 11% below those of first half of 2018 ($96,560 v $108,795). Among our granular soil insecticides, sales of Aztec were up about 14% over the prior year period, as distributors and retailers replenished channel inventories. This increase was partially offset by decreased sales of Counter and Thimet, largely due to wet conditions in the Midwest and Southeast regions of the United States. Sales of our Impact post-emergent corn herbicide were up year-over-year, as inclement weather prevented many growers from applying a full measure of pre-emergent herbicides prior to planting. Dacthal, used on high-value vegetable crops, was slightly down in comparison to a very strong prior year. Our Parazone herbicide product sales were down due to persistent wet weather in key markets and higher-than-normal channel inventory.

Net sales of our domestic non-crop business increased about 16% to $29,507 from $25,393, period-over-period. This result was due largely to strong sales of our pest strips, our pharmaceutical products, sales from Envance and additional sales of our mosquito adulticide Dibrom, as applicators restocked both to address persistent wet weather conditions in the U.S. and to prepare for potential hurricane activity later in 2019.

Net sales of our international businesses were up approximately 13% during the period ($86,713 v $76,976). A significant part of this increase was due to the addition of sales from our newly acquired Brazilian subsidiaries, Defensive and Agrovant, and the addition of our Assure II herbicide products that were acquired in December 2018. Performance in Brazil met our expectations, despite drought conditions and competitive pressure in certain markets. We experienced solid sales performance from AgriCenter in Central America – with higher granular soil insecticide sales, steady demand for fungicides and miscellaneous products, and somewhat lower foliar insecticide sales. Elsewhere in the international sector, we posted increased sales of Mocap insecticide and bromacil herbicides (despite continuing supply shortages) during this period, while both Nemacur and Thimet sales declined as the result of various weather-related issues. A more detailed explanation of net sales, markets and factors affecting profitability appears below.

2019

2018

Change

% Change

Net sales:

Insecticides

$
76,692

$
84,654

$
(7,962
)

-9
%
Herbicides/soil fumigants/fungicides

68,738

71,262

(2,524
)

-4
%
Other, including plant growth regulators

37,843

29,845

7,998

27
%
Total crop

183,273

185,761

(2,488
)

-1
%
Non-crop

29,507

25,393

4,114

16
%
Total net sales

$
212,780

$
211,154

$
1,626

1
%
Cost of sales:

Insecticides

$
45,330

$
52,501

$
(7,171
)

-14
%
Herbicides/soil fumigants/fungicides

43,064

42,176

888

2
%
Other, including plant growth regulators

26,396

19,168

7,228

38
%
Total crop

114,790

113,845

945

1
%
Non-crop

14,635

12,961

1,674

13
%
Total cost of sales

$
129,425

$
126,806

$
2,619

2
%
Gross profit:

Insecticides

$
31,362

$
32,153

$
(791
)

-2
%
Herbicides/soil fumigants/fungicides

25,674

29,086

(3,412
)

-12
%
Other, including plant growth regulators

11,447

10,677

770

7
%
Gross profit crop

68,483

71,916

(3,433
)

-5
%
Gross profit non-crop

14,872

12,432

2,440

20
%
Total gross profit

$
83,355

$
84,348

$
(993
)

-1
%
Gross margin crop

37
%

39
%

Gross margin non-crop

50
%

49
%

Total gross margin

39
%

40
%

Across our crop business, net sales of our insecticides group declined approximately 9% to end at $76,692, as compared to $84,654 during the six months ended June 30, 2018. Within this category, net sales of our non-granular insecticides were driven by our cotton insecticide Bidrin^®, which posted a 50% sales gain due to increased year-over-year cotton acres in the U.S. This increase more than offset sales declines of Abamectin resulting from regional weather issues and bifenthrin resulting from generic competitive pressures. Net sales of our granular soil insecticides were down about 14% due to lower Thimet sales in peanuts, lower sales of Counter in sugar beets, and lower sales internationally for Mocap and Nemacur, in part due to regulatory concerns.

Within the group of herbicides/fungicides/fumigants used in crop applications, net sales for the six months ended June 30, 2019 decreased by approximately 4% to $68,738 from $71,262, in the comparable period of 2018. While our traditional Impact and Dacthal products had stable results, the decrease in this group was driven by reduced sales of chlorothalonil due to abnormally high supply (from expedited, pre-tariff importation of large quantities by many sellers) and pricing pressure in the face of seasonally normal demand. Additionally, wet weather inhibited the application of our Parazone burn-down herbicide and Metam soil fumigants. Offsetting these declines were the addition of the Assure II herbicide acquired at the end of 2018 and year-over-year increases in our bromacil herbicides, both of these factors were largely reflected in the international section of our business.

