08.05.2018 22:05:00

American Vanguard Reports First Quarter 2018 Results

American Vanguard Corporation (NYSE:AVD) today announced financial results for the quarter ended March 31, 2018.

Financial Highlights Fiscal 2018 First Quarter – versus Fiscal 2017 First Quarter

  • Net sales of $104.1 million in 2018, compared to $70.7 million in 2017
  • Net income of $4.66 million in 2018, compared to $3.45 million in 2017
  • EBITDA1 of $13.3 million in 2018, compared to $10.5 million in 2017
  • Earnings per diluted share of $0.16 in 2018, compared to $0.12 in 2017

Eric Wintemute, Chairman and CEO of American Vanguard commented, "Our overall financial performance for this year’s first quarter improved significantly, aided by our 2017 product and company acquisitions as well as our diversified participation in many markets. Net sales rose 47%, driven by a 41% increase attributable to acquisitions and a 6% gain in AMVAC’s traditional base business. Our domestic sales experienced solid performance from granular soil insecticides, herbicides, and soil fumigants. Further, our international business grew significantly with the inclusion of AgriCenter’s Central American franchise.”

Mr. Wintemute continued, "Gross profit increased as a result of improved factory performance, organic growth in the Company’s sales and the addition of products and businesses acquired during 2017. As we anticipated in our last conference call, gross margins decreased slightly due to a product mix influenced by the AgriCenter distribution business. Our operating expenses declined as a percentage of sales, but rose on an absolute basis, as we integrated acquired businesses, made new product introductions, funded regulatory defense of important products, incurred bulk freight costs to meet strong soil fumigant demand and advanced the development of our SIMPAS precision application technology. With modest interest expenses and a reduced tax rate, we posted a 35% year-over-year increase in net income and a 27% increase in EBITDA,2 as compared to the first quarter of 2017.”

Mr. Wintemute concluded, "During the balance of 2018, we expect continued growth in our herbicide products, our Central American region and our non-crop business. We also anticipate strong demand for our products in cotton, fruit and vegetables, strong sales of our Dibrom® mosquito adulticide in light of predicted Gulf Coast hurricane activity and stable demand for our corn products in spite of weather-related delays in Midwest planting. In addition, we are scheduled to introduce several new products from our development pipeline. We look forward to providing further detail on our financial performance, market outlook and future initiatives during our upcoming conference 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 at 4:30 pm ET / 1:30 pm PT on Tuesday, May 8, 2018. Interested parties may participate in the call by dialing (201) 493-6744 – please dial in 10 minutes before the call is scheduled to begin, 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 and the Standard & Poor’s Small Cap 600 Index. 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.

____________

1 Earnings before interest, taxes, depreciation and amortization. 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 measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define EBITDA differently.
2 The Company believes that use of EBITDA is useful to investors in that it is one of the primary bases upon which borrowing capacity is calculated under the Company’s senior credit facility, it gives investors a sense of the Company’s financial condition and results of operations without giving effect to the cost of increased acquisition activity in 2017 and it is commonly used by investors and others as a basis for supporting overall business valuations. Nevertheless, investors should not consider EBITDA in isolation or as a substitute for analysis of the Company’s results as reported in accordance with GAAP.
 
   

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

  March 31,  

December 31,
2018 2017
Current assets:
Cash and cash equivalents $ 13,018 $ 11,337
Receivables:
Trade, net of allowance for doubtful accounts of $298 and $46, respectively 111,638 102,534
Other   10,765   7,071
Total receivables, net 122,403 109,605
Inventories 143,231 123,124
Prepaid expenses   11,390   10,817
Total current assets 290,042 254,883
Property, plant and equipment, net 48,579 49,321
Intangible assets, net of applicable amortization 178,283 180,950
Goodwill 22,983 22,184
Other assets   26,906   28,254
Total assets $ 566,793 $ 535,592
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities $ 5,475 $ 5,395
Accounts payable 63,820 53,748
Deferred revenue 11,858 14,574
Accrued program costs 43,688 39,054
Accrued expenses and other payables 9,011 12,061
Income taxes payable   880   1,370
Total current liabilities 134,732 126,202
Long-term debt, net 90,325 77,486
Other liabilities, excluding current installments 10,328 10,306
Deferred income tax liabilities   17,250   16,284
Total liabilities   252,635   230,278
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 32,668,923 shares at March 31, 2018 and 32,241,866 shares at December 31, 2017 3,267 3,225
Additional paid-in capital 77,735 75,658
Accumulated other comprehensive loss (3,835 ) (4,507 )
Retained earnings 245,056 238,953
Less treasury stock at cost, 2,450,634 shares at March 31, 2018 and

