AMERICAN VANGUARD CORPORATION FORWARD-LOOKING STATEMENTS/RISK FACTORS:
The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company's operations, future results and prospects. 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 Annual 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 theU.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 3., Quantitative and Qualitative Disclosures about Market Risk, and Part II, Item 1A., Risk Factors, in this Quarterly Report on Form 10-Q.
MANAGEMENT OVERVIEW
Overview of the Company's Performance
During the third quarter of 2022, the agriculture industry continued to demonstrate resiliency. Driven by geopolitical conditions, corn and soybean commodity prices for row crops remained high. Further, supply chain conditions continued to improve across many industries. Further, thus far, the industry has been able to compensate for the effects of inflation through price increases. The Company responded to these conditions by increasing prices, where possible, and deployed its factory assets to continue meeting demand. Consequently, the Company's overall operating results for the third quarter of 2022 improved modestly in terms of net sales and more significantly in terms of profitability, as compared with those of the same period of 2021. Led by increased sales within our international business, consolidated net sales increased by 3% (to end at$152,117 as compared to$147,298 ) and net income increased by 23% (to$6,741 from$5,498 ). On a consolidated basis, domestic sales were flat, and international sales increased 9%, resulting in an overall net sales improvement of 3%. By contrast, cost of sales was virtually flat, quarter-over-quarter. This lower comparative increase in cost of sales was a result of higher selling prices and a favorable mix of higher-margin products in the third quarter of 2022, as compared to the same period of the prior year. Cost of sales were 60% of sales in the third quarter of 2022, as compared to 61% for the same period of 2021. These factors, taken together, yielded a 8% increase in gross profit, while overall gross margin percent improved to 40% from 39% quarter-over-quarter, as a result of selling more higher margin products, increased prices, and better factory performance. Operating expenses remained flat at 33% of net sales, notwithstanding significant inflationary pressure. Operating income for the period increased by 26% (to$11,244 from$8,946 ), driven by the overall sales increase, higher selling prices and improved factory utilization. Interest expense was flat as compared with the same period of 2021, while tax expense rose by 95% (from$1,517 in the third quarter of 2021 to$2,963 in the same period of 2022) due to an increase in taxable income and higher effective tax rate. These factors yielded net income for the period of$6,741 , a 23% increase over compared to$5,498 in the third quarter of 2021. Details on our financial performance are set forth below. 22 --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Quarter Ended
2022 2021 Change % Change
Net sales:
U.S. crop $ 69,115 $ 66,722 $ 2,393 4 %
U.S. non-crop 18,936 21,622 (2,686 ) -12 %
Total U.S. 88,051 88,344 (293 ) 0 %
International 64,066 58,954 5,112 9 %
Total net sales: $ 152,117 $ 147,298 $ 4,819 3 %
Cost of sales:
U.S. crop $ 34,613 $ 36,485 $ (1,872 ) -5 %
U.S. non-crop 10,125 12,740 (2,615 ) -21 %
Total U.S. 44,738 49,225 (4,487 ) -9 %
International 45,995 41,009 4,986 12 %
Total cost of sales: $ 90,733 $ 90,234 $ 499 1 %
Gross profit:
U.S. crop $ 34,502 $ 30,237 $ 4,265 14 %
U.S. non-crop 8,811 8,882 (71 ) -1 %
Total U.S. 43,313 39,119 4,194 11 %
International 18,071 17,945 126 1 %
Total gross profit $ 61,384 $ 57,064 $ 4,320 8 %
Gross margin:
U.S. crop 50 % 45 %
U.S. non-crop 47 % 41 %
Total U.S. 49 % 44 %
International 28 % 30 %
Total gross margin 40 % 39 %
Our domestic crop business recorded net sales that were 4% higher than those of
the third quarter of 2021 ($69,115 as compared to $66,722 ). Year-over-year gains
were posted by Dacthal (a leading weed control solution for a variety of high
value vegetable crops including onions), Folex (which benefited from favorable
harvest weather conditions and the increase in 2022 cotton acres in the
Mississippi Delta region), and Bidrin (our cotton foliar insecticide which
benefitted from increased early-season pest pressure). These gains were
partially offset by lower sales of corn soil insecticide Aztec, due to a shift
in customer purchasing patterns, and temporarily delayed sales of Thimet for
sugarcane applications which were curtailed at the end of the quarter due to the
impact of Hurricane Ian on logistics in Florida . Further, while drought
conditions in our Western and Southwestern markets adversely impacted the
physical volume of our soil fumigants products, we achieved improved net sales
through appropriate price adjustments.
