Sets $15MM Adjusted EBITDA Gain as Transformation Target

American Vanguard Corporation (NYSE:AVD) today announced financial results for the fourth quarter and full year ended December 31, 2023.

Fiscal 2023 Fourth Quarter Financial Highlights – versus Fiscal 2022 Fourth Quarter:

Net sales were $172.2 million in 2023, compared to $159.5 million in 2022
Net income was $7.0 million in 2023, compared to $3.9 million in 2022
Earnings per diluted share of $0.25 in 2023, compared to $0.13 in 2022
Adjusted EBITDA¹ of $21 million in 2023, compared to $12 million in 2022

Fiscal 2023 Full Year Financial Highlights – versus Fiscal 2022 Full Year:

Net sales were $579 million in 2023, compared to $610 million in 2022
Net income was $7.5 million in 2023, compared to $27.4 million in 2022
Earnings per diluted share of $0.26 in 2023, compared to $0.92 in 2022
Adjusted EBITDA¹ of $55 million in 2023, compared to $73 million in 2022

Eric Wintemute, Chairman and CEO of American Vanguard, stated: "We rebounded sharply in Q4 after having weathered the effect of global destocking within the distribution channel, the oversupply of Chinese generic products into multiple regions, and the unavailability of our most profitable products due to supply chain issues. Increased demand during Q4 provided evidence that destocking activity continues to subside and that, even while showing greater discipline, procurement within the distribution channel is following more normal patterns. During the quarter, we achieved predicted revenue growth, maintained solid manufacturing operations, sustained strong profit margins by bolstering brand value and strengthened our balance sheet."

Mr. Wintemute concluded: "Looking forward, we believe that our company is situated well in both domestic and international markets and are targeting 8 to 12% revenue growth resulting in a full year adjusted EBITDA range of $70 to $80 million in 2024. We expect gross profit margins to remain strong, operating expenses to be tightly managed, and factory performance to be efficient. In addition, with the assistance of our consultant Kearney, through our business transformation initiative, we are targeting growth of adjusted EBITDA to 15% of net sales or an additional $15 million or more of adjusted EBITDA on a full year basis. The full benefit of the transformation will be realized by 2026 through a combination of operational, commercial, digital, and general and administrative sub-initiatives. We look forward to giving you a detailed presentation during our upcoming earnings call."

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, EVP & COO and David T. Johnson, VP & CFO, will conduct a conference call focusing on the financial results and strategic themes at 5:00 pm ET on March 13, 2023. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time and ask for the American Vanguard call. The conference call will also be webcast live via the News and Media section of the Company's web site at www.american-vanguard.com. To listen to the live webcast, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Company's web site.

About American Vanguard

American Vanguard Corporation is a diversified specialty and agricultural products company that develops and markets products for crop protection and management, turf and ornamentals management and public and animal health. American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. To learn more about American Vanguard, please reference the Company's web site at www.american-vanguard.com.

The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are estimates by the Company's management and are subject to various risks and uncertainties that may cause results to differ from management's current expectations. Such factors include weather conditions, changes in regulatory policy and other risks as detailed from time-to-time in the Company's SEC reports and filings. All forward-looking statements, if any, in this release represent the Company's judgment as of the date of this release.

CONSOLIDATED BALANCE SHEETS December 31, 2023 and 2022 (In thousands, except share data) (Unaudited)

	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	11,416		$	20,328
Receivables:
Trade, net of allowance for credit losses of $7,107 and $5,136, respectively		182,613			156,492
Other		8,356			9,816
Total receivables, net		190,969			166,308
Inventories		219,551			184,190
Prepaid expenses		6,261			15,850
Income taxes receivable		3,824			1,891
Total current assets		432,021			388,567
Property, plant and equipment, net		74,560			70,912
Operating lease right-of-use assets, net		22,417			24,250
Intangible assets, net of amortization		172,508			184,664
Goodwill		51,199			47,010
Deferred income tax assets		2,849			141
Other assets		11,994			10,769
Total assets	$	767,548		$	726,313
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	68,833		$	69,000
Customer prepayments		65,560			110,597
Accrued program costs		68,076			60,743
Accrued expenses and other payables		16,354			20,982
Operating lease liabilities, current		6,081			5,279
Income taxes payable		5,591			—
Total current liabilities		230,495			266,601
Long-term debt		138,900			51,477
Operating lease liabilities, long-term		17,113			19,492
Deferred income tax liabilities		7,892			14,597
Other liabilities		3,138			4,167
Total liabilities		397,538			356,334
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $0.10 par value per share; authorized 400,000 shares; none issued		—			—
Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,676,787 shares in 2023 and 34,446,194 shares in 2022		3,467			3,444
Additional paid-in capital		110,810			105,634
Accumulated other comprehensive loss		(5,963	)		(12,182	)
Retained earnings		332,897			328,745
		441,211			425,641
Less treasury stock at cost, 5,915,182 shares in 2023 and 5,029,892 in 2022		(71,201	)		(55,662	)
Total stockholders' equity		370,010			369,979
Total liabilities and stockholders' equity	$	767,548		$	726,313

CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2023, 2022 and 2021 (In thousands, except per share data) (Unaudited)

	2023			2022			2021
Net sales	$	579,371		$	609,615		$	557,676
Cost of sales		(400,207	)		(417,227	)		(386,953	)
Gross profit		179,164			192,388			170,723
Operating expenses
Selling, general and administrative		(117,844	)		(119,921	)		(111,093	)
Research, product and regulatory		(38,025	)		(31,816	)		(28,855	)
Total operating expenses		(155,869	)		(151,737	)		(139,948	)
Bargain purchase gain on business acquisition		—			—			171
Operating income		23,295			40,651			30,946
Change in fair value of equity investments, net		(359	)		(732	)		(790	)
Other income		—			—			672
Interest expense, net		(12,639	)		(3,954	)		(3,687	)
Income before provision for income taxes and loss on equity method investment		10,297			35,965			27,141
Provision for income taxes		(2,778	)		(8,561	)		(8,166	)
Income before loss on equity method investment		7,519			27,404			18,975
Loss from equity method investment		—			—			(388	)
Net income	$	7,519		$	27,404		$	18,587
Earnings per common share—basic	$	0.27		$	0.94		$	0.62
Earnings per common share—assuming dilution	$	0.26		$	0.92		$	0.61
Weighted average shares outstanding—basic		28,128			29,234			29,811
Weighted average shares outstanding—assuming dilution		28,533			29,872			30,410

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES For the years and quarters ended December 31, 2023 and 2022 (Unaudited)

	For the quarters ended December 31,						For the years ended December 31,
	2023			2022			2023			2022
Net sales:
U.S. crop	$	83,406		$	68,231		$	269,229		$	288,624
U.S. non-crop		25,246			22,865			75,287			76,709
Total U.S.		108,652			91,096			344,516			365,333
International		63,528			68,366			234,855			244,282
Total net sales	$	172,180		$	159,462		$	579,371		$	609,615
Total cost of sales	$	(117,545	)	$	(117,529	)	$	(400,207	)	$	(417,227	)
Total gross profit		54,635			41,933			179,164			192,388
Total gross margin		32	%		26	%		31	%		32	%

CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2023, 2022 and 2021 (In thousands) (Unaudited)

	2023			2022			2021

Cash flows from operating activities:
Net income	$	7,519		$	27,404		$	18,587
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		21,780			22,138			22,229
Amortization of other long-term assets		1,754			3,573			3,943
Amortization and accretion of deferred loan fees and discounted liabilities		254			289			359
Loss on disposal of property, plant and equipment		—			268			194
Provision for bad debts		1,935			1,171			649
Provision for inventory obsolescence		517			340			1,034
Loan principal and interest forgiveness		—			—			(672	)
Fair value adjustment of contingent consideration		—			610			758
Decrease in environmental liability		—			—			(167	)
Stock-based compensation		6,138			5,684			6,880
Deferred income taxes		(9,710	)		(5,278	)		(2,090	)
Changes in liabilities for uncertain tax positions or unrecognized tax benefits		(508	)		(1,441	)		(1,783	)
Change in equity investment fair value		359			732			790
Loss from equity method investment		—			—			388
Bargain purchase gain		—			—			(171	)
Non-cash lease expense		256			68			286
Foreign currency transaction gains		(581	)		(29	)		(225	)
Changes in assets and liabilities associated with operations, net of business combinations:
Increase in net receivables		(20,278	)		(6,447	)		(24,347	)
(Increase) decrease in inventories		(27,832	)		(29,560	)		8,323
(Increase) decrease in income tax receivable, net		3,568			(4,910	)		6,051
(Increase) decrease in prepaid expenses and other assets		1,269			(3,082	)		(4,581	)
Increase (decrease) in accounts payable		(2,287	)		1,704			8,783
(Decrease) Increase in deferred revenue		(45,079	)		47,551			19,280
Increase (decrease) in accrued program costs		7,244			(2,449	)		17,877
Increase (decrease) in other payables and accrued expenses		(5,066	)		90			3,986
Decrease in contingent consideration		—			(1,321	)		—
Net cash (used in) provided by operating activities		(58,748	)		57,105			86,361
Cash flows from investing activities:
Capital expenditures		(11,878	)		(13,261	)		(9,518	)
Proceeds from disposal of property, plant and equipment		242			84			—
Acquisitions of business and product line		(5,195	)		—			(10,000	)
Intangible assets		(186	)		(1,293	)		(524	)
Net cash used in investing activities		(17,017	)		(14,470	)		(20,042	)
Cash flows from financing activities:
Payments under line of credit agreement		(172,500	)		(254,000	)		(186,569	)
Borrowings under line of credit agreement		259,100			253,000			131,000
Payment of contingent consideration		—			(68	)		(1,301	)
Net receipt from the issuance of common stock under ESPP		981			837			743
Net receipt from the exercise of stock options		46			827			172
Net payment from common stock purchased for tax withholding		(1,967	)		(2,067	)		(2,955	)
Repurchase of common stock		(15,539	)		(34,002	)		(4,579	)
Payment of cash dividends		(3,384	)		(2,787	)		(2,382	)
Net cash provided by (used in) financing activities		66,737			(38,260	)		(65,871	)
Net (decrease) increase in cash and cash equivalents		(9,028	)		4,375			448
Effect of exchange rate changes on cash and cash equivalents		116			(332	)		(86	)
Cash and cash equivalents at beginning of year		20,328			16,285			15,923
Cash and cash equivalents at end of year	$	11,416		$	20,328		$	16,285

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA For the years and quarters ended December 31, 2023 and 2022 (Unaudited)

	For the years ended December 31,
	2023		2022
Net income	$	7,519	$	27,404
Provision for income taxes		2,778		8,561
Interest expense, net		12,639		3,954
Proxy costs		541		1,785
Depreciation and amortization		23,534		25,711
Stock compensation expense		6,138		5,684
Transformation costs		957		-
Adjusted EBITDA²	$	54,106	$	73,099

	For the quarters ended December 31,
	2023		2022
Net income	$	6,979	$	3,898
Provision (benefit) for income taxes		712		(1,626	)
Interest expense, net		4,357		1,698
Depreciation and amortization		5,684		6,406
Stock compensation expense		1,881		1,288
Transformation costs		957		—
Adjusted EBITDA²	$	20,570	$	11,664

^{______________________________

1} Earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company's competitors) may define adjusted EBITDA differently.

² Earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company's competitors) may define adjusted EBITDA differently.

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American Vanguard Reports Fourth Quarter & Full Year 2023 Results