Company Quick10K Filing
American Vanguard
Price15.59 EPS1
Shares30 P/E26
MCap462 P/FCF-21
Net Debt159 EBIT27
TEV621 TEV/EBIT23
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-10
10-Q 2019-09-30 Filed 2019-11-06
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-12
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-03-14
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-03-07
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-02
10-Q 2016-03-31 Filed 2016-05-04
10-K 2015-12-31 Filed 2016-03-02
10-Q 2015-09-30 Filed 2015-11-03
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-05-02
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-08-06
10-Q 2013-03-31 Filed 2013-05-03
10-K 2012-12-31 Filed 2013-03-01
10-Q 2012-09-30 Filed 2012-11-02
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-04
10-K 2011-12-31 Filed 2012-03-09
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-05
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-03-10
10-Q 2010-09-30 Filed 2010-11-03
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-03-10
8-K 2020-06-03
8-K 2020-05-11
8-K 2020-04-22
8-K 2020-03-05
8-K 2020-01-30
8-K 2019-12-23
8-K 2019-12-05
8-K 2019-11-05
8-K 2019-10-15
8-K 2019-09-12
8-K 2019-08-06
8-K 2019-07-23
8-K 2019-06-05
8-K 2019-06-05
8-K 2019-05-07
8-K 2019-04-01
8-K 2019-03-06
8-K 2019-01-10
8-K 2019-01-03
8-K 2018-12-10
8-K 2018-11-05
8-K 2018-09-17
8-K 2018-08-06
8-K 2018-06-21
8-K 2018-06-06
8-K 2018-05-08
8-K 2018-04-03
8-K 2018-03-23
8-K 2018-03-08

AVD 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Numbers in Thousands)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Purchases of Equity Securities By The Issuer
Item 6. Exhibits
EX-31.1 avd-ex311_7.htm
EX-31.2 avd-ex312_8.htm
EX-32.1 avd-ex321_6.htm

American Vanguard Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
68554841127413702012201420172020
Assets, Equity
13510881542702012201420172020
Rev, G Profit, Net Income
50286-16-38-602012201420172020
Ops, Inv, Fin

10-Q 1 avd-10q_20200331.htm 10-Q avd-10q_20200331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                      

Commission file number 001-13795

 

AMERICAN VANGUARD CORPORATION

 

 

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)

(949) 260-1200

(Registrant’s telephone number, including area code)

 

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

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.10 par value

 

AVD

 

New York Stock Exchange

 

 

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.

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

 

Smaller reporting company

Emerging growth company

 

 

 

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—30,163,787 shares as of May 1, 2020.

 

 

 


AMERICAN VANGUARD CORPORATION

INDEX

 

 

 

 

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 2019

 

3

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019

 

4

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019

 

5

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019

 

6

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019

 

7

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

 

Item 4.

Controls and Procedures

 

26

 

 

 

PART II—OTHER INFORMATION

 

27

 

 

 

 

Item 1.

Legal Proceedings

 

27

 

 

 

 

Item 1A.

Risks Factors

 

27

 

 

 

 

Item 2.

Purchases of Equity Securities by Issuer

 

27

 

 

 

 

Item 6.

Exhibits

 

28

 

 

 

 

SIGNATURES

 

29

 

2


PART I. FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the three months

ended March 31

 

 

 

2020

 

 

2019

 

Net sales

 

$

95,962

 

 

$

99,676

 

Cost of sales

 

 

57,581

 

 

 

57,974

 

Gross profit

 

 

38,381

 

 

 

41,702

 

Operating expenses

 

 

36,545

 

 

 

34,800

 

Operating income

 

 

1,836

 

 

 

6,902

 

Interest expense, net

 

 

1,508

 

 

 

1,612

 

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

 

$

520

 

 

$

3,906

 

Earnings per common share—basic

 

$

0.02

 

 

$

0.13

 

Earnings per common share—assuming dilution

 

$

0.02

 

 

$

0.13

 

Weighted average shares outstanding—basic

 

 

29,288

 

 

 

28,977

 

Weighted average shares outstanding—assuming dilution

 

 

29,948

 

 

 

29,579

 

 

See notes to the condensed consolidated financial statements.