Cost of sales within the domestic crop business decreased by 5% (from $36,485 in
2021 to $34,613 in 2022) primarily as a result of selling more higher-margin
products, and improved factory performance. As a result of these factors and
increased pricing, domestic crop generated an 14% increase in gross profit (from
$30,237 in the third quarter of 2021 to $34,502 this year) on a 4% increase in
sales.
Our domestic non-crop business posted a decline in net sales in the third
quarter of 2022, as compared to the same period in the prior year (down 12% to
$18,936 from $21,622 in 2021). In the quarter, demand for our OHP nursery and
ornamental products declined, as consumer spending paused on concerns over a
possible economic recession. Conversely, we saw an uptick in demand for goods
that we supply to professional pest control applicators and landscapers.
Mosquito control product sales were below the prior year third quarter, but in
the aftermath of Hurricane Ian channel inventories of our Dibrom adulticide are
being depleted and is expected to be replenished in the next two quarters.
Cost of sales within the domestic non-crop business declined by 21% in the third
quarter of 2022, as compared to the same period in the prior year (from $12,740
in 2021 to $10,125 in 2022), primarily resulting from lower sales offset by
price increases and improved factory performance and associated overhead cost
recovery. Gross profit for domestic non-crop decreased by 1% (from $8,882 in
2021 to $8,811 in 2022).
23
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Net sales of our international businesses rose by 9% during the period ($64,066
in 2022 vs. $58,954 in 2021) and constituted 42% of our consolidated quarterly
sales. These results were achieved despite the challenges posed by the strong US
Dollar and various production, supply, and transportation difficulties. The
business benefited from sales increases in soil fumigants, Mocap and Nemacur
soil insecticides and an especially strong performance in Brazil , where our
Counter nematicide sales are accelerating. Our Central American business
experienced increased demand in the pineapple, banana, and citrus markets, along
with continuing expansion of our Greenplants micronutrient solutions. In Mexico ,
despite drought conditions, our business experienced good performance by
penetrating previously untapped regions of the country with at-plant fumigants
and herbicides on high-value crops. Despite sufficient rainfall and heavy demand
for molluscicides and other insecticide products for use on canola, winter wheat
and pulse, our Australian operations posted lower sales as a result of supply
constraints and transportation-related difficulties.
Cost of sales in our international business increased by 12% (from $41,009 in
2021 to $45,995 in 2022), on sales that increased by 9% and was impacted by cost
increases (including logistics and freight) of the third-party products that we
distribute. Gross profit for the international businesses increased by 1% (to
$18,071 in 2022 from $17,945 in 2021).
On a consolidated basis, gross profit for the third quarter of 2022 increased by
8% (from $57,064 in 2021 to $61,384 in 2022). Overall gross margin percentage
ended at 40% in the third quarter of 2022, as compared to 39% in the third
quarter of the prior year. The primary driver for this increase was higher
selling prices coupled with improved factory performance, partially offset by
inflation on raw materials and logistics and, for our international businesses,
higher purchases costs related to increases in the US Dollar.
Operating expenses increased by $1,730 to $50,140 for the three-month period
ended September 30, 2022 , as compared to the same period in 2021. The changes in
operating expenses by department are as follows:
2022 2021 Change % Change
Selling $ 14,162 $ 12,462 $ 1,700 14 %
General and administrative 15,570 15,727 (157 ) -1 %
Research, product development and
regulatory 8,513 7,674 839 11 %
Freight, delivery and warehousing 11,895 12,547 (652 ) -5 %
Subtotal $ 50,140 $ 48,410 $ 1,730 4 %
•
Selling expenses increased by $1,700 to end at $14,162 for the three-month
period ended September 30, 2022 , as compared with the same period of the prior
year. This included increased costs associated with travel expenses (as the
business resumed in-person interaction with customers), inflation related
increased wages, increased spending on advertising and promoting the Company's
products, and the cost of commissions associated with sales growth in Brazil .
