Nov 2, 2017   SOURCE: BusinessWire

American Vanguard Reports Third Quarter & Year-to-Date 2017 Results

American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine months ended September 30, 2017.

Third Quarter 2017 Financial Highlights – versus 2016:

  • Net sales were $90.0 million in Q3 2017 compared to $82.4 million in Q3 2016.
  • Net income was $4.1 million in Q3 2017 compared to $2.9 million in Q3 2016.
  • Earnings per diluted share were $0.14 in Q3 2017 compared to $0.10 in Q3 2016.

Nine Months 2017 Financial Highlights – versus 2016:

  • Net sales were $238.6 million in 2017 compared to $224.6 million in 2016.
  • Net income was $11.8 million in 2017 compared to $8.9 million in 2016.
  • Earnings per diluted share were $0.40 in 2017 compared to $0.30 in 2016.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We are pleased to report revenue increases of 9% for the third quarter and 6% for the first nine months of 2017. Our top line performance was driven by three positive factors: strong demand for our cotton products, extraordinary demand for our mosquito adulticide in the aftermath of domestic hurricanes, and incremental sales of new products acquired in June. These gains were partially offset by weather events in the soil fumigant market and competitive pressure in the Midwest herbicide market.”

Mr. Wintemute continued, “With respect to profitability, a diversified product mix and efficient manufacturing performance allowed us to record improved gross profit margins for both the third quarter (42% versus 40% in the prior year) and year-to-date (43% versus 41% in the prior year). Further, we achieved a significant increase in net income, despite higher operating expenses in both the three and nine month periods. These expenses relate largely to maintaining, acquiring and developing product lines and commercializing technology. While we remain committed to exercising financial discipline, we believe that part of this discipline involves planning for the future. Consequently, during the third quarter, we incurred legal and due diligence costs in connection with acquisitions, funded increased regulatory costs for the re-registration of several important organophosphate products, expanded field trials for our product pipeline, and invested in further development of SIMPAS. We believe that these near-term expenses for portfolio extension, geographic expansion and technology innovation provide significant growth potential for American Vanguard.”

Mr. Wintemute concluded: “Our outlook for the final quarter of 2017 remains positive, as we integrate recent acquisitions and position our business for the upcoming spring planting season. During 2018, we expect that, with the addition of the AgriCenter companies, our International business will double. Further, our non-crop business should increase by about 50% with the addition of OHP’s horticulture business. This is an exciting time for American Vanguard, and we look forward to giving further comments during our earnings 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 and strategic themes at 4:30pm Eastern / 1:30pm Pacific on Thursday, November 2, 2017. Interested parties may participate in the call by dialing (201) 493-6744. Please call 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.

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

   

ASSETS

September 30, December 31,
2017 2016
Current assets:
Cash and cash equivalents $ 9,045 $ 7,869
Receivables:
Trade, net of allowance for doubtful accounts of $45 and $42, respectively 100,043 83,777
Other   3,630   3,429
Total receivables, net 103,673 87,206
Inventories 123,315 120,576
Prepaid expenses   13,543   11,424
Total current assets 249,576 227,075
Property, plant and equipment, net 49,495 50,295
Intangible assets, net of applicable amortization 141,127 121,433
Other assets   28,917   31,153
$ 469,115 $ 429,956
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities $ 99 $ 26
Accounts payable 29,355 24,358
Deferred revenue — 3,848
Accrued program costs 65,650 42,930
Accrued expenses and other payables 8,704 12,072
Income taxes payable   1,684   13,840
Total current liabilities 105,492 97,074
Long-term debt, net of deferred loan fees 57,379 40,951
Other liabilities, excluding current installments 2,789 2,868
Deferred income tax liabilities   6,712   6,706
Total liabilities   172,372   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 32,236,629 shares at September 30, 2017 and 31,819,695 shares at December 31, 2016

3,224 3,183
Additional paid-in capital 74,423 71,699
Accumulated other comprehensive loss (3,881 ) (4,851 )
Retained earnings   230,962   220,428
304,728 290,459

Less treasury stock at cost, 2,450,634 shares at September 30, 2017 and December 31, 2016

