AVD - American Vanguard Reports Fourth Quarter & Full Year 2017 Results

March, 12 2018 04:05 PM American Vanguard Corporation

Full-Year Revenues Increase 14% and Net Income Grows 59%

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 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.


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
)

View source version on businesswire.com: http://www.businesswire.com/news/home/20180312006116/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.
www.theequitygroup.com
Lena Cati
Lcati@equityny.com

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

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