These increased costs were somewhat offset by exchange movement in key
currencies.
•
General and administrative expenses decreased by$157 to end at$15,570 for the three-month period endedSeptember 30, 2022 , as compared to the same period of 2021. The main drivers were the positive impacts on the foreign currency exchange rates, offset by increased wages, travel expenses, legal and other administrative costs in support of our growing business.
•
Research, product development costs and regulatory expenses increased by$839 to end at$8,513 for the three-month period endedSeptember 30, 2022 , as compared to the same period of 2021. The main drivers were increased international regulatory and registration costs as we invest in our strongly growing business.
•
Freight, delivery and warehousing costs for the three-month period endedSeptember 30, 2022 , were$11,895 or 7.8% of sales as compared to$12,547 or 8.5% of sales for the same period in 2021. The decrease can mainly be attributed to improved supply chain conditions and variations in delivery destinations. OnApril 1, 2020 , the Company made a strategic investment inClean Seed Inc. , in the amount of$1,190 . The Company recorded negative fair value adjustments in the amount of$454 and$269 for the three months endedSeptember 30, 2022 and 2021, respectively. 24 --------------------------------------------------------------------------------
Interest costs net of capitalized interest were
Average Indebtedness and Interest expense
Three months ended September 30, 2022 Three months ended September 30, 2021
Average Interest Interest Average Interest Interest
Debt Expense Rate Debt Expense Rate
Revolving line of credit
(average) $ 125,441 $ 1,104 3.5 % $ 147,171 $ 889 2.4 %
Amortization of deferred loan
fees - 61 - - 70 -
Amortization of other deferred
liabilities - 10 - - 2 -
Other interest expense - (1 ) - - 52 -
Subtotal 125,441 1,174 3.7 % 147,171 1,013 2.8 %
Capitalized interest - (88 ) - - (51 ) -
Total $ 125,441 $ 1,086 3.5 % $ 147,171 $ 962 2.6 %
The Company's average overall debt for the three-month period ended September
30, 2022 was $125,441 , as compared to $147,171 for the three-month period ended
September 30, 2021 . Our borrowings in the three-month period ended September 30,
2022 , were lower mainly due to cash generated over the last 12 months used to
pay down debt, partially offset by the acquisition activity over the same period
and increases in working capital in support of business growth. As can be seen
from the table above, the effective bank interest rate on our revolving line of
credit was 3.5% and 2.4% at each of the three-month period ended September 30,
2022 and 2021, respectively.
Income tax expense increased by $1,446 to $2,963 for the three-month period
ended September 30, 2022 , as compared to $1,517 for the comparable period in
2021. The effective tax rates for the three-month period ended September 30,
2022 , and 2021, were 30.5% and 20.7%, respectively. 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. The increase in
effective tax rate was primarily driven by the mix of our domestic and
international income.
Our net income for the three-month period ended September 30, 2022 , was $6,741
or $0.23 per basic and diluted share, as compared to $5,498 or $0.18 per basic
and diluted share in the same quarter of 2021.