 

3


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

 

For the three months

ended March 31

 

 

 

2020

 

 

2019

 

Net income

 

$

520

 

 

$

3,906

 

Comprehensive income:

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(9,063

)

 

 

(1,769

)

Comprehensive income (loss)

 

$

(8,543

)

 

$

2,137

 

 

See notes to the condensed consolidated financial statements.

4


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,544

 

 

$

6,581

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $2,606 and $2,297, respectively

 

 

141,509

 

 

 

136,075

 

Other

 

 

13,134

 

 

 

16,949

 

Total receivables, net

 

 

154,643

 

 

 

153,024

 

Inventories

 

 

175,861

 

 

 

163,313

 

Prepaid expenses

 

 

11,149

 

 

 

10,457

 

Income taxes receivable

 

 

3,406

 

 

 

2,824

 

Total current assets

 

 

350,603

 

 

 

336,199

 

Property, plant and equipment, net

 

 

57,599

 

 

 

56,521

 

Operating lease right-of-use assets

 

 

10,731

 

 

 

11,258

 

Intangible assets, net of applicable amortization

 

 

193,823

 

 

 

198,377

 

Goodwill

 

 

41,974

 

 

 

46,557

 

Other assets

 

 

19,511

 

 

 

21,186

 

Total assets

 

$

674,241

 

 

$

670,098

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

227

 

 

$

1,513

 

Accounts payable

 

 

64,333

 

 

 

64,881

 

Deferred revenue

 

 

4,448

 

 

 

6,826

 

Accrued program costs

 

 

53,696

 

 

 

47,699

 

Accrued expenses and other payables

 

 

11,720

 

 

 

12,815

 

Operating lease liabilities, current

 

 

4,883

 

 

 

4,904

 

Total current liabilities

 

 

139,307

 

 

 

138,638

 

Long-term debt, net

 

 

168,225

 

 

 

148,766

 

Operating lease liabilities, long term

 

 

5,996

 

 

 

6,503

 

Other liabilities, excluding current installments

 

 

10,963

 

 

 

12,890

 

Deferred income tax liabilities

 

 

15,543

 

 

 

19,145

 

Total liabilities

 

 

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

  33,188,421 shares at March 31, 2020 and 33,233,614 shares at December 31, 2019

 

 

3,319

 

 

 

3,324

 

Additional paid-in capital

 

 

89,757

 

 

 

90,572

 

Accumulated other comprehensive loss

 

 

(14,761

)

 

 

(5,698

)

Retained earnings

 

 

274,052

 

 

 

274,118

 

Less treasury stock at cost, 3,061,040 shares at March 31, 2020 and December 31, 2019

 

 

(18,160

)

 

 

(18,160

)

Total stockholders’ equity

 

 

334,207

 

 

 

344,156

 

Total liabilities and stockholders' equity

 

$

674,241

 

 

$

670,098

 

 

See notes to the condensed consolidated financial statements.

 

 

5


 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For The Three Months Ended March 31, 2020 and March 31, 2019

(In thousands, except share data)

(Unaudited)

 

 

 

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

 

 

See notes to the condensed consolidated financial statements.

 

6


 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the three months

ended March 31

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

520

 

 

$

3,906

 

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

 

 

4

 

 

 

 

Provision for bad debts

 

 

359

 

 

 

1,034

 

Revision of deferred compensation

 

 

 

 

 

(1,543

)

Stock-based compensation

 

 

1,357

 

 

 

1,485

 

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 (increase) in net receivables

 

 

(5,472

)

 

 

6,812

 

Increase in inventories

 

 

(16,446

)

 

 

(23,763

)

Increase in prepaid expenses and other assets

 

 

(776

)

 

 

(2,724

)

Decrease (increase) in income tax receivable/payable, net

 

 

(597

)

 

 

750

 

(Decrease) increase  in accounts payable

 

 

(189

)

 

 

4,788

 

Decrease in deferred revenue

 

 

(2,342

)

 

 

(16,036

)

Increase in accrued program costs

 

 

6,016

 

 

 

2,391

 

Decrease in other payables and accrued expenses

 

 

(2,094

)

 

 

(2,508

)

Net cash used in by operating activities

 

 

(13,946

)

 

 

(20,263

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,980

)

 

 

(3,369

)

Acquisitions of businesses, product lines and intangible assets

 

 

 

 

 

(24,246

)

Net cash used in investing activities

 

 

(2,980

)

 

 

(27,615

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

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

)

Payment of cash dividends

 

 

(582

)

 

 

(581

)

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

 

 

(752

)

 

 

(498

)

Cash and cash equivalents at beginning of period

 

 

6,581

 

 

 

6,168

 

Cash and cash equivalents at end of period

 

$

5,544

 

 

$

6,657

 

Non-cash investing activities:

 

 

 

 

 

 

 

 

Deferred consideration in connection with business acquisitions:

 

$

 

 

$

2,645

 

 

See notes to the condensed consolidated financial statements.