  (8,269 )   (8,269 )
American Vanguard Corporation stockholders’ equity 296,459 282,190
Non-controlling interest   284   167
Total stockholders’ equity   296,743   282,357
$ 469,115 $ 429,956
 
     

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2017     2016 2017   2016
Net sales $ 89,975 $ 82,447 $ 238,553 $ 224,645
Cost of sales   51,943   49,461   136,102   132,761
Gross profit 38,032 32,986 102,451 91,884
Operating expenses   31,570   28,286   84,175   77,429
Operating income 6,462 4,700 18,276 14,455
Interest expense, net   375   301   1,073   1,304
Income before provision for income taxes and loss on equity method investments 6,087 4,399 17,203 13,151
Income tax expense   1,954   1,378   5,015   3,672
Income before loss on equity method investments 4,133 3,021 12,188 9,479
Loss from equity method investments   115   180   226   309
Net income 4,018 2,841 11,962 9,170
Income (loss) attributable to non-controlling interest   71   36   (117 )   (253 )
Net income attributable to American Vanguard $ 4,089 $ 2,877 $ 11,845 $ 8,917
Earnings per common share—basic $ .14 $ .10 $ .41 $ .31
Earnings per common share—assuming dilution $ .14 $ .10 $ .40 $ .30
Weighted average shares outstanding—basic   29,193   28,957   29,064   28,886
Weighted average shares outstanding—assuming dilution   29,783   29,496   29,648   29,385
 
 

ANALYSIS OF SALES

For the Three and Nine Months Ended September 30, 2017

(In thousands)

     

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017     2016 2017     2016
Net sales:
Insecticides $ 24,866 $ 25,478 $ 102,249 $ 89,496
Herbicides/soil fumigants/fungicides 32,717 34,242 68,783 80,009
Other, including plant growth regulators   17,191   13,328   30,680   23,148
Net sales: 74,774 73,048 201,712 192,653
Non-crop   15,201   9,399   36,841   31,992
Total net sales: $ 89,975 $ 82,447 $ 238,553 $ 224,645
Net sales:
US $ 65,842 $ 60,033 $ 173,877 $ 161,661
International   24,133   22,414   64,676   62,984
Total net sales: $ 89,975 $ 82,447 $ 238,553 $ 224,645
 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

For the Nine Months Ended
September 30,

2017   2016
Cash flows from operating activities:
Net income $ 11,962 $ 9,170

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of fixed and intangible assets 12,358 12,367
Amortization of other long term assets 3,995 3,935
Amortization of discounted liabilities 20 28
Stock-based compensation 3,585 1,656
Excess tax benefit from exercise of stock options — (82 )
Increase in deferred income taxes 6 —
Loss from equity method investment 226 309
Changes in assets and liabilities associated with operations:
Increase in net receivables (15,746 ) (19,202 )
Increase in inventories (2,213 ) (5,201 )
Increase in prepaid expenses and other assets (3,678 ) (1,011 )
(Decrease) increase in income tax receivable/payable, net (12,137 ) 1,519
Increase in accounts payable 4,556 7,925
Decrease in deferred revenue (3,848 ) (8,847 )
Increase in accrued program costs 22,720 30,536
(Decrease) increase in other payables and accrued expenses   (3,562 )   3,098
Net cash provided by operating activities   18,244   36,200
Cash flows from investing activities:
Capital expenditures (5,333 ) (6,122 )
Investment (950 ) (3,283 )
Acquisition of product lines and other intangible assets   (25,904 )   (224 )
Net cash used in investing activities   (32,187 )   (9,629 )
Cash flows from financing activities:
Payments under line of credit agreement (59,025 ) (24,000 )
Borrowings under line of credit agreement 76,000 —
Payments on other long-term liabilities (26 ) (541 )
Tax benefit from exercise of stock options — 82

Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)

(820 ) 204
Payment of cash dividends   (1,161 )   (289 )
Net cash provided by (used in) financing activities   14,968   (24,544 )
Net increase in cash and cash equivalents 1,025 2,027
Effect of exchange rate changes on cash and cash equivalents 151 (957 )
Cash and cash equivalents at beginning of period   7,869   5,524
Cash and cash equivalents at end of period $ 9,045 $ 6,594