Nine Months Ended
Overview of the Company's Performance
During the first nine months of 2022, the global agricultural industry maintained the upcycle that began in 2021. Commodity prices remained high, driven in part by the Russian invasion ofUkraine , which has served to reduce exports from bothRussia andUkraine , of corn, wheat, sunflower oil and fertilizer inputs into the global market, and a stronger farm economy in theU.S. Inflation in multiple countries has led to higher costs of goods and transportation; however, the strength of the farm economy was able to absorb these effects during the subject period. Following extraordinary activity in the first quarter, domestic distribution within our industry slowed procurement modestly during the second and third quarters. All told, the Company's overall operating results for the first nine months of 2022 improved in most all respects over those of the same period of 2021. On a consolidated basis, with domestic sales up 12% and international sales up by 14%, overall net sales increased by 13% (to$449,636 from$398,063 ). Cost of sales were up 10% on an absolute basis but decreased as a percent of net sales to 59% from 61%. Factory performance improved during the first nine months of 2022, as compared to that of 2021. These factors, taken together, yielded an increase in gross profit, which was up$28,022 or 18% period-over-period and improved to 41% of net sales, up from 39% during the first nine months of 2021. Operating expenses rose on an absolute basis by 10% but declined as a percent of net sales to 32% as compared to 33% of net sales for the same period of the prior year. Interest expense declined slightly, while income tax expense increased to$10,187 from$5,324 during the comparable period last year, primarily as a result of stronger financial performance and higher effective tax rate. Overall, the Company's net income for the period increased by 71%, ending at$23,506 , as compared to$13,713 during the first nine months of the prior year. Details on our financial performance are set forth below. 25 --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Nine months ended
2022 2021 Change % Change
Net sales:
U.S. crop $ 220,503 $ 184,052 $ 36,451 20 %
U.S. non-crop 53,648 60,563 (6,915 ) -11 %
Total U.S. 274,151 244,615 29,536 12 %
International 175,485 153,448 22,037 14 %
Total net sales: $ 449,636 $ 398,063 $ 51,573 13 %
Cost of sales:
U.S. crop $ 115,904 $ 105,739 $ 10,165 10 %
U.S. non-crop 28,822 32,516 (3,694 ) -11 %
Total U.S. 144,726 138,255 6,471 5 %
International 122,554 105,474 17,080 16 %
Total cost of sales: $ 267,280 $ 243,729 $ 23,551 10 %
Gross profit:
U.S. crop $ 104,599 $ 78,313 $ 26,286 34 %
U.S. non-crop 24,826 28,047 (3,221 ) -11 %
Total U.S. 129,425 106,360 23,065 22 %
International 52,931 47,974 4,957 10 %
Total gross profit $ 182,356 $ 154,334 $ 28,022 18 %
Gross margin:
U.S. crop 47 % 43 %
U.S. non-crop 46 % 46 %
Total U.S. 47 % 43 %
International 30 % 31 %
Total gross margin 41 % 39 %
Our domestic crop business recorded net sales that were 20% above those of first
nine months of 2021. Assisted by consistently high crop commodity prices and a
strong domestic farm economy, the Company experienced strong demand across all
product categories and was able to implement appropriate pricing actions to
cover escalating material and transportation costs. Our Midwest corn business
was exceptional, with Aztec soil insecticide and Impact herbicide brands
increasing 70% over the prior year nine-month period. Our domestic cotton
business led by Bidrin foliar insecticide and Folex harvest defoliant grew by
over 40% in the first three quarter of 2022, as compared to the same period of
2021. Domestic Crop also benefited from very strong sales increases in Dacthal
for high valued vegetable crops, Assure II which is expanding sales
significantly in the US and Envoke, a newly introduced herbicide used to address
glyphosate resistant weeds. The only area of demand softness was in soil
fumigants, which experienced lower unit volumes due to drought conditions in
Western and Southwestern states where water allocation has been implemented.
However, we were able to make pricing adjustment to cover inflationary material
and transportation costs in order to retain our traditional profit margins.
During the first nine months of 2022, customer procurement activity was
exceptionally high in the first quarter and assumed more normalized levels in
the second and third quarters.
Cost of sales within the domestic crop business increased 10%, as compared to
the first nine months of 2021, driven by sales that increased by 20% including
increased sales of higher margin products (many of which we manufacture in our
domestic facilities) and benefitting from improved factory performance. Gross
profit for domestic crop rose by 34% during the nine-month period to $104,599
from $78,313 .
Our domestic non-crop business recorded an 11% decrease in net sales for the
first nine months of the year (to $53,648 from $60,563 ). Revenue for our Envance
technologies decreased when compared to the same period in 2021, due primarily
to a one-time license fee received in 2021, and the timing of recognizing
revenue for recurring royalties. Additionally, we experienced a fall-off in
consumer demand for our OHP nursery and ornamental products, which we attribute
to a pause in consumer spending caused by concerns over possible economic
recession. Sales of our Dibrom® mosquito adulticide remained nearly flat as did
demand for commercial pest control products (pest strips and bifenthrin).
