May 4, 2017   SOURCE: BusinessWire

American Vanguard Reports First Quarter 2017 Results

American Vanguard Corporation (NYSE:AVD), today announced financial results for the quarter ended March 31, 2017.

Financial Highlights Fiscal 2017 First Quarter – versus Fiscal 2016 First Quarter

• Net sales of $70.7 million in 2017, compared with $69.5 million in 2016

• Net income of $3.45 million in 2017, compared with $2.79 million in 2016

• Earnings per diluted share of $0.12 in 2017, compared with $0.10 in 2016

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our overall financial performance for the quarter improved, as we continued to benefit from our participation in diverse crops and pest control applications. Net sales increased during the period, driven by our portfolio’s strong performance in cotton, peanuts, sugar crops, fruits and vegetables and in non-crop uses. Sales of our corn soil insecticides were flat, despite reduced corn acres and corn commodity pricing. Further, while we saw reduced demand for our corn herbicide due to delayed planting and competitive market conditions, we recorded significantly improved sales in the southern cotton market, driven by this year’s rise in cotton acreage and the expectation of higher pest pressure from foliar insects.”

Mr. Wintemute continued, “We also reported stronger net income and gross margins for the period, due to favorable raw material pricing, improved manufacturing efficiency and sales mix. Additionally, we reduced outstanding debt and substantially increased our borrowing capacity at quarter end. While we continue to manage operating expenses closely, we did experience a rise in these costs due in part to our R&D investment in SIMPAS.”

Mr. Wintemute concluded, “As we look forward to the rest of the year, we expect to have continued growth of our cotton and peanut products and stable performance of our soil fumigants. We also expect to benefit from stronger fruit & vegetable sales in the post-drought western U.S. and additional Dibrom® mosquito adulticide sales in light of continued public health concerns. Delayed planting on many corn acres should lead to a stronger post-emergent herbicide market, which would benefit Impact sales during the second quarter. Also, we are seeing more divestment activity in the industry today than we have in the last two or three decades. In light of this, we are pursuing multiple acquisition opportunities that we expect to report upon over the balance of 2017. And, as you may recall, we recently announced our agreement to purchase three products from the Adama group, subject to the closing of the ChemChina/Syngenta merger, which is scheduled to take place in the second quarter. All in all, I am confident about our prospects for the balance of the year and look forward to giving additional color on our performance during the earnings call.”

Conference Call

Eric Wintemute, Chairman & CEO 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 Thursday, May 4, 2017. 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.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

       
Mar. 31,

2017

Dec. 31,

2016

Current assets:
Cash and cash equivalents $ 10,792 $ 7,869
Receivables:
Trade, net of allowance for doubtful accounts of $112 and $42, respectively 72,758 83,777
Other   3,314   3,429
Total receivables, net 76,072 87,206
Inventories 122,279 120,576
Prepaid expenses   12,461   11,424
Total current assets 221,604 227,075
Property, plant and equipment, net 51,425 50,295
Intangible assets, net of applicable amortization 119,757 121,433
Other assets   29,819   31,153
$ 422,605 $ 429,956
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities $ 33 $ 26
Accounts payable 21,333 24,358
Deferred revenue 3,454 3,848
Accrued program costs 49,542 42,930
Accrued expenses and other payables 6,586 12,072
Income tax payable   14,633   13,840
Total current liabilities 95,581 97,074
Long-term debt, net 29,993 40,951
Other liabilities, excluding current installments 2,842 2,868
Deferred income tax liabilities   6,714   6,706
Total liabilities   135,130   147,599
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 32,213,960 shares at March 31, 2017 and 31,819,695 shares at December 31, 2016 3,222 3,183
Additional paid-in capital 73,043 71,699
Accumulated other comprehensive loss (4,094 ) (4,851 )
Retained earnings   223,445   220,428
295,616 290,459
Less treasury stock at cost, 2,450,634 shares at March 31, 2017 and

December 31, 2016

  (8,269 )   (8,269 )
American Vanguard Corporation stockholders’ equity 287,347 282,190
Non-controlling interest   128   167
Total stockholders’ equity   287,475   282,357
 
$ 422,605 $ 429,956
 
 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

     
For the three months

ended March 31

2017     2016
Net sales $ 70,673 $ 69,474
Cost of sales   40,589   41,971
Gross profit 30,084 27,503
Operating expenses   24,951   22,873
Operating income 5,133 4,630
Interest expense, net   298   541
Income before provision for income taxes and loss on equity method investment 4,835 4,089
Income taxes expense   1,380   1,060
Income before loss on equity method investment 3,455 3,029
Loss from equity method investment   42   82
Net income 3,413 2,947
Loss (income) attributable to non-controlling interest   39   (153 )
Net income attributable to American Vanguard   3,452   2,794
Earnings per common share—basic $ .12 $ .10
Earnings per common share—assuming dilution $ .12 $ .10
Weighted average shares outstanding—basic   28,947   28,808
Weighted average shares outstanding—assuming dilution   29,654   29,307
 
 

ANALYSIS OF SALES

For The Three Months Ended March 31, 2017 and 2016

(In thousands)

(Unaudited)

     
Three Months Ended

March 31

2017     2016
Net sales:
Insecticides $ 37,942 $ 33,106
Herbicides/soil fumigants/fungicides 20,021 24,685
Other, including plant growth regulators   3,392   3,277
Net sales: 61,355 61,068
Non-crop   9,318   8,406
Total net sales: $ 70,673 $ 69,474
Net sales:
US $ 52,244 $ 49,855
International   18,429   19,619
Total net sales: $ 70,673 $ 69,474
 
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

     
For the three months

ended March 31

2017   2016
Cash flows from operating activities:
Net income $ 3,413 $ 2,947
Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization of fixed and intangible assets 3,939 4,315
Amortization of other long term assets 1,423 1,092
Amortization of discounted liabilities 6 9
Stock-based compensation 1,080 456
Excess tax benefit from exercise of stock options — (35 )
Increase in deferred income taxes 8 —
Operating loss from equity method investment 42 82
Changes in assets and liabilities associated with operations:
Decrease (increase) in net receivables 11,422 (10,202 )
Increase in inventories (1,366 ) (7,938 )
Increase in prepaid expenses and other assets (1,126 ) (1,036 )
Decrease in income tax receivable/payable, net 793 1,205
(Decrease) increase in accounts payable (3,025 ) 13,031
Decrease in deferred revenue (394 ) (1,848 )
Increase in other payables and accrued expenses   955   7,512
Net cash provided by operating activities   17,170   9,590
Cash flows from investing activities:
Capital expenditures (3,080 ) (715 )
Investment   (300 )   (3,283 )
Net cash used in investing activities   (3,380 )   (3,998 )
Cash flows from financing activities:
Payments under line of credit agreement (27,000 ) (14,600 )
Borrowings under line of credit agreement 16,000 12,000
Payments on other long-term liabilities — (373 )
Tax benefit from exercise of stock options — 35
Net payments from the issuance of common stock (sale of stock under ESPP,

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

303 (315 )
Payment of cash dividends   (289 )   —
Net cash used in by financing activities   (10,986 )   (3,253 )
Net increase in cash and cash equivalents 2,804 2,339
Cash and cash equivalents at beginning of period 7,869 5,524
Effect of exchange rate changes on cash and cash equivalents   119   53
Cash and cash equivalents at end of period $ 10,792 $ 7,916