AVD - American Vanguard Reports Fourth Quarter & Full Year 2021 Results

March, 08 2022 04:05 PM American Vanguard Corporation

Announces Share Repurchase Plan

American Vanguard Corporation (NYSE: AVD) today announced preliminary, unaudited financial results for the fourth quarter and full year ended December 31, 2021.

Fiscal 2021 Fourth Quarter Financial Highlights – versus Fiscal 2020 Fourth Quarter:

Net sales were $159 million in 2021, compared to $141 million in 2020
Operating income was $9.4 million in 2021, compared to $10.1 million in 2020
EBITDA ¹ of $14.8 million in 2021, compared to $17.1 million in 2020
Both operating income and EBITDA from 2020 benefited from a one-time gain of $4.6 million due to bargain purchase accounting

Fiscal 2021 Full Year Financial Highlights – versus Fiscal 2020 Full Year:

Net sales were $557 million in 2021, compared to $459 million in 2020
Operating income was $30.9 million in 2021, compared to $22.9 million in 2020
Net income was $18.6 million* in 2021, compared to $15.2 million in 2020
Earnings per diluted share of $0.61* in 2021, compared to $0.51 in 2020
EBITDA ¹ of $56.8 million in 2021, compared to $47.5 million in 2020

*Net income and earnings per share for the full year period include the impact of a $3.3 million, one-time, non-cash charge relating to tax reserves (for net operating loss carryforwards) from the Company’s operations in Brazil. These NOLs may be taken as credits in future reporting periods subject to sufficient profitability from those operations.

With respect to the Company’s financial performance, CEO and Chairman, Eric G. Wintemute stated: “2021 proved to be a very successful year for AVD despite continuing challenges posed by COVID-19, supply chain disruptions and inflation. On an annual basis, our net sales increased by 21%, operating income was up about 35%, EBITDA rose 20% and, but for the one-time, non-cash charge (which could potentially be reversed over time), our net income would have risen 44% and generated EPS of $0.72.

“The Company adapted to restrictive public health protocols, varying degrees of customer access limitations, and remote work processes in many operational and administrative functions. Throughout the year, we kept AMVAC manufacturing facilities fully functioning and sustained strong profit margins with price increases to offset inflationary costs. In addition, we strengthened our balance sheet, reduced inventory, increased net cash from operations, reduced debt and improved availability under our credit facility.”

Mr. Wintemute continued: “2021 results were driven by every part of our business. Our U.S. Crop business benefited from economic reopening and high crop commodity prices which resulted in strong demand for our products in corn, soybeans, cotton, potatoes, and many fruits and vegetables. The U.S. Non-Crop business experienced significant demand in mosquito control, commercial pest applications, horticulture/ornamental products and Envance Technologies’ licensing for consumer products. In addition, our International business saw expanded presence in Australia, increased penetration of our biological offerings and solid performance from our Central and South American groups.”

Mr. Wintemute concluded: “Looking forward, we believe that our Company is situated well in both domestic and international markets. We are currently optimistic about the prospects for 8-11% revenue growth in 2022 and are targeting gross profit margins to remain strong (38 to 40% of net sales), net income to increase by 60-70% and operating expenses to be between 31% and 33% of net sales. On a very solid core business foundation, we will continue to develop our key strategic growth initiatives in Green Solutions and SIMPAS/Ultimus technologies. We look forward to giving you a more detailed presentation during our upcoming earnings call.”

In addition, the Company announced that its board of directors has approved a program for the repurchase of up to one million shares of common stock within the requirements of Exchange Act Rule 10b-18 over the course of the next year. With respect to the repurchase program, Mr. Wintemute stated, “This authorization reflects the strong confidence that our board places in the company’s long-term success. This program also serves, in part, to offset the expansion of outstanding shares resulting from equity awards that we make to our workforce.”

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 March 8, 2022. 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.