Within the group of other products (which includes part of our AgriCenter business, the Defensive and Agrovant Brazilian subsidiaries, plant growth regulators, molluscicides and tolling activity), net sales were $37,843, up approximately 27%, as compared to $29,845 in the first half of 2018. This result benefitted from the inclusion of the Brazilian business, modest gains in the AgriCenter business and improved sales of our growth regulator NAA. These items offset lower half-year sales of our Folex® cotton defoliant and reduced toll manufacturing activity.

Our non-crop sales ended the first half of 2019 with net sales of $29,507 up 16%, as compared to $25,393 for the same period of the prior year. This category benefitted from continued strong sales of our aerially-applied mosquito adulticide Dibrom, commercial pest control products including pest strips, the OHP horticulture business, and our pharmaceutical products.

Our first half International sales ended at $86,713, a 13% increase over the $76,976 in the first six month of 2018. The main driver of this performance was the addition of the Defensive and Agrovant businesses in Brazil, the AgriCenter Central American business, and the acquisition of the Assure II products at the end of 2018. Our traditional product portfolio (including Mocap, Nemacur) showed significant half-year sales declines within the international markets.

Our cost of sales for the first half of 2019 ended at $129,425 or 61% of net sales. This compares to $126,806 or 60% of net sales in the same period of 2018. The increase in cost of sales as a percentage of net sales in 2019 was driven in part by decisions made to reduce factory output as part of our 2019 manufacturing plan.

Gross profit for the six months ended June 30, 2019 decreased by $993, or 1%, to end at $83,355, as compared to $84,348 for the first half of 2018. Gross margin percentage ended at 39% in the first six months of 2019, as compared to 40% in the same period of the prior year. As previously noted, the change in performance is largely driven by the Company ~~updated manufacturing plan for 2019 which responds to the weather related lower sales already discussed and the new businesses acquired in early 2019.~~

~~Operating expenses increased by $1,744 to $70,162 for the six months ended June 30, 2019, as compared to the same period in 2018. The differences in operating expenses by department are as follows:~~

~~Interest costs net of capitalized interest were $3,537 in the first six months of 2019, as compared to $1,803 in the same period of 2018. Interest costs are summarized in the following table:~~

The Company’s average overall debt for the six months ended June 30, 2019 was $160,782, as compared to $94,934 for the six months ended June 30, 2018. During the period, we continued to focus on our usage of revolving debt, while funding working capital for the newly acquired products and businesses. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 4.3% for the six months ended June 30, 2019, as compared to 3.3% in 2018.

~~Income tax expense was $2,584 for the six months ended June 30, 2019, as compared to $3,440 for the comparable period in 2018. The~~ effective tax rate ~~for the six months ended June 30, 2019~~ was ~~26.8%, as compared to 24.4% in the same period of the prior year. Our effective tax rate increased due to the Company’s mix of domestic and international business. Furthermore, the~~25.7%. The effective tax rate for all interim periods is based on the projected income for the full year and is subject to ongoing review and adjustment by management.

During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 we recognized a loss of $13 and ~~2018, the Company recognized losses of $60 and $75,~~$24, respectively, on our investment in the Hong Kong joint venture which is a 50% owned equity investment. ~~During the six months ended June 30, 2018, we recognized a loss of $443 on our investment in TyraTech. TyraTech became a wholly owned and consolidated subsidiary on November 9, 2018.~~

Non-controlling interest represents the share of net income or loss that is attributable to the minority stockholder of our majority owned subsidiary, Envance. During the six months ended June 30, 2018, non-controlling interest amounted to a gain of $85. Envance became a wholly owned subsidiary on November 9, 2018.

Our overall net income for the ~~six~~first three months ~~ended June 30, 2019~~of 2020 was ~~$7,012~~$520 or ~~$0.24~~$0.02 per basic and diluted share, as compared to ~~$10,254~~$3,906 or ~~$0.35~~$0.13 per basic and ~~$0.34 per~~ diluted share in the same ~~period~~quarter of ~~2018.~~2019.

