AVD - American Vanguard Reports First Quarter 2018 Results

May, 08 2018 04:05 PM American Vanguard Corporation

Recent Acquisitions and Traditional Business Drive Growth

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 DibromÂ® 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 2000Â® and Russell 3000Â® 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

____________

³Earnings 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/20180508006561/en/

Company:
American Vanguard Corporation
William A. Kuser, 949-260-1200
Director of Investor Relations
williamk@amvac-chemical.com
or
Investor Representative:
The Equity Group Inc.
Lena Cati, 212-836-9611
Lcati@equityny.com
www.theequitygroup.com

Company Name:	American Vanguard Corporation
Stock Symbol:	AVD
Market:	NYSE
Website:	american-vanguard.com

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