Mar 12, 2018   SOURCE: BusinessWire

American Vanguard Reports Fourth Quarter & Full Year 2017 Results

American Vanguard Corporation (NYSE:AVD) today announced financial results for the fourth quarter and full year ended December 31, 2017.

Fiscal 2017 Fourth Quarter Financial Highlights – versus Fiscal 2016 Fourth Quarter:

  • Net sales were $116.5 million versus $87.5 million, an increase of 33%.
  • Net income was $8.4 million versus $3.9 million, an increase of 115%.
  • EPS was $0.28 (an increase of 115%), of which about $0.11 arose from a one-time tax benefit.

Fiscal 2017 Financial Highlights – versus Fiscal 2016:

  • Net sales were $355.0 million versus $312.1 million, an increase of 14%.
  • Net income was $20.3 million versus $12.8 million, an increase of 59%.
  • EPS was $0.68 (an increase of 55%), of which about $0.11 arose from a one-time tax benefit.

Note: Fourth Quarter and Full-Year Net Income and EPS reflect a one-time tax benefit gained by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our improved revenue performance in 2017 was driven by solid growth (+$11.8 million) of our existing products and the acquisition of new products and businesses during the year (+$31.1 million). These acquisitions which broadened and diversified our product portfolio and expanded our geographic market access were procured at attractive investment values. This acquisition approach has been the generator of steady company growth over the last three decades, and with our strong balance sheet we expect to be able to take advantage of additional acquisition opportunities over the next several years.”

Mr. Wintemute continued: “We experienced dynamic market conditions in 2017; however, due to our balanced portfolio of products, were able to improve both the top and bottom lines. For example, strong contributions from our cotton products and mosquito adulticide more than offset weather-related impact on soil fumigant sales and competitive pricing in corn herbicides. Our full-year gross profit margins remained strong at 42%, aided by improved factory utilization and cost control which reduced our unabsorbed overhead expense by nearly $5 million. Improved sales, operating earnings and working capital management have enabled us to achieve a year-end debt level of $78 million and to increase our credit borrowing capacity to $140 million, despite having completed six acquisitions during the year. Further, we continued to reduce our inventory of existing products year-over-year and generated $59.0 million in cash from operating activities during 2017. Finally, net income rose significantly for both the fourth quarter and the year, aided in part by an estimated $3.4 million tax benefit recorded by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017.”

Mr. Wintemute concluded: “Our outlook for the current year is positive. Within our crop business, we expect that our leading position in the U.S. potato market will remain firm, while our high-margin fruit & vegetable segment is expected to constitute over 30% of our overall business in 2018. In addition, we expect relative stability in the Midwest corn markets which should drive sales of our corn soil insecticides and our expanded herbicide offerings. While U.S. cotton and peanut acreage may be flat-to-slightly down compared to 2017, we expect stable sales in both of these crops. Our non-crop business is expected to expand by nearly 50% with the incorporation of the new OHP horticultural acquisition for the full year in 2018. Internationally, we are poised for modest growth of our traditional product portfolio, boosted by full-year sales of our Latin American acquisition Grupo AgriCenter. While addressing these markets, we will continue to plan for the future by investing in technology innovation, new products and portfolio defense. Please join us on our earnings call, where we will give you more color on our business.”

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 4:30 pm ET on Monday, March 12, 2018. 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
CONSOLIDATED BALANCE SHEETS
December 31, 2017 and 2016
(In thousands, except share data)
 
  2017   2016
Assets
Current assets:
Cash and cash equivalents $ 11,337 $ 7,869
Receivables:
Trade, net of allowance for doubtful accounts of $46 and $42, respectively 102,534 83,777
Other   7,071   3,429
  109,605   87,206
Inventories 123,124 120,576
Prepaid expenses   10,817   11,424
Total current assets 254,883 227,075
Property, plant and equipment, net 49,321 50,295
Intangible assets, net of applicable amortization 180,950 121,433
Goodwill 22,184 —
Other assets   28,254   31,153
Total assets $ 535,592 $ 429,956
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of other liabilities $ 5,395 $ 26
Accounts payable 53,748 24,358
Deferred revenue 14,574 3,848
Accrued program costs 39,054 42,930
Accrued expenses and other payables 12,061 12,072
Income taxes payable   1,370   13,840
Total current liabilities 126,202 97,074
Long-term debt, excluding current installments 77,486 40,951
Other liabilities, excluding current installments 10,306 2,868
Deferred income tax liabilities, net   16,284   6,706
Total liabilities   230,278   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 32,241,866 shares in 2017 and 31,819,695 shares in 2016 3,225 3,183
Additional paid-in capital 75,658 71,699
Accumulated other comprehensive loss (4,507 ) (4,851 )
Retained earnings   238,953   220,428
313,329 290,459
Less treasury stock at cost, 2,450,634 shares in 2017 and in 2016   (8,269 )   (8,269 )
American Vanguard Corporation stockholders’ equity 305,060 282,190
Non-controlling interest   254   167
Total stockholders’ equity   305,314   282,357
Total liabilities and stockholders’ equity $ 535,592 $ 429,956
 