December 31, 2017

  (8,269 )   (8,269 )
American Vanguard Corporation stockholders’ equity 313,954 305,060
Non-controlling interest   204   254
Total stockholders’ equity   314,158   305,314
Total liabilities and stockholders' equity $ 566,793 $ 535,592
 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 
For the three months

ended March 31

2018     2017
Net sales $ 104,108 $ 70,673
Cost of sales   63,057   40,589
Gross profit 41,051 30,084
Operating expenses   33,700   24,951
Operating income 7,351 5,133
Interest expense, net   837   298
Income before provision for income taxes and loss on equity method investments 6,514 4,835
Income tax expense   1,692   1,380
Income before loss on equity method investments 4,822 3,455
Loss from equity method investments   217   42
Net income 4,605 3,413
Loss attributable to non-controlling interest   50   39
Net income attributable to American Vanguard $ 4,655 $ 3,452
Earnings per common share—basic $ 0.16 $ 0.12
Earnings per common share—assuming dilution $ 0.16 $ 0.12
Weighted average shares outstanding—basic   29,282   28,947
Weighted average shares outstanding—assuming dilution   29,972   29,654
 
 

ANALYSIS OF SALES

For the three months ended March 31, 2018 and 2017

(In thousands)

(Unaudited)

 
Three Months Ended

March 31

2018     2017
Net sales:
Crop:
Insecticides $ 41,293 $ 37,942
Herbicides/soil fumigants/fungicides 32,185 20,021
Other, including plant growth regulators and distribution   17,840   3,392
91,318 61,355
Non-crop, including distribution   12,790   9,318
Total net sales: $ 104,108 $ 70,673
Net sales:
US $ 69,815 $ 52,244
International   34,293   18,429
Total net sales: $ 104,108 $ 70,673
 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
For the three months

ended March 31

2018   2017
Cash flows from operating activities:
Net income $ 4,605 $ 3,413
Adjustments to reconcile net income to net cash provided by (used in) operating

activities:

Depreciation and amortization of fixed and intangible assets 4,983 3,939
Amortization of other long term assets 1,163 1,423
Amortization of discounted liabilities 102 6
Stock-based compensation 1,309 1,080
Increase in deferred income taxes — 8
Operating loss from equity method investment 217 42
Changes in assets and liabilities associated with operations:
(Increase) decrease in net receivables (9,303 ) 11,422
Increase in inventories (19,558 ) (1,366 )
Increase in prepaid expenses and other assets (562 ) (1,126 )
(Increase) decrease in income tax receivable/payable, net (497 ) 793
Increase (decrease) in accounts payable 9,613 (3,025 )
Decrease in deferred revenue (2,740 ) (394 )
Increase in accrued program costs 4,634 6,612
Decrease in other payables and accrued expenses   (3,201 )   (5,657 )
Net cash (used in) provided by operating activities   (9,235 )   17,170
Cash flows from investing activities:
Capital expenditures (1,553 ) (3,080 )
Acquisitions of businesses and intangible assets   (815 )   (300 )
Net cash used in investing activities   (2,368 )   (3,380 )
Cash flows from financing activities:
Payments under line of credit agreement (23,000 ) (27,000 )
Borrowings under line of credit agreement 35,800 16,000
Net payments from the issuance of common stock (sale of stock under ESPP,

exercise of stock options, and shares purchased for tax withholdings)

810 303
Payment of cash dividends   (438 )   (289 )
Net cash provided by (used in) financing activities   13,172   (10,986 )
Net increase in cash and cash equivalents 1,569 2,804
Cash and cash equivalents at beginning of period 11,337 7,869
Effect of exchange rate changes on cash and cash equivalents   112   119
Cash and cash equivalents at end of period $ 13,018 $ 10,792
 
 

Unaudited Reconciliation of Net Income to EBITDA

For the three months ended March 31, 2018 and March 31, 2017

(Unaudited)

     
March 31, 2018 March 31, 2017
Net income attributable to American Vanguard, as reported $ 4,655 $ 3,452
Provision for income taxes 1,692 1,380
Interest expense, net 837 298
Depreciation and amortization   6,146   5,362

EBITDA3

$ 13,330 $ 10,492

____________

3 Earnings before interest, taxes, depreciation and amortization. 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 measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define EBITDA differently.
 

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