CONSOLIDATED BALANCE SHEETS December 31, 2021 and 2020 (In thousands, except share data) (Unaudited)









2021


2020

Assets








Current assets:








Cash and cash equivalents

$
16,285


$
15,923

Receivables:








Trade, net of allowance for doubtful accounts of $3,938 and $3,297, respectively


149,326



130,029

Other


9,595



6,969

Total receivables, net


158,921



136,998

Inventories, net


154,306



163,784

Prepaid expenses


12,488



10,499

Income taxes receivable


—



3,046

Total current assets


342,000



330,250

Property, plant and equipment, net


66,111



65,382

Operating lease right-of-use assets


25,386



12,198

Intangible assets, net of amortization


197,841



197,514

Goodwill


46,260



52,108

Other assets


16,292



20,077

Deferred income tax assets, net


270



2,764

Total assets

$
694,160


$
680,293

Liabilities and Stockholders’ Equity








Current liabilities:








Current installments of other liabilities

$
802


$
2,647

Accounts payable


67,140



59,253

Deferred revenue


63,064



43,611

Accrued program costs


63,245



45,441

Accrued expenses and other payables


20,745



16,184

Income taxes payable


3,006



—

Operating lease liabilities, current


5,059



4,188

Total current liabilities


223,061



171,324

Long-term debt, net of deferred loan fees


52,240



107,442

Other liabilities, excluding current installments


5,335



9,054

Operating lease liabilities, long-term


20,780



8,177

Deferred income tax liabilities, net


20,006



23,560

Total liabilities


321,422



319,557

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 34,248,218 shares in 2021 and 33,922,433 shares in 2020


3,426



3,394

Additional paid-in capital


101,450



96,642

Accumulated other comprehensive loss


(13,784
)


(9,322
)
Retained earnings


304,385



288,182




395,477



378,896

Less treasury stock at cost, 3,361,040 shares in 2021 and 3,061,040 in 2020


(22,739
)


(18,160
)
Total stockholders’ equity


372,738



360,736

Total liabilities and stockholders’ equity

$
694,160


$
680,293

CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2021, 2020 and 2019 (In thousands, except per share data) (Unaudited)












2021


2020


2019

Net sales

$
556,872


$
458,704


$
468,186

Cost of sales


(343,629
)


(286,114
)


(290,832
)
Gross profit


213,243



172,590



177,354

Operating expenses


(182,468
)


(154,339
)


(151,133
)
Bargain purchase gain on business acquisition


171



4,657



—

Operating income


30,946



22,908



26,221

Change in fair value of equity investments, net


(790
)


717



—

Other income


672



—



—

Interest expense, net


(3,687
)


(5,178
)


(7,209
)
Income before provision for income taxes and loss on equity method investment


27,141



18,447



19,012

Provision for income taxes


(8,166
)


(3,080
)


(5,202
)
Income before loss on equity method investment


18,975



15,367



13,810

Less loss from equity method investment


(388
)


(125
)


(209
)
Net income

$
18,587


$
15,242


$
13,601

Earnings per common share—basic

$
0.62


$
0.52


$
0.47

Earnings per common share—assuming dilution

$
0.61


$
0.51


$
0.46

Weighted average shares outstanding—basic


29,811



29,450



29,030

Weighted average shares outstanding—assuming dilution


30,410



29,993



29,656

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES For the years and quarters ended December 31, 2021 and 2020 (Unaudited)







For the quarters ended December 31,


For the years ended December 31,


2021

2020


2021


2020

Net sales:














U.S. crop
$
78,034

$
68,402


$
263,632


$
211,357

U.S. non-crop

19,588


16,811



78,605



60,367

Total U.S.

97,622


85,213



342,237



271,724

International

61,187


55,535



214,635



186,980

Total net sales
$
158,809

$
140,748


$
556,872


$
458,704

Gross profit:














U.S. crop
$
31,828

$
27,175


$
109,568


$
92,723

U.S. non-crop

8,823


6,736



37,443



27,842

Total U.S.