Cost of sales within the domestic non-crop business decreased by 11%, (to
$28,822 in 2022 from $32,516 in 2021) on net sales that were down by 11%. Gross
profit for domestic non-crop decreased by 11% (to $24,826 in 2022 from $28,047
in 2021), due largely to the non-recurrence of a one-time, upfront license fee
as described above.
26
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Net sales of our international businesses increased by 14% during the first
three quarters of 2022 (to $175,485 in 2022 from $153,448 in 2021). Central
America and Mexico both delivered double-digit growth by satisfying continuing
strong demand for soil fumigants (on high-value crops), herbicides and granular
insecticides. Brazil continued an upward trend (grew over 35%) fueled by further
market penetration of our Counter granular insecticide/nematicide. Australia
matched prior year sales driven by our expanded market footprint following the
integration of the acquired AgNova business, partially offset by supply and
logistics challenges. Significant product sales improvements included Mocap and
Nemacur insecticides (together growing over 40%) and Assure II herbicide growing
approximately 250%.
Cost of sales in our international business increased by 16% (to $122,544 in
2022 from $105,474 in 2021) primarily driven by volume growth and impacted by
increased prices from the strengthening US Dollar, and general inflation on
materials and associated logistics costs. Gross profit for the international
businesses increased by 10% to $52,931 during the first nine months of 2022 from
$47,974 during the same period in 2021.
On a consolidated basis, net sales for the first nine months of 2022 increased 13%, and gross profit increased by 18%. Our gross profit in the first nine months of 2022 increased in part as a result of improved sales volumes and pricing, and improved factory performance. Gross margin performance, when expressed as a percentage of sales, rose to 41% from 39% year-over-year.
Operating expenses increased by$12,616 to$145,550 for the nine-month period endedSeptember 30, 2022 , as compared to the same period in 2021. The changes in operating expenses by department are as follows: 2022 2021 Change % Change Selling$ 37,844 $ 35,184 $ 2,660 8 % General and administrative: Other 50,262 46,859 3,403 7 % Proxy contest activities 1,785 - 1,785 100 %
Research, product development and regulatory 23,241 21,221
2,020 10 %
Freight, delivery and warehousing 32,418 29,670 2,748 9 %
$ 145,550 $ 132,934 $ 12,616 9 %
•
Selling expenses increased by $2,660 to end at $37,844 for the nine-month period
ended September 30, 2022 , as compared to the same period of 2021. The main
drivers were increased costs associated with commissions in Brazil , travel
expenses (as the business resumed in-person interaction with customers),
inflation related increased wages and product complaints as a result of sales
growth in Mid-west offset by positive movements in some key exchange rates.
•
General and administrative expenses - other increased by$3,403 to end at$50,262 for the nine-month period endedSeptember 30, 2022 , as compared to the same period of 2021. The main drivers were increased wages, travel expenses and other administrative costs in support of our growing business, increased legal costs, the settlement of deferred consideration related to the Australian business acquired in the final quarter of 2020, and increased short- and long-term incentive compensation as a result of our improved business performance. These costs were partly offset by some positive moves of exchange rates.
•
The Company spent
•
Research, product development costs and regulatory expenses increased by$2,020 to end at$23,241 for the nine-month period endedSeptember 30, 2022 , as compared to the same period of 2021. The main drivers were increased costs associated with in-field activities in support of our proprietary delivery systems, and international product defense and registration expenses supporting strong sales growth.
•
Freight, delivery and warehousing costs for the nine-month period endedSeptember 30, 2022 were$32,418 or 7.2% of sales as compared to$29,670 or 7.5% of sales for the same period in 2021. This increased expense is primarily driven by strong sales growth and variations in final delivery destinations, partially offset by improved supply chain conditions. During the nine-month period endedSeptember 30, 2022 , the Company recorded a decrease in the fair value of our equity investment in Clean Seed in the amount of$857 and recorded an increase in the amount of$103 during the nine months endedSeptember 30, 2021 . These changes in fair value of our investment directly reflect changes in the stock's quoted market price. 27 -------------------------------------------------------------------------------- During the nine-month period endedSeptember 30, 2021 , a Paycheck Protection Program loan assumed on the acquisition of Agrinos in the fourth quarter of 2020 was fully extinguished with the majority of the balance forgiven and recorded as other income in the Company's condensed consolidated statements of operations in the amount of$672 . Interest costs net of capitalized interest were$2,256 in the first nine-month period of 2022, as compared to$2,921 in the same period of 2021. Interest costs are summarized in the following table:
Average Indebtedness and Interest expense
Nine months ended September 30, 2022 Nine months ended September 30, 2021
Average Interest Interest Average Interest Interest
Debt Expense Rate Debt Expense Rate
Revolving line of credit
(average) $ 111,939 $ 2,250 2.7 % $ 144,405 $ 2,733 2.5 %
Amortization of deferred loan
fees - 199 - - 230 -
Amortization of other deferred
liabilities - 27 - - (6 ) -
Other interest expense - 20 - - 140 -
Subtotal 111,939 2,496 3.0 % 144,405 3,097 2.9 %
Capitalized interest - (240 ) - - (176 ) -
Total $ 111,939 $ 2,256 2.7 % $ 144,405 $ 2,921 2.7 %
The Company's average overall debt for the nine-month period ended September 30,
2022 , was $111,939 , as compared to $144,405 for the nine months ended September
30, 2021 . During the period, we continued to focus on our use of revolving debt,
while funding working capital for the growing business. As can be seen from the
table above, our effective bank interest rate on our revolving line of credit
was 2.7% for the nine months ended September 30, 2022 , as compared to 2.5% for
the same period of 2021.
Income tax expense increased by $4,863 to end at $10,187 for the nine-month
period ended September 30, 2022 , as compared to income tax expense of $5,324 for
the comparable period in 2021. The effective tax rate for the nine months ended
September 30, 2022 , was 30.2% as compared to 27.4% for same period last year.
The rate has increased compared to prior year reflecting a mix of income in
different jurisdictions. For tax years beginning after December 31, 2021 , the
Tax Cuts and Jobs Act ("TCJA") of 2017 amends Internal Revenue Code Section 174
wherein research and development expenditures will no longer be deducted in the
tax year that such costs are incurred but must now be capitalized and amortized
over either a five- or fifteen-year period, depending on the location of the
activities performed. 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.
Our net income for the nine-month period ended September 30, 2022 was $23,506 or
$0.80 per basic and $0.78 per diluted share, as compared to $13,713 or $0.46 per
basic and $0.45 per diluted share in the same period of 2021.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized net cash of$45,678 during the nine-month period endedSeptember 30, 2022 , as compared to$174 during the nine months endedSeptember 30, 2021 . Included in the$45,678 are net income of$23,506 , plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of$19,305 , loss on disposal of property, plant and equipment of$265 , amortization of deferred loan fees of$174 and provision for bad debts in the amount of$597 . Also included are stock-based compensation of$4,396 , adjustment to contingent consideration in the amount of$621 , increase in deferred income taxes of$64 , change in fair value of an equity investment of$857 , and net foreign currency adjustments of$218 . These together provided net cash inflows of$49,903 , as compared to$39,606 for the same period of 2021. During the nine-month period of 2022, the Company increased working capital by$97,986 , as compared to an increase of$37,611 during the same period of the prior year. Included in this change: inventories increased by$38,987 , as compared to$4,325 for the same period of 2021. While increases in inventory are normal for the Company's annual cycle, the Company decided this year to bring in raw materials earlier than in prior seasons in order to secure our needs of key materials for the balance of the year and the start of the next growing season. 28 -------------------------------------------------------------------------------- Customer prepayments decreased by$62,831 , as compared to$38,272 in the same period of 2021, driven by customer decisions regarding demand, payment timing and our cash incentive programs. Our accounts payable balances increased by$14,418 , as compared to an increase of$7,769 in the same period of 2021, driven by increased factory activity levels. Accounts receivables increased by$46,289 , as compared to an increase of$42,979 in the same period of 2021. This is primarily driven by increased group sales and strong international growth. Prepaid expenses increased by$4,272 , as compared to$2,194 in the same period of 2021. Income tax receivable increased by$5,201 , as compared to a decrease of$2,031 in the prior year. Accrued programs increased by$45,016 , (as compared to$33,982 in the prior year), which is normal at this point in the growing season. Finally, other payables and accrued expenses increased by$2,555 , as compared to$4,025 in the prior year. With regard to our program accrual, the increase (as noted above) primarily reflects our volume and mix of sales (certain products are marketed with higher levels of program accruals), and mix of customers in the first nine months of 2022, 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 onSeptember 30th of each year. During the first nine months of 2022, the Company made accruals for programs in the amount of$78,640 and payments in the amount of$33,869 . During the first nine months of the prior year, the Company made accruals in the amount of$59,267 and made payments in the amount of$25,353 . The increase in accruals for programs in the first nine months of 2022, compared to the same period in 2021, is a direct result of an increase in sales of qualifying products. Cash used for investing activities for the nine-month period endedSeptember 30, 2022 and 2021 was$9,978 and$18,431 , respectively. The$18,431 in 2021 includes a product acquisition in the amount of$10,000 . No such acquisition took place in the current year. In 2022, the Company spent$8,946 on purchases of fixed assets primarily focused on continuing to invest in manufacturing infrastructure. In addition, the Company made a payment of$1,000 to Clean Seed to amend a license agreement under which royalty-bearing license rights were converted to fully paid-up, royalty-free, perpetual license rights, and spent$78 on patents for the Envance technology business. During the nine-month period endedSeptember 30, 2022 , financing activities provided$59,797 , as compared to$19,974 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to$96,000 during the nine-month period endedSeptember 30, 2022 , as compared to$28,592 in the same period of the prior year. The Company paid dividends to stockholders amounting to$2,072 during the nine months endedSeptember 30, 2022 , as compared to$1,789 in the same period of 2021. The Company paid$13,731 for the repurchase of 720,350 shares of its common stock during the nine-month period endedSeptember 30, 2022 and$20,000 in connection with an accelerated share repurchase program. There were no such purchases during the nine-month period endedSeptember 30, 2021 . The Company received$837 for the issuance of shares under ESPP during the nine-month period endedSeptember 30, 2022 , as compared to$743 for the same period last year. The Company also received$783 from the exercise of stock options during the nine-month period endedSeptember 30, 2022 , as compared to$172 in the prior period. Lastly, in exchange for shares of common stock returned by employees, the Company paid$2,020 and$2,915 for tax withholding on stock-based compensation awards during the nine-months endedSeptember 30, 2022 and 2021, respectively. The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets atSeptember 30, 2022 andDecember 31, 2021 . These are summarized in the following table: Long-term indebtedness ($000 's) September 30, 2022 December 31, 2021 Revolving line of credit $ 149,300 $ 53,300 Deferred loan fees (886 ) (1,060 ) Net long-term debt $ 148,414 $ 52,240 AtSeptember 30, 2022 , the Company was compliant with all covenants to its credit agreement. Also, atSeptember 30, 2022 , the Company's total Funded Debt amounted to$149,300 . At that date the Company's rolling four quarter Consolidated EBITDA (as defined in the Credit Agreement, see Note 10) amounted to$77,167 , which results in a leverage ratio of 1.93, as compared to a maximum leverage ratio permitted under the Credit Agreement of 3.5. AtSeptember 30, 2022 , the Company has the capacity to increase its borrowings by up to$120,783 , according to the terms thereof. This compares to an available borrowing capacity of$94,973 as ofSeptember 30, 2021 . AtDecember 31, 2021 , the Company had borrowing capacity of$178,705 . The level of borrowing capacity is driven by three factors: (1) our financial performance, as measured in EBITDA for both the trailing twelve-month period and proforma basis arising from acquisitions, (2) net borrowings, and (3) the leverage covenant (the TL 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. 29 --------------------------------------------------------------------------------
RECENTLY ISSUED ACCOUNTING GUIDANCE
Please refer to Note 15 in the accompanying Notes to the condensed consolidated financial statements for recently issued accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company's Form 10-K filed with theSEC for the year endedDecember 31, 2021 , 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 endedDecember 31, 2021 . 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 updates to estimates and assumptions are reflected in the condensed consolidated financial statements in the period that these updates are determined to be necessary. Actual results may differ from these estimates under different outcomes or conditions. Our estimates did not change materially during the three- and nine-months endedSeptember 30, 2022 .
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