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American Vanguard Reports Third Quarter and Nine-Month 2019 Results

November 5, 2019

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Nov 5, 2019--

American Vanguard Corporation (NYSE:AVD), today announced financial results for the three- and nine-month periods ended September 30, 2019.

Financial Highlights Fiscal 2019 Third Quarter – versus Fiscal 2018 Third Quarter

Financial Highlights Fiscal 2019 First Nine Months – versus Fiscal 2018 First Nine Months

Eric Wintemute, Chairman and CEO of American Vanguard commented, “As we noted in our pre-announcement, driven largely by our international business, consolidated net sales for the quarter grew by 12%. At the same time, net income declined for the period, with earnings per share at $0.11 for the quarter. This was due to lower factory activity, higher operating expenses and a comparatively higher benefit in the comparable quarter of 2018 relating to the reassessment of deferred purchase price consideration.”

Mr. Wintemute continued, “Our overall performance was mixed. On the one hand, our international business grew by 27% during the quarter. With further integration of relatively early-stage business operations, we experienced expansion in Central America, Brazil, Mexico and Canada. On the other hand, the domestic business was held to only 3% growth in the quarter due to extreme weather conditions that have set back the entire industry. Persistent rains and cold during the first half of 2019 delayed plantings, pushed harvest times back and reduced demand for post-harvest fumigants. This was followed by record-setting heat in the Southern region during the third quarter that reduced demand for defoliants, fungicides and insecticides. Notwithstanding these weather challenges, our domestic Ag sales increased by 1% in the third quarter and we recorded a 10% increase in our domestic non-crop sales, led by our mosquito adulticide and pest strip product lines.”

Mr. Wintemute continued, “Focusing on full year 2019 results, we expect consolidated sales to increase by about 5% year-over-year with mixed performance among our major markets. International sales should increase by about 25% for the full year. However, our domestic sales will likely decrease by about 5% on a per annum basis, which we believe is consistent with industry-wide forecasts that show domestic markets receding by 6% to 12% for the year. With these considerations in mind, we are expecting full year 2019 net sales of approximately $475 million, gross profit margins around 38%, operating expenses of approximately $155 million and a full corporate tax rate of approximately 29%.”

Mr. Wintemute concluded, “During our earnings conference call, we will cover current and near-term market conditions, provide our preliminary outlook for 2020 and outline continued efforts to improve our balance sheet. We will also update listeners on technology development with a focus on biological products and SIMPAS.”

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,

2019

 

 

December 31,

2018

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,887

 

 

$

6,168

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $1,988 and $1,263, respectively

 

 

140,220

 

 

 

123,320

 

Other

 

 

13,783

 

 

 

10,709

 

Total receivables, net

 

 

154,003

 

 

 

134,029

 

Inventories, net

 

 

186,285

 

 

 

159,895

 

Prepaid expenses

 

 

10,731

 

 

 

10,096

 

Income tax receivable

 

 

88

 

 

 

 

Total current assets

 

 

356,994

 

 

 

310,188

 

Property, plant and equipment, net

 

 

55,330

 

 

 

49,252

 

Operating lease right-of-use assets

 

 

12,186

 

 

 

 

Intangible assets, net of amortization

 

 

196,542

 

 

 

186,583

 

Goodwill

 

 

38,435

 

 

 

25,790

 

Other assets

 

 

21,810

 

 

 

21,774

 

Total assets

 

$

681,297

 

 

$

593,587

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

1,305

 

 

$

1,609

 

Accounts payable

 

 

67,188

 

 

 

66,535

 

Deferred revenue

 

 

368

 

 

 

20,043

 

Accrued program costs

 

 

57,512

 

 

 

37,349

 

Accrued expenses and other payables

 

 

11,912

 

 

 

15,962

 

Operating lease liabilities, current

 

 

4,889

 

 

 

 

Income taxes payable

 

 

 

 

 

4,030

 

Total current liabilities

 

 

143,174

 

 

 

145,528

 

Long-term debt, net of deferred loan fees

 

 

165,008

 

 

 

96,671

 

Other liabilities, excluding current installments

 

 

9,808

 

 

 

6,795

 

Operating lease liabilities, long-term

 

 

7,414

 

 

 

 

Deferred income tax liabilities

 

 

17,907

 

 

 

15,363

 

Total liabilities

 

 

343,311

 

 

 

264,357

 

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

33,235,938 shares at September 30, 2019 and 32,752,827

shares at December 31, 2018

 

 

3,325

 

 

 

3,276

 

Additional paid-in capital

 

 

88,257

 

 

 

83,177

 

Accumulated other comprehensive loss

 

 

(6,699

)

 

 

(4,507

)

Retained earnings

 

 

271,263

 

 

 

262,840

 

 

 

 

356,146

 

 

 

344,786

 

Less treasury stock at cost, 3,061,040 shares at September 30, 2019 and

2,902,992 shares at December 31, 2018

 

 

(18,160

)

 

 

(15,556

)

Total stockholders’ equity

 

 

337,986

 

 

 

329,230

 

Total liabilities and stockholders' equity

 

$

681,297

 

 

$

593,587

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

For the Three MonthsEnded
September 30,

 

 

For the Nine Months Ended
September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

 

$

124,884

 

 

$

111,780

 

 

$

337,664

 

 

$

322,934

 

Cost of sales

 

 

77,421

 

 

 

66,480

 

 

 

206,846

 

 

 

193,286

 

Gross profit

 

 

47,463

 

 

 

45,300

 

 

 

130,818

 

 

 

129,648

 

Operating expenses

 

 

40,677

 

 

 

33,635

 

 

 

110,839

 

 

 

102,011

 

Operating income

 

 

6,786

 

 

 

11,665

 

 

 

19,979

 

 

 

27,637

 

Interest expense, net

 

 

2,070

 

 

 

1,116

 

 

 

5,606

 

 

 

2,961

 

Income before provision for income taxes and loss on equity

method investments

 

 

4,716

 

 

 

10,549

 

 

 

14,373

 

 

 

24,676

 

Income tax expense

 

 

1,474

 

 

 

3,526

 

 

 

4,059

 

 

 

6,966

 

Income before loss on equity method investments

 

 

3,242

 

 

 

7,023

 

 

 

10,314

 

 

 

17,710

 

Loss from equity method investments

 

 

89

 

 

 

533

 

 

 

149

 

 

 

1,051

 

Net income

 

 

3,153

 

 

 

6,490

 

 

 

10,165

 

 

 

16,659

 

Net loss attributable to non-controlling interest

 

 

 

 

 

35

 

 

 

 

 

 

120

 

Net income attributable to American Vanguard

 

$

3,153

 

 

$

6,525

 

 

$

10,165

 

 

$

16,779

 

Earnings per common share—basic

 

$

.11

 

 

$

.22

 

 

$

.35

 

 

$

.57

 

Earnings per common share—assuming dilution

 

$

.11

 

 

$

.22

 

 

$

.34

 

 

$

.56

 

Weighted average shares outstanding—basic

 

 

29,057

 

 

 

29,399

 

 

 

29,013

 

 

 

29,340

 

Weighted average shares outstanding—assuming dilution

 

 

29,650

 

 

 

30,209

 

 

 

29,591

 

 

 

30,146

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three months and nine months ended September 30, 2019 and 2018

(In thousands)

(Unaudited)

 

 

 

For the three months ended

September 30,

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

55,952

 

 

$

55,285

 

 

$

667

 

 

 

1

%

US non-crop

 

 

18,036

 

 

 

16,426

 

 

 

1,610

 

 

 

10

%

US total

 

 

73,988

 

 

 

71,711

 

 

 

2,277

 

 

 

3

%

International

 

 

50,896

 

 

 

40,069

 

 

 

10,827

 

 

 

27

%

Net sales:

 

$

124,884

 

 

$

111,780

 

 

$

13,104

 

 

 

12

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

23,926

 

 

$

27,106

 

 

$

(3,180

)

 

 

-12

%

US non-crop

 

 

9,491

 

 

 

7,991

 

 

 

1,500

 

 

 

19

%

US total

 

 

33,417

 

 

 

35,097

 

 

 

(1,680

)

 

 

-5

%

International

 

 

14,046

 

 

 

10,203

 

 

 

3,843

 

 

 

38

%

Total gross profit:

 

$

47,463

 

 

$

45,300

 

 

$

2,163

 

 

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin domestic

 

 

45

%

 

 

49

%

 

 

 

 

 

 

 

 

Gross margin international

 

 

28

%

 

 

25

%

 

 

 

 

 

 

 

 

Gross margin total

 

 

38

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

September 30,

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

152,512

 

 

$

166,397

 

 

$

(13,885

)

 

 

-8

%

US non-crop

 

 

47,543

 

 

 

39,492

 

 

 

8,051

 

 

 

20

%

US total

 

 

200,055

 

 

 

205,889

 

 

 

(5,834

)

 

 

-3

%

International

 

 

137,609

 

 

 

117,045

 

 

 

20,564

 

 

 

18

%

Net sales:

 

$

337,664

 

 

$

322,934

 

 

$

14,730

 

 

 

5

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

66,140

 

 

$

78,439

 

 

$

(12,299

)

 

 

-16

%

US non-crop

 

 

24,363

 

 

 

19,843

 

 

 

4,520

 

 

 

23

%

US total

 

 

90,503

 

 

 

98,282

 

 

 

(7,779

)

 

 

-8

%

International

 