40,651


33,911



147,011



120,565

International

18,258


16,727



66,232



52,025

Total gross profit
$
58,909

$
50,638


$
213,243


$
172,590

CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2021, 2020 and 2019 (In thousands) (Unaudited)












2021


2020


2019

Increase cash












Cash flows from operating activities:












Net income

$
18,587


$
15,242


$
13,601

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












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


22,229



19,902



18,643

Loss on disposal of property, plant and equipment


194



119



—

Amortization of other long-term assets


3,943



3,947



3,983

Accretion of discounted liabilities


(8
)


9



72

Amortization of deferred loan fees


367



300



224

Provision for bad debts


649



1,002



1,035

Loan principal and interest forgiveness


(672
)


—



—

Fair value adjustment of contingent consideration


758



250



(4,120
)
Decrease in environmental liability


(167
)


(1,155
)


—

Stock-based compensation


6,880



6,561



7,160

Increase (decrease) in deferred income taxes


(1,133
)


969



2,616

Changes in liabilities for uncertain tax positions or unrecognized tax benefits


(1,783
)


(2,092
)


263

Change in equity investment fair value


790



(717
)


—

Loss from equity method investment


388



125



209

Bargain purchase gain


(171
)


(4,657
)


—

Net foreign currency adjustment


(225
)


126



275

Changes in assets and liabilities associated with operations, net of business combinations:












(Increase) decrease in net receivables


(24,347
)


15,407



(11,513
)
Decrease in inventories


8,130



7,421



3,817

(Increase) decrease in income tax receivable, net


6,051



(287
)


(6,855
)
(Increase) decrease in prepaid expenses and other assets


(3,354
)


140



(876
)
Increase in net operating lease liability


286



18



149

Increase (decrease) in accounts payable


8,783



(8,199
)


(7,912
)
Increase (decrease) in deferred revenue


19,280



36,803



(13,355
)
Increase (decrease) in accrued program costs


17,877



(2,517
)


5,797

Increase (decrease) in other payables and accrued expenses


3,986



1,607



(3,600
)
Net cash provided by operating activities


87,318



90,324



9,613

Cash flows from investing activities:












Capital expenditures


(9,518
)


(11,249
)


(12,985
)
Acquisitions of businesses and product lines


(10,000
)


(19,342
)


(37,972
)
Intangible assets


(524
)


(4,014
)


(3,880
)
Investment


—



(1,190
)


—

Net cash used in investing activities


(20,042
)


(35,795
)


(54,837
)
Cash flows from financing activities:












Net (payments) borrowings under line of credit agreement


(55,569
)


(41,624
)


51,900

Payment of contingent consideration


(1,301
)


(1,227
)


(850
)
Net receipt from the issuance of common stock under ESPP


743



721



716

Net receipt from the exercise of stock options


172



1,603



680

Net payment from common stock purchased for tax withholding


(2,955
)


(2,745
)


(1,113
)
Repurchase of common stock


(4,579
)


—



(2,604
)
Payment of cash dividends


(2,382
)


(1,168
)


(2,323
)
Net cash (used in) provided by financing activities


(65,871
)


(44,440
)


46,406

Net increase in cash and cash equivalents


1,405



10,089



1,182

Effect of exchange rate changes on cash and cash equivalents


(1,043
)


(747
)


(769
)
Cash and cash equivalents at beginning of year


15,923



6,581



6,168

Cash and cash equivalents at end of year

$
16,285


$
15,923


$
6,581

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA Quarters ended December 31, 2021 and 2020 (Unaudited)







2021


2020

Net income attributable to American Vanguard
$
4,874


$
7,908

Provision for income taxes

2,842



1,396

Interest expense, net

766



1,374

Depreciation and amortization

6,340



6,418

EBITDA ²
$
14,822


$
17,096

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA Years ended December 31, 2021 and 2020 (Unaudited)







2021


2020

Net income attributable to American Vanguard
$
18,587


$
15,242

Provision for income taxes

8,166



3,080

Interest expense, net

3,687



5,178

Depreciation and amortization

26,366



23,968

EBITDA ²
$
56,806


$
47,468

__________________________
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.
² 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/20220308006294/en/

Company Contact:
American Vanguard Corporation
William A. Kuser, Director of Investor Relations
(949) 260-1200
williamk@amvac-chemical.com

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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