The Company used cash of ~~$32,086~~$13,946 in operating activities during the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$3,804 provided by operating activities~~$20,263 during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Included in the ~~$32,086~~$13,946 are net income of ~~$7,012,~~$520, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of ~~$11,379, stock based~~$5,792, and provision for bad debts in the amount of $359. Also included are stock-based compensation of ~~$2,995, revision~~$1,357, losses from equity method investment of ~~deferred compensation of $2,888, changes~~$13, decrease in

deferred income taxes of ~~$572 and losses from equity method investments~~$910and net foreign currency adjustment of ~~$60. The total~~$823. These together provided net cash inflows of ~~$18,431,~~$7,954, as compared to ~~$24,299~~$10,027 for the same period of ~~2018.~~2019.

During the first ~~six~~three months of ~~2019,~~2020, the Company increased working capital by ~~$48,935,~~$14,161, as compared to ~~$19,172~~$28,358 during the same period of the prior year. Included in this change: inventories increased by ~~$27,635, driven by our expanded business~~$16,446 (normal at this point in the season), as ~~we work through~~compared to $23,763 for the ~~annual industry cycle.~~first quarter of 2019. Deferred revenue decreased by ~~$19,438,~~$2,342, as compared to ~~$7,254~~$16,036 in the same period of ~~2018,~~2019, driven by customer decisions regarding ~~product~~ demand, payment timing and our cash incentive programs. Our accounts payable balances decreased by ~~$10,138 reflecting decisions~~$189, as compared to ~~work down inventory as part of our integrated manufacturing plan and the impact of new business cycles associated with our distribution businesses. This compared with an increase of $11,309~~$4,788 in the same period of ~~2018.~~2019, reflecting slower production activity this year in efforts to control inventory level. Accounts receivables ~~decreased~~increased by ~~$7,841~~$5,472, as compared to ~~$5,297~~a decreased of $6,812 in the same period of ~~2018, with the change~~2019. This is primarily driven ~~primarily~~ by ~~a different~~territorial mix of ~~domestic crop~~ sales ~~(and associated timing~~ and ~~terms) following the purchases of new products~~some slight delays caused by COVID-19 disruption in ~~2018.~~Central America. Prepaid expenses increased by ~~$1,844 and income~~$776, as compared to $2,724 in the same period of 2019. Income tax receivable ~~decreased~~increased by ~~$4,480.~~$597, as compared to decreasing by $750 in the prior year. Accrued programs increased by ~~$11,823,~~$6,016, as compared

to ~~$15,039~~$2,391 in the prior year. The change reflected some changes in product mix and program strategies in US Agriculture market. Finally, other payables and accrued expenses decreased by ~~$6,719,~~$2,094, as compared to ~~$3,683~~$2,508 in the prior year as a result of the reduced incentive compensation accrual.

With regard to our program accrual, the ~~change~~increase (as noted above) primarily reflects our mix of sales and customers in the first ~~half~~quarter of ~~2019,~~2020, as compared to the prior year. The Company accrues programs in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30^thof each year. During the first ~~half~~quarter of ~~2019,~~2020, the Company made accruals for programs in the amount of ~~$29,220~~$17,189 and made payments in the amount of ~~$17,397.~~$11,192. During the first ~~half~~quarter of ~~2018,~~the prior year, the Company made accruals in the amount of ~~$28,813~~$14,902 and made payments in the amount of ~~$13,774. The increased payments in 2019 relate to the mix of products sold during the period and associated variations in payment cycles.~~$11,701.

Cash used for investing activities was ~~$31,518~~$2,980 for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as compared to ~~$4,861~~$27,615 for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The Company spent ~~$7,216~~$2,980 on ~~capital expenditures~~fixed assets acquisitions primarily focused on continuing to invest in manufacturing ~~infrastructure and $24,302 related~~infrastructure.

During the three months ended March 31, 2020, financing activities provided $16,641, principally from the borrowings on the Company’s senior credit facility, as compared to ~~a business acquisition during~~$48,865 for the same period of the prior year. In the first quarter of 2020, we paid dividends to stockholders amounting to $582, as compared to $581 in the same period of 2019.