 
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2017, 2016 and 2015
(In thousands, except per share data)
 
  2017   2016   2015
Net sales $ 355,047 $ 312,113 $ 289,382
Cost of sales   207,655   183,825   177,480
Gross profit 147,392 128,288 111,902
Operating expenses   120,598   107,748   100,378
Operating income 26,794 20,540 11,524
Interest expense, net   1,941   1,623   2,562
Income before provision for income taxes and loss on equity investments 24,853 18,917 8,962
Provision for income taxes   4,443   5,540   2,009
Income before loss on equity investments 20,410 13,377 6,953
Less net loss from equity method investments   (49 )   (353 )   (636 )
Net income 20,361 13,024 6,317
Net (income) loss attributable to non-controlling interest   (87 )   (236 )   274
Net income attributable to American Vanguard $ 20,274 $ 12,788 $ 6,591
Earnings per common share—basic $ 0.70 $ 0.44 $ 0.23
Earnings per common share—assuming dilution $ 0.68 $ 0.44 $ 0.23
Weighted average shares outstanding—basic   29,100   28,859   28,673
Weighted average shares outstanding—assuming dilution   29,703   29,394   29,237
 
 
ANALYSIS OF SALES
For the Three Years Ended December 31, 2017
(In thousands)
 
  2017     2016     2015
Net sales:
Insecticides $ 132,137 $ 119,226 $ 117,180
Herbicides/soil fumigants/fungicides 121,581 123,540 111,897
Other, including plant growth regulators   47,691   29,438   29,013
Total crop 301,409 272,204 258,090
Non-crop   53,638   39,909   31,292
$ 355,047 $ 312,113 $ 289,382
Net Sales:
U.S. $ 256,142 $ 228,854 $ 212,087
International   98,905   83,259   77,295
$ 355,047 $ 312,113 $ 289,382
 
 
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2017, 2016 and 2015
(In thousands)
 
  2017   2016   2015
Increase cash
Cash flows from operating activities:
Net income $ 20,361 $ 13,024 $ 6,317

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization of fixed and intangible assets 16,959 16,327 16,474
Amortization of other long term assets and debt issuance costs 5,221 5,203 5,275
Amortization of discounted liabilities 110 16 140
Stock-based compensation 4,714 3,167 3,881
Excess tax benefit from share based compensation — (96 ) (23 )
Increase (decrease) in deferred income taxes 398 (151 ) 27
Operating loss from equity method investment 49 353 629
Loss from dilution of equity method investment — — 7
Changes in assets and liabilities associated with operations, net of business combinations:
Decrease (increase) in net receivables 754 (11,817 ) 13,034
Decrease in inventories 16,183 15,901 29,154
(Increase) decrease in income tax receivable/payable, net (12,073 ) 1,186 4,872
Decrease (increase) in prepaid expenses and other assets 647 (3,872 ) 2,082
Increase (decrease) in accounts payable 3,322 9,015 (5,068 )
Increase (decrease) in deferred revenue 10,726 (5,040 ) 7,990
Decrease in accrued program costs (4,529 ) (1,441 ) (8,175 )
(Decrease) increase in other payables   (3,841 )   4,631   1,952
Net cash provided by operating activities   59,001   46,406   78,568
Cash flows from investing activities:
Capital expenditures (6,666 ) (10,630 ) (6,899 )
Investment (950 ) (3,283 ) (125 )
Acquisitions of businesses and intangible assets   (81,896 )   (224 )   (36,667 )
Net cash used in investing activities   (89,512 )   (14,137 )   (43,691 )
Cash flows from financing activities:
Payments under line of credit agreement (103,975 ) (107,600 ) (121,400 )
Borrowings under line of credit agreement 141,000 80,000 90,880
Debt issuance cost (751 ) — —
Payment on other long-term liabilities (26 ) (704 ) (1,543 )
Excess tax benefit from share based compensation — 96 23
Net payment from the issuance of common stock (sale of stock under ESPP, exercise of stock options and shares purchased for tax withholding) (713 ) 241 317
Payment of cash dividends   (1,600 )   (578 )   (1,141 )
Net cash provided by (used in) financing activities   33,935   (28,545 )   (32,864 )
Net increase in cash and cash equivalents 3,424 3,724 2,013
Effect of exchange rate changes on cash and cash equivalents 44 (1,379 ) (1,374 )
Cash and cash equivalents at beginning of year   7,869   5,524   4,885
Cash and cash equivalents at end of year $ 11,337 $ 7,869 $ 5,524
Supplemental cash flow information:
Cash paid (received) during the year for:
Interest $ 1,500 $ 1,748 $ 2,750
Income taxes, net $ 17,841 $ 4,947 $ (3,697 )