 

40,315

 

 

 

31,366

 

 

 

8,949

 

 

 

29

%

Total gross profit:

 

$

130,818

 

 

$

129,648

 

 

$

1,170

 

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin domestic

 

 

45

%

 

 

48

%

 

 

 

 

 

 

 

 

Gross margin international

 

 

29

%

 

 

27

%

 

 

 

 

 

 

 

 

Gross margin total

 

 

39

%

 

 

40

%

 

 

 

 

 

 

 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

For the Nine Months Ended
September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

10,165

 

 

$

16,659

 

Adjustments to reconcile net income to net cash used in operating

activities:

 

 

 

 

 

 

 

 

Depreciation and amortization of property, plant and equipment and intangible assets

 

 

13,892

 

 

 

14,233

 

Amortization of other long term assets

 

 

3,174

 

 

 

3,630

 

Amortization of discounted liabilities

 

 

41

 

 

 

314

 

Provision for bad debts

 

 

728

 

 

 

540

 

Reassessment of deferred consideration

 

 

(3,539

)

 

 

(5,437

)

Stock-based compensation

 

 

5,159

 

 

 

4,235

 

Deferred income taxes

 

 

(459

)

 

 

(34

)

Loss from equity method investments

 

 

149

 

 

 

1,051

 

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

 

 

Increase in net receivables

 

 

(15,983

)

 

 

(24,922

)

Increase in inventories

 

 

(19,713

)

 

 

(39,305

)

Increase in prepaid expenses and other assets

 

 

(849

)

 

 

(959

)

Increase in net operating lease liability

 

 

117

 

 

 

 

(Decrease) increase in income tax receivable/payable, net

 

 

(4,477

)

 

 

2,069

 

(Decrease) increase in accounts payable

 

 

(5,516

)

 

 

5,711

 

Decrease in deferred revenue

 

 

(19,800

)

 

 

(13,965

)

Increase in accrued program costs

 

 

20,163

 

 

 

22,882

 

Decrease in other payables and accrued expenses

 

 

(4,936

)

 

 

(1,792

)

Net cash used in operating activities

 

 

(21,684

)

 

 

(15,090

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(10,546

)

 

 

(5,154

)

Acquisition of business, product lines, and intangible assets

 

 

(31,836

)

 

 

(1,634

)

Net cash used in investing activities

 

 

(42,382

)

 

 

(6,788

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(73,800

)

 

 

(71,125

)

Borrowings under line of credit agreement

 

 

142,000

 

 

 

90,800

 

Net payments from the issuance of common stock (sale of stock under ESPP,

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

 

 

(30

)

 

 

1,731

 

Repurchase of common stock

 

 

(2,604

)

 

 

 

Payment of cash dividends

 

 

(1,741

)

 

 

(1,611

)

Net cash provided by financing activities

 

 

63,825

 

 

 

19,795

 

Net decrease in cash and cash equivalents

 

 

(241

)

 

 

(2,083

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(40

)

 

 

114

 

Cash and cash equivalents at beginning of period

 

 

6,168

 

 

 

11,337

 

Cash and cash equivalents at end of period

 

$

5,887

 

 

$

9,368

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three months and nine months ended September 30, 2019 and 2018

(Unaudited)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income attributable to American Vanguard, as reported

 

$

3,153

 

 

$

6,525

 

 

$

10,165

 

 

$

16,779

 

Provision for income taxes

 

 

1,474

 

 

 

3,526

 

 

 

4,059

 

 

 

6,966

 

Interest expense, net

 

 

2,070

 

 

 

1,116

 

 

 

5,606

 

 

 

2,961

 

Depreciation and amortization

 

 

5,687

 

 

 

6,034

 

 

 

17,066

 

 

 

17,863

 

EBITDA 2

 

$

12,384

 

 

$

17,201

 

 

$

36,896

 

 

$

44,569

 

 ___________________________

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 measure 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. The Company believes that the 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 conditions and results of operation without giving effect to the cost of increased acquisition activity 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 a substitute for analysis of the Company’s results as reported in accordance with GAAP.

 

2 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.

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191105006168/en/

CONTACT: Company:

American Vanguard Corporation

William A. Kuser, Director of Investor Relations

(949) 260-1200

williamk@amvac-chemical.comInvestor Representative

The Equity Group Inc.

www.theequitygroup.com

Lena Cati (212) 836-9611

Lcati@equityny.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: AGRICULTURE NATURAL RESOURCES MANUFACTURING OTHER NATURAL RESOURCES CHEMICALS/PLASTICS

SOURCE: American Vanguard Corporation

Copyright Business Wire 2019.

PUB: 11/05/2019 04:05 PM/DISC: 11/05/2019 04:05 PM

http://www.businesswire.com/news/home/20191105006168/en