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

As of June 30, 2017, AMVAC Chemical Corporation (“AMVAC”), the Company’s principal operating subsidiary, as borrower, and affiliates (including the Company, AMVAC CV and AMVAC BV), as guarantors and/or borrowers, entered into a Third Amendment to Second Amended and Restated Credit Agreement (the “Credit Agreement”) with a group of commercial lenders led by Bank of the West (AMVAC’s primary bank) as agent, swing line lender and Letter of Credit (“L/C”) issuer. The Credit Agreement is a senior secured lending facility, consisting of a line of credit of up to $250,000, an accordion feature of up to $100,000 and a maturity date of June 30, 2022. The Credit Agreement contains two key financial covenants; namely, borrowers are required to maintain a Consolidated Funded Debt Ratio of no more than 3.25-to-1 and a Consolidated Fixed Charge Covenant Ratio of at least 1.25-to-1. The Company’s borrowing capacity varies with its financial performance, measured in terms of EBITDA, for the trailing twelve month period. Under the Credit Agreement, revolving loans bear interest at a variable rate based, at borrower’s election with proper notice, on either (i) LIBOR plus the “Applicable Rate” which is based upon the Consolidated Funded Debt Ratio (“Eurocurrency Rate Loan”) or (ii) the greater of (x) the Prime Rate, (y) the Federal Funds Rate plus 0.50%, and (z) the Daily One-Month LIBOR Rate plus 1.00%, plus, in the case of (x), (y) or (z) the Applicable Rate (“Alternate Base Rate Loan”). Interest payments for Eurocurrency Rate Loans are payable on the last day of each interest period (either one, two, three or six months, as selected by the borrower) and the maturity date, while interest payments for Alternate Base Rate Loans are payable on the last business day of each month and the maturity date.

At ~~June 30, 2019, according~~March 31, 2020, the Company is compliant with all covenants to ~~the terms of the~~its Senior Credit ~~Agreement and based~~Facility. Based on its performance against the most restrictive covenants ~~listed above,~~in the Credit Agreement (see, supra Note 10), the Company had the capacity to increase its borrowings by up to ~~$30,557.~~$39,552, according to the terms thereof. This compares to an available borrowing capacity of ~~$137,047~~$56,707 as of ~~June 30, 2018.~~March 31, 2019. The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing ~~twelve-month~~twelve month period ~~plus~~and proforma basis arising from acquisitions, ~~which have declined,~~ (2) net borrowings, ~~which have increased due to recent acquisitions and~~ (3) the leverage covenant ~~(being the number of times EBITDA the Company may borrow under its credit facility agreement)~~(the Consolidated Funded Debt Ratio).

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

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

The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company’s Form 10-K filed with the SEC for the year ended December 31, ~~2018,~~2019, the Company provided a comprehensive statement

of critical accounting policies. These policies have been reviewed in detail as part of the preparation work for this Form 10-Q. After our review of these matters, we have determined that, during the subject reporting period, there has been no material change to the critical accounting policies that are listed in the Company’s Form 10-K for the year ended December 31, ~~2018, except for the adoption of ASC 842, Leases, as of January 1,~~ 2019.

Certain of the Company’s policies require the application of judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on historical experience, terms of existing contracts, commonly accepted industry practices and other assumptions that the Company believes are reasonable under the circumstances. These estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the condensed consolidated financial statements in the period that revisions are determined to be necessary. Actual results may differ from these estimates under different outcomes or conditions.

The Company is exposed to market risk related to changes in interest rates, primarily from its borrowing activities. The Company’s indebtedness to its primary lender is evidenced by a line of credit with a variable rate of interest, which fluctuates with changes in the lender’s reference rate. For more information, please refer to the applicable disclosures in the Company’s Form 10-K filed with the SEC for the year ended December 31, ~~2018.~~2019.

The Company ~~conducts business in various foreign currencies, primarily in Europe, Mexico, Central and South America. Therefore~~faces market risk to the extent that changes in ~~the value of the currencies of such countries or regions~~foreign currency exchange rates affect ~~the Company’s financial position~~our non-U.S. dollar functional currency as to foreign subsidiaries’ revenues, expenses, assets and ~~cash flows when translated into U.S. Dollars.~~liabilities. The Company ~~has mitigated~~currently does not engage in hedging activities with respect to such exchange rate risks.

Assets and ~~will continue to mitigate a portion of its currency exchange exposure through natural hedges based on~~liabilities outside the ~~operation of decentralized foreign operating companies~~U.S. are located in ~~which the majority of all costs are local-currency based. Furthermore,~~regions where the Company has ~~established~~subsidiaries or joint ventures: Central America, South America, North America, Europe Asia, and Australia. The Company’s investments in foreign subsidiaries and joint ventures with a ~~procedure for covering forward exchange rates on specific purchase orders when appropriate. A 10% change in~~functional currency other than the ~~value of all foreign currencies would have an immaterial effect on~~U.S. dollar are generally considered long-term. Accordingly, the ~~Company’s financial position and cash flows.~~Company does not hedge these net investments.