7


 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(In thousands, except share data)

(Unaudited)

 

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. 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 three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The financial statements and related notes do not include all information and footnotes required by US GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2019.

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.

 

Update to Significant Accounting Policies:

 

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. 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 20 years.

Finance leases are immaterial to the condensed consolidated financial statements. There were no lease transactions with related parties as of March 31, 2020.

 

8


 

The operating lease expense for the three months ended March 31, 2020 and 2019 was $1,395 and $1,227, respectively. Lease expenses related to variable lease payments and short-term leases were immaterial. Other information related to operating leases follows:

 

 

 

Three months

ended

March 31, 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

%

 

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

 

 

 

March 31, 2020

 

2020 (excluding three months ended March 31, 2020)

 

$

3,959

 

2021

 

 

3,552

 

2022

 

 

1,952

 

2023

 

 

871

 

2024

 

 

389

 

Thereafter

 

 

870

 

Total lease payments

 

$

11,593

 

Less: imputed interest

 

 

714

 

Total

 

$

10,879

 

 

 

 

 

 

Amounts recognized in the condensed consolidated balance sheet:

 

 

 

 

Operating lease liabilities, current

 

$

4,883

 

Operating lease liabilities, long term

 

$

5,996

 

 

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

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

Net sales:

 

 

 

 

 

 

 

 

US crop

 

$

50,362

 

 

$

50,270

 

US non-crop

 

 

10,993

 

 

 

11,267

 

Total US

 

 

61,355

 

 

 

61,537

 

International

 

 

34,607

 

 

 

38,139

 

Total net sales:

 

$

95,962

 

 

$

99,676

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

Goods transferred at a point in time

 

$

95,776

 

 

$

99,297

 

Goods and services transferred over time

 

 

186

 

 

 

379

 

Total net sales:

 

$

95,962

 

 

$

99,676

 

 

Performance ObligationsA 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.

9


 

Contract BalancesThe timing of revenue recognition, billings and cash collections may result in deferred revenue. The Company sometimes receives payments from its customers in advance of goods and services being provided in return for early cash incentive programs, resulting in deferred revenues. These liabilities are reported 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.

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Contract assets

 

$

6,091

 

 

$

6,091

 

Deferred revenue

 

$

4,448

 

 

$

6,826

 

 

Revenue recognized for the three months ended March 31, 2020, that was included in the deferred revenue balance at the beginning of 2020 was $2,378. The Company expects to recognize all its remaining deferred revenue in fiscal 2020.

 

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

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Land

 

$

2,706

 

 

$

2,706

 

Buildings and improvements

 

 

18,293

 

 

 

18,640

 

Machinery and equipment

 

 

116,915

 

 

 

116,757

 

Office furniture, fixtures and equipment

 

 

6,331

 

 

 

6,228

 

Automotive equipment

 

 

1,565

 

 

 

1,762

 

Construction in progress

 

 

8,028

 

 

 

5,263

 

Total

 

 

153,838

 

 

 

151,356

 

Less accumulated depreciation

 

 

(96,239

)

 

 

(94,835

)

Property, plant and equipment, net

 

$

57,599

 

 

$

56,521

 

 

The Company recognized depreciation expense related to property and equipment of $1,517 and $1,648 for the three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020 and 2019, the Company eliminated from assets and accumulated depreciation $113 and $710, respectively, of fully depreciated assets.

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

 

 

5. 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:

 

 

 

March 31,

2020

 

 

December 31,

2019

 

Finished products

 

$

161,788

 

 

$

151,917

 

Raw materials

 

 

14,073

 

 

 

11,396

 

Inventories

 

$

175,861

 

 

$

163,313

 

 

 

 

10


 

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 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: