American Vanguard Corporation Common Stock ($0.10 Par Value) (AVD) Q2 2026 Earnings: Revenue $117M (-9.7%)
AVD — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
American Vanguard's Q2 2026 sales fell 9.7% to $116.8M on an 18% drop in International, and a doubled interest bill after the March refinancing widened the net loss to $9.9M; full-year guidance was kept.
Revenue
$117M
-9.7% YoY
Net income
-$9.9M
Diluted EPS
$-0.34
Operating margin
-0.3%
This period vs a year ago
Same period last year
This period
Revenue▼-9.7%
≈$129M
$117M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Overview
American Vanguard (AVD) — a maker of crop-protection chemicals (insecticides, herbicides, soil fumigants) and of "Specialty" products for turf, ornamental plants and pest control — reported a weaker second quarter of 2026. Net sales fell 9.7% to $116.8 million, the company slipped to a small operating loss of $0.3 million (from a $4.4 million profit a year ago), and net loss widened to $9.9 million, or $(0.34) per share, from $0.8 million, or $(0.03). Two things drove it: international sales dropped 18% on dry weather in Central America and weaker demand in Mexico and Brazil, and interest expense roughly doubled after a March 2026 refinancing that replaced a bank credit line with two expensive term loans.
The first half looks better than the quarter: sales were down only 2%, gross profit was up 3%, and management reaffirmed its full-year outlook. But the business now carries $285 million of floating-rate debt, so the second half has to deliver a lot more than the first.
At a glance
Revenue $116.8M, down 9.7%: the U.S. was down only 3% (Specialty +11%, U.S. crop −9%); almost all of the drop came from International, down 18%.
Interest expense $9.1M vs $4.5M: borrowing costs were larger than the quarter's entire adjusted EBITDA ($6.6M) and turned a roughly break-even operating quarter into a $9.9M net loss.
Full-year guidance kept at $530–550M sales and $44–48M adjusted EBITDA: that implies second-half sales 7–15% above the same half of 2025, after a first half that was down 2%.
The quarter in numbers
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$116.8M
$129.3M
−9.7%
Gross profit
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$34.7M
$40.5M
−14.4%
Gross margin
29.7%
31.4%
−1.6 pts
Operating income (loss)
$(0.3)M
$4.4M
n/m
Operating margin
−0.3%
3.4%
−3.6 pts
Interest expense, net
$9.1M
$4.5M
+105%
Net loss
$(9.9)M
$(0.8)M
n/m (loss widened by $9.0M)
Diluted EPS
$(0.34)
$(0.03)
n/m
Adjusted EBITDA (non-GAAP)
$6.6M
$11.0M
−40%
U.S. Specialty sales
$21.8M
$19.6M
+11%
International sales
$46.9M
$57.1M
−18%
"n/m" = not meaningful: a percentage change between two losses doesn't say anything useful. Operating margin is the share of sales left after running the business, before interest and tax. Adjusted EBITDA is the company's own measure of earnings before interest, tax, depreciation and amortization, also excluding stock pay, restructuring ("transformation") costs and impairments.
First-half 2026 for context: net sales $240.3M (−2%), gross profit $73.1M (+3%, margin 30% vs 29%), operating income $1.6M vs $0.06M, net loss $(14.0)M vs $(9.3)M, adjusted EBITDA $16.9M vs $14.0M.
Where sales went
Sales line
Q2 2026
Q2 2025
Change
H1 2026
H1 change
U.S. crop
$48.0M
$52.7M
−9%
$115.2M
+5%
U.S. Specialty
$21.8M
$19.6M
+11%
$38.2M
+10%
International
$46.9M
$57.1M
−18%
$87.0M
−13%
Total
$116.8M
$129.3M
−10%
$240.3M
−2%
AVD reports a single business segment; the split above is the sales breakdown it gives in the 10-Q.
U.S. crop (−9% in the quarter, +5% in the half): the 10-Q attributes the quarterly drop largely to timing — orders for the cotton insecticide Bidrin and the cotton defoliant Folex slid into the third quarter, closer to harvest. Sales of granular soil insecticides (Aztec, Thimet) also fell on "variable pest pressure and more cautious grower spending" in corn and row crops. Herbicides and fungicides (Impact, Envoke) and soil fumigants grew. Part of the U.S. crop number now includes sales to some foreign customers that used to be booked under International — an internal reshuffle that flatters U.S. crop and hurts International a little.
U.S. Specialty (+11%): the cleanest part of the quarter — turf products (Turfcide fungicide, Dylox insecticide) and herbicides (Bromacil, Imazaquin) drove it. For the half, the biological insecticide brand BotaniGard and Basamid, a soil fumigant used in building new golf courses, also helped.
International (−18%): El Niño brought drier-than-normal weather to Central America, delaying or cancelling plantings of rice (Panamá, Nicaragua), peanuts (Nicaragua) and vegetables (Guatemala). Sales to certain banana plantations were paused because of labor-union activity. In Mexico, Bromacil sales fell with weaker demand from agave growers and soil-fumigant shipments hit shipping problems. In Brazil, demand for the two main products (Redshield and Argenfrut) fell partly because raw-material cost increases pushed prices up.
Margins, costs and the interest bill
Gross profit fell 14% on the lower volume, and gross margin slipped to 30% from 31% on higher freight and net factory costs. Operating expenses fell 3% to $35.0M: selling costs were down 5% and other general and administrative costs down 10% (lower wages and outside-service spending), while research, development and regulatory spending rose 12% on third-party product-development studies. Excluding transformation costs and product-liability claims, the company says operating expenses were $33.1M, or 28% of sales, versus $34.4M (27%) a year ago — lower in dollars but higher as a share of a smaller sales base.
The bigger story is below the operating line. On March 13, 2026, AVD refinanced its revolving credit line with a $225M first-lien term loan (led by Centerbridge Partners, priced at SOFR plus 8.25% initially) and a $60M second-lien term loan (led by BMO, SOFR plus 2.00% with a 3% SOFR floor). Average debt in the quarter was $285.1M versus $196.7M, and the all-in interest rate including amortized loan fees was 12.9% versus 9.1%. The company also paid $16.2M in loan fees in the first half. Both loans float with SOFR: management says each 0.25-point move in rates changes the annual net loss by about $0.7M.
The loans come with tight terms: AVD can't pay cash dividends, its ability to buy back stock is restricted, and it must keep minimum unrestricted cash ($30M for September 2026, rising to $35M for October–November and $40M from December 2026) plus a cap on first-lien debt relative to trailing EBITDA of 6.70x through December 2026, stepping down to 4.00x by the end of 2028. The company states it was in compliance at June 30, with $43.9M of cash.
Takeaway: AVD's operations are roughly at break-even — first-half operating income was $1.6M — but the refinancing added about $4.7M of interest per quarter. Until adjusted EBITDA grows well beyond its current run rate, the interest bill alone keeps the company loss-making, which is why the second-half sales jump embedded in guidance matters more than any single product line.
What the headline numbers hide
Cash burn was heavier than the loss. Operating cash flow for the first half was −$60.5M against a net loss of $14.0M (−$39.8M a year earlier). Agricultural chemical makers usually use cash in the first half, but this year customer prepayments fell by $32.4M (they had dropped to $0.7M at June 30 from $33.1M in December, because customers prepaid less in December 2025) and receivables rose $16.2M. The cash on the balance sheet ($43.9M, up from $12.4M) came from borrowing — net borrowings were $110.4M in the half — not from the business.
Part of the quarterly sales drop is timing. Management attributes much of the U.S. crop decline to cotton orders moving into Q3. That's plausible given first-half U.S. crop sales were up 5%, but it means Q3 has to show those sales actually arriving.
GAAP vs adjusted. Adjusted EBITDA of $6.6M adds back $9.1M of interest, $4.6M of depreciation and amortization, $1.5M of transformation costs (mainly employee termination and retention costs, $0.7M, and Los Angeles plant reorganization, $0.7M), $0.3M of asset impairments tied to ending chemical synthesis at the Los Angeles plant, $0.4M of stock pay, $0.4M of tax and $0.2M of other items. Transformation costs have now appeared in every recent period ($7.2M in 2025, $20.2M in 2024), so treating them as one-off is generous; the company says it expects them to keep decreasing.
Tax expense despite a pre-tax loss. AVD booked $0.4M of tax on a $9.5M pre-tax loss because it holds full valuation allowances against U.S. and Brazilian tax assets (it can't record a tax benefit on those losses), while some smaller international units are profitable and taxed.
No buyback effect. The diluted share count rose slightly (28.6M vs 28.3M), so per-share results reflect the operating and interest picture directly.
Inventory is moving the right way. Inventories were $181.4M; the CFO says they are $10M lower than a year ago, reflecting tighter production planning.
The 10-K/A filed on 2026-09-30 doesn't change any figures. It amends the FY2025 annual report only to fix the auditor's report — making it cover all three years presented and correcting a figure the auditor cited for accrued program costs from $54.6M to $52.2M (the balance sheet already showed $52.2M). No financial statements were restated.
Outlook
Management reaffirmed full-year 2026 guidance of $530–550M in net sales and $44–48M in adjusted EBITDA. Against FY2025 sales of $515.1M, that is 3–7% growth for the year. The math is demanding: with $240.3M of sales and $16.9M of adjusted EBITDA in the first half, the second half needs roughly $290–310M of sales (versus about $270M in the second half of 2025) and $27–31M of adjusted EBITDA. The CFO points to lower second-half costs from the Los Angeles plant consolidation (production moves to the company's Axis, Alabama site by December 31, 2026, with at least $4M in expected annual savings) and a headquarters relocation.
Our view: the U.S. business — especially Specialty — is holding up, and the cost cuts are real in dollar terms. But hitting guidance depends on the delayed cotton orders landing in Q3 and on International recovering from weather and pricing problems that management doesn't control. The 10-Q also adds a new risk factor: the war involving Iran and the Strait of Hormuz blockade are raising growers' fuel and fertilizer costs, which the company says could cut demand for its products. With interest now running near $9M a quarter and a minimum-cash covenant that rises to $40M by December, the margin for a soft second half is thin. A finance-leadership change adds one more variable: on October 1, 2026 AVD named Matthew Horwath (former CFO of FARO Technologies) as CFO, with David Johnson moving to Chief Accounting Officer.
What to watch in Q3: whether U.S. crop sales recover with the Bidrin/Folex shipments, whether International stabilizes, adjusted EBITDA progress toward the $44–48M range, and cash staying comfortably above the covenant floor.
Source: American Vanguard Form 10-Q for the quarter ended June 30, 2026 (filed 2026-08-10), with adjusted EBITDA and guidance from the company's Q2 2026 earnings release (Form 8-K Exhibit 99.1, 2026-08-10). Dollar figures are in U.S. dollars.