As of ~~June 30, 2019,~~March 31, 2020, the Company has a comprehensive set of disclosure controls and procedures designed to ensure that all information required to be disclosed in our filings under the Securities Exchange Act (1934) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. As of ~~June 30, 2019,~~March 31, 2020, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has concluded, based on their evaluation, that the Company’s disclosure controls and procedures are effective to provide reasonable assurance of the achievement of the objectives described above.

There were no changes in the Company’s internal controls over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. ~~We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new accounting standards under ASC 842,~~ ~~Leases~~.

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

~~During the reporting period, there have been no material developments in legal proceedings that were reported~~Please refer to Note 14 in the ~~Company’s Form 10-K for the year ended December 31, 2018, except as described below.~~

~~EPA FIFRA/RCRA Matter.~~ On November 10, 2016, the Company was served with a grand jury subpoena out of the U.S. District Court for the Southern District of Alabama in which the U.S. Department of Justice (“DoJ”) sought production of documents relatingaccompanying Notes to the Company’s reimportation of depleted Thimet containers from Canada and Australia. The Company retained defense counsel and completed production of documents. Over the past several months, government attorneys have interviewed eight individuals who may be knowledgeable of the matter. At this stage, however, DoJ has not made clear its intentions with regard to either its theory of the case or potential criminal enforcement. Thus, it is too early to tell whether a loss is probable or reasonably estimable. Accordingly, the Company has not recorded a loss contingency on this matter.

~~Takings Case.~~ On June 14, 2016, the Company filed a lawsuit against the United States Environmental Protection Agency (“USEPA”) in the U.S. Court of Federal Claims, entitled “American Vanguard Corporation v. USEPA” (Case No. 16-694C) under which the Company sought damages from USEPA on the ground that that agency’s issuance of a Stop Sale, Use and Removal Order against the PCNB product line in August 2010 amounts to a taking without just compensation under the Tucker Act. The court in this matter denied the government’s motion to dismissCondensed Consolidated Financial Statements for lack of jurisdiction and failure to state a claim which was brought in September 2016. Fact and expert discovery was completed, and both parties filed motions for summary judgment on the merits. In January 2019, the court denied the Company’s motion for summary judgment, while granting that of the government, finding that the Company’s PCNB business did not amount to a cognizable property interest in the context of the Tucker Act. In February 2019, the Company filed a motion for reconsideration on the ground that the court’s decision was based upon an erroneous understanding of the facts. In March 2019, the court denied the motion for reconsideration. The matter was subsequently dismissed without prejudice. The Company has elected not to appeal the trial court’s decision and expects that that court will dismiss the matter with prejudice. Accordingly, the Company did not record a gain or loss for the matter.

The Company continually re-assesses the business risks, and as part of that process detailed a range of risk factors in the disclosures in American Vanguard’s Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed on March ~~12, 2019.~~10, 2020. In preparing this document, we have reviewed all the risk factors included in that document and ~~have identified two areas~~find that ~~warrant disclosure~~there are no material changes to those risk factors, except for the following:

The Covid-19 pandemic is creating risk, uncertainty and adverse conditions in ~~this filing.~~

~~Product liability judgments~~many industries both here and abroad. The Company is closely monitoring the impact of the COVID-19 pandemic on ~~glyphosate by domestic courts present a litigation risk to companies in this industry.~~ ~~– Over~~all aspects of its business, including how the past several months, multiple judgments have been rendered by domestic courts in product liability cases against Bayer/Monsanto in connection with injuries allegedly arising from exposure to the herbicide product, glyphosate. The basis was purported carcinogenicity based largely upon the findings of certain international organizations, in spite of significant scientific evidence to the contrary.pandemic will impact its customers, business partners, and employees. While the Company ~~has~~did not ~~sold glyphosate domestically,~~incur significant disruptions from the ~~theory~~COVID-19 pandemic during the three months ended March 31, 2020, the Company is unable to predict the impact that the pandemic will have on its financial condition, results of ~~these results could put one or more~~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 ~~Company’s products at risk.~~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 ~~one~~the Company will be able to operate without material disruption for the duration of the pandemic or ~~more product liability actions would~~that its financial conditions and results of operations will not be ~~brought against~~materially adversely affected by the ~~Company on a similar basis. Further, adverse rulings in such actions could have a material adverse affect upon the Company’s financial performance~~pandemic in future ~~reporting periods.~~quarters.

~~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 chlorpyrifos, 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.

The table below summarizes the number of shares of our common stock that were repurchased during the ~~six~~three months ended ~~June 30,~~March 31, 2019 under the share repurchase program. The shares and respective amount are recorded as treasury shares on the Company’s condensed consolidated balance sheet. There were no similar purchases during the three months ended March 31, 2020.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	95-2588080
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification Number)

4695 MacArthur Court, Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

		Page Number
PART I—FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and ~~six months ended June 30,~~ 2019 ~~and 2018~~	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and ~~six months ended June 30,~~ 2019 ~~and 2018~~	4

	Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	5

	Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity for the three months ended March 31, 2020 and ~~six months ended June 30,~~ 2019 ~~and 2018~~	6

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	87

	Notes to Condensed Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3026

Item 4.	Controls and Procedures	3026

PART II—OTHER INFORMATION		3127

Item 1.	Legal Proceedings	3127

Item 1A.	Risks Factors	27

Item 2.	Purchases of Equity Securities by Issuer	27

Item 6.	Exhibits	3328

SIGNATURES		3429


~~Weighted-average remaining lease term (in years)~~	~~3.44~~
~~Weighted-average discount rate~~	~~3.71~~	%

	Three months ended March 31, 2020			Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	1,396		$	1,206
ROU assets obtained in exchange for new liabilities	$	825		$	371

Weighted-average remaining lease term (in years)		3.15			3.25
Weighted-average discount rate		3.67	%		3.69	%

	June 30, 2019		March 31, 2020
Remainder of 2019	$	2,611
2020		4,792
2020 (excluding three months ended March 31, 2020)			$	3,959
2021		2,834		3,552
2022		1,299		1,952
2023		688		871
2024				389
Thereafter		1,183		870
Total lease payments	$	13,407	$	11,593
Less: imputed interest		914		714
Total	$	12,493	$	10,879

Amounts recognized in the condensed consolidated balance sheet:
Operating lease liabilities, current	$	4,749	$	4,883
Operating lease liabilities, long term	$	7,744	$	5,996

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

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

	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Total receivables, net	$	131,030	$	134,029
Contract assets		3,200		3,000	$	6,091	$	6,091
Deferred revenue		751		20,043	$	4,448	$	6,826

	For the three months ended June 30,
	2019		2018		Change			% Change
Net sales:
US crop	$	47,311	$	51,760	$	(4,449	)		-9	%
US non-crop		17,219		12,603		4,616			37	%
US total		64,530		64,363		167			0	%
International		48,574		42,683		5,891			14	%
Net sales:	$	113,104	$	107,046	$	6,058			6	%
Gross profit:
US crop	$	18,719	$	26,222	$	(7,503	)		-29	%
US non-crop		8,558		6,352		2,206			35	%
US total		27,277		32,574		(5,297	)		-16	%
International		14,376		10,723		3,653			34	%
Total gross profit:	$	41,653	$	43,297	$	(1,644	)		-4	%

Declaration Date	Record Date	Distribution Date	Dividend Per Share		Total Paid
June 10, 2019	June 28, 2019	July 12, 2019	$	0.020	$	580
March 6, 2019	March 27, 2019	April 10, 2019	$	0.020	$	580
December 10, 2018	December 27, 2018	January 10, 2019	$	0.020	$	581

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
Numerator:
Net income attributable to AVD	$	3,106	$	5,599	$	7,012	$	10,254
Denominator: (in thousands)
Net income									$	520	$	3,906
Denominator:
Weighted average shares outstanding-basic		29,001		29,330		28,989		29,309		29,288		28,977
Dilutive effect of stock options and grants		539		860		571		804		660		602
		29,540		30,190		29,560		30,113
Weighted average shares outstanding-diluted										29,948		29,579

Long-term indebtedness ($000's)	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Revolving line of credit	$	165,200		$	97,400		$	168,700		$	149,300
Deferred loan fees		(626	)		(729	)		(475	)		(534	)
Net long-term debt	$	164,574		$	96,671
Total indebtedness							$	168,225		$	148,766

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

	Incentive Stock Option Plans			Weighted Average Price Per Share
Balance outstanding, December 31, 2019		332,823		$	9.14
Options exercised		(15,836	)		8.83
Balance outstanding, March 31, 2020		316,987		$	9.16

	Outstanding Weighted Average						Exercisable Weighted Average				Outstanding Weighted Average
Exercise Price Per Share	Shares		Remaining Life (Months)		Exercise Price		Shares		Exercise Price		Shares		Remaining Life (Months)		Exercise Price
Incentive Stock Option Plan:
$7.50		218,045		17	$	7.5		218,045	$	7.50		185,150		8	$	7.5
$11.32—$14.49		147,029		64	$	11.48		147,029	$	11.48		131,837		55	$	11.48
		365,074			$	9.10		365,074	$	9.10		316,987			$	9.16

	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Land	$	2,548		$	2,548		$	2,706		$	2,706
Buildings and improvements		17,902			17,555			18,293			18,640
Machinery and equipment		109,901			109,064			116,915			116,757
Office furniture, fixtures and equipment		6,067			5,655			6,331			6,228
Automotive equipment		1,694			1,116			1,565			1,762
Construction in progress		7,239			2,513			8,028			5,263
Total gross value		145,351			138,451
Total								153,838			151,356
Less accumulated depreciation		(91,714	)		(89,199	)		(96,239	)		(94,835	)
Total net value	$	53,637		$	49,252
Property, plant and equipment, net							$	57,599		$	56,521

	Six Months Ended June 30, 2019					Six Months Ended June 30, 2018					Three Months Ended March 31, 2020					Three Months Ended March 31, 2019
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		587,210		$	17.59		391,753		$	15.61		719,845		$	17.67		587,210		$	17.59
Granted		297,679			17.34		254,972			19.97		4,185			18.63		290,679			17.34
Vested		(105,582	)		15.21		(8,800	)		12.07		(213,781	)		16.18		(105,582	)		15.21
Forfeited		(6,589	)		17.69		(5,265	)		16.51		(14,715	)		18.08		(6,589	)		17.69
Nonvested shares at March 31^st		772,718			17.77		632,660			17.41		495,534		$	18.31		765,718		$	17.77
Granted		40,522			13.34		22,308			23.66
Vested		(32,771	)		13.35		(20,313	)		22.82
Forfeited		(21,184	)		17.77		(6,424	)		17.25
Nonvested shares at June 30th		759,285		$	17.72		628,231		$	17.40

As of June 30, 2019	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
As of March 31, 2020									Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
Incentive Stock Option Plan:
Outstanding		365,074	$	9.10		36	$	2,302		316,987	$	9.16		28	$	1,681
Expected to Vest		365,074	$	9.10		36	$	2,302		316,987	$	9.16		28	$	1,681
Exercisable		365,074	$	9.10		36	$	2,302		316,987	$	9.16		28	$	1,681

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2019		120,782		$	11.49	$	11.49
Options exercised		(3,035	)		11.49		11.49
Balance outstanding, March 31, 2020		117,747		$	11.49	$	11.49

	Three months ended March 31, 2020
Balance, December 31, 2019	$	1,243
Payments		(1,227	)
Foreign exchange effect		(16	)
Balance, March 31, 2020	$	—

	Six months ended June 30, 2019									Six months ended June 30, 2018
	Average Debt		Interest Expense			Interest Rate				Average Debt		Interest Expense			Interest Rate
Revolving line of credit (average)	$	160,782	$	3,485			4.3	%	��	$	94,934	$	1,577			3.3	%
Amortization of deferred loan fees		—		103			—				—		117			—
Amortization of other deferred liabilities		—		—			—				—		154			—
Other interest (income) expense		—		59			—				—		(11	)		—
Subtotal		160,782		3,647			4.5	%			94,934		1,837			3.9	%
Capitalized interest		—		(110	)		—				—		(34	)		—
Total	$	160,782	$	3,537			4.4	%		$	94,934	$	1,803			3.8	%

Exhibit No.		Description

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

32.1		Certification Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

101		The following materials from American Vanguard Corp’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive ~~Income;~~Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated ~~Statements~~Statement of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

	american vanguard corporation

Dated: ~~August 7, 2019~~May 11, 2020	By:	/s/ eric g. wintemute
		Eric G. Wintemute
		Chief Executive Officer and Chairman of the Board

Dated: ~~August 7, 2019~~May 11, 2020	By:	/s/ david t. johnson
		David T. Johnson
		Chief Financial Officer & Principal Accounting Officer