AVD - American Vanguard Reports Q1 2024 Results

May, 09 2024 04:05 PM American Vanguard Corporation

Adjusted EBITDA up 35%, Operating Income up 87%

American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights – versus First Quarter 2023:

Net sales of $135 million vs. $125 million
Adjusted EBITDA ¹ of $15.5 million vs. $11.5 million
Operating Income of $6.1 million vs. $3.3 million
Net income of $1.6 million vs. $1.9 million
Earnings per diluted share of $0.06 vs. $0.07

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We attained improved operating leverage with a significant increase in adjusted EBITDA and operating income, during the first quarter as compared to last year. This is due in part to our cost control initiatives, on account of which our operating expenses reduced as a percent of net sales, even after including our transformation costs. We expect to gain greater efficiencies through our transformation program which we have begun in earnest and which we expect will generate an additional $15 million of adjusted EBITDA on an annualized basis by 2026.”

He continued, “Further, it is pleasing to note that we experienced growth in all three businesses, US Crop, US Non-crop and International. Within US Crop, we recorded strong sales of granular soil insecticides (in light of a stable farm economy), herbicides (in part due to seasonal demand and favorable weather conditions) and cotton and peanut products (driven by increased planted acres for those crops). The destocking initiatives from last year have begun to subside to a degree; however, the distribution channel is still exercising conservatism in their procurement approach.”

Mr. Wintemute continued, “Within US Non-crop, we experienced significantly higher sales, led by our mosquito adulticides (in anticipation of tropical storm activity), pest strips (with a resurgence in consumer and technical sales) and our OHP products for nursery and ornamental uses. Our International business recorded moderately higher sales, led by Mexico and APAC, despite continued overstocking of generic products in other regions. All in, we are encouraged by the resiliency of our markets during the quarter.”

Mr. Wintemute concluded, “Market conditions remain stable with a strong farm economy and a more relaxed procurement approach within the distribution channel compared to last year. That said, in light of concerns raised by USEPA, we have voluntarily suspended sales of our herbicide Dacthal pending potential approval of a label that we believe should answer the agency’s concerns. In light of these factors, we are adjusting our annual targets to achieve an increase in net sales of between 6% and 9% year over year and are setting our adjusted EBITDA target to $60 - $70 million. We look forward to giving you a more detailed presentation during our upcoming earnings 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 and strategic themes at 4:15 pm ET on Thursday, May 9, 2024. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time 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. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has over 1,000 product registrations in 56 nations worldwide. Its strategy rests on three growth initiatives – i) Core Business (through innovation of conventional products), ii) Green Solutions (with over 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products) and iii) Precision Agriculture innovation (including SIMPAS prescriptive application and Ultimus measure/record/verify technologies). American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. 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

March 31, 2024


December 31, 2023

Current assets:






Cash

$
13,709


$
11,416

Receivables:






Trade, net of allowance for credit losses of $7,798 and $7,107, respectively


187,197



182,613

Other


7,395



8,356

Total receivables, net


194,592



190,969

Inventories


228,309



219,551

Prepaid expenses


7,446



6,261

Income taxes receivable


2,889



3,824

Total current assets


446,945



432,021

Property, plant and equipment, net


75,909



74,560

Operating lease right-of-use assets, net


23,084



22,417

Intangible assets, net of amortization


168,723



172,508

Goodwill


50,469



51,199

Deferred income tax assets


3,307



2,849

Other assets


13,188



11,994

Total assets

$
781,625


$
767,548








LIABILITIES AND STOCKHOLDERS’ EQUITY






Current liabilities:






Accounts payable

$
64,642


$
68,833

Customer prepayments


28,520



65,560

Accrued program costs


74,343



68,076

Accrued expenses and other payables


15,927



16,354

Operating lease liabilities, current


6,358



6,081

Income taxes payable


5,633



5,591

Total current liabilities


195,423



230,495

Long-term debt, net


187,017



138,900

Operating lease liabilities, long term


17,407



17,113

Deferred income tax liabilities


7,157



7,892

Other liabilities


3,038



3,138

Total liabilities


410,042



397,538

Commitments and contingent liabilities






Stockholders' equity:






Preferred stock, $0.10 par value per share; authorized 400,000 shares; none issued


—



—

Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,754,634 shares at March 31, 2024 and 34,676,787 shares at December 31, 2023


3,475



3,467

Additional paid-in capital


113,223



110,810

Accumulated other comprehensive loss


(7,527
)


(5,963
)
Retained earnings


333,613



332,897

Less treasury stock at cost, 5,915,182 shares at March 31, 2024 and December 31, 2023


(71,201
)


(71,201
)
Total stockholders’ equity


371,583



370,010

Total liabilities and stockholders’ equity

$
781,625


$
767,548

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)






For the three months ended March 31



2024


2023

Net sales

$
135,143


$
124,885

Cost of sales


(92,725
)


(86,348
)
Gross profit


42,418



38,537

Operating expenses






Selling, general and administrative


(30,621
)


(26,402
)
Research, product development and regulatory


(5,706
)


(8,870
)
Operating income


6,091



3,265

Change in fair value of an equity investment


638



(22
)
Interest expense, net


(3,693
)


(1,686
)
Income before provision for income taxes


3,036



1,557

Income tax (expense) benefit


(1,484
)


361

Net income

$
1,552


$
1,918

Earnings per common share—basic

$
0.06


$
0.07

Earnings per common share—assuming dilution

$
0.06


$
0.07

Weighted average shares outstanding—basic


27,844



28,367

Weighted average shares outstanding—assuming dilution


28,128



29,073

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES (Unaudited)












For the three months ended March 31,









2024


2023


Change


% Change

Net sales:












U.S. crop

$
67,257


$
61,876


$
5,381



9
%
U.S. non-crop


17,768



13,899



3,869



28
%
Total U.S.


85,025



75,775



9,250



12
%
International


50,118



49,110



1,008



2
%
Total net sales

$
135,143


$
124,885


$
10,258



8
%
Total cost of sales

$
(92,725
)

$
(86,348
)

$
(6,377
)


7
%
Total gross profit

$
42,418


$
38,537


$
3,881



10
%
Total gross margin


31
%


31
%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)






For the three months ended March 31



2024


2023

Cash flows from operating activities:






Net income

$
1,552


$
1,918

Adjustments to reconcile net income to net cash used in operating activities:






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


5,441



5,539

Amortization of other long-term assets


189



714

Provision for bad debts


700



581

Stock-based compensation


2,005



1,474

Change in deferred income taxes


(1,025
)


122

Change in liabilities for uncertain tax positions or unrecognized tax benefits


35



371

Change in equity investment fair value


(638
)


22

Other


(5
)


72

Foreign currency transaction gains


(373
)


(446
)
Changes in assets and liabilities associated with operations:






Increase in net receivables


(5,579
)


(8,779
)
Increase in inventories


(9,353
)


(33,731
)
Increase (decrease) in prepaid expenses and other assets


(1,466
)


600

Change in income tax receivable/payable, net


1,014



(2,965
)
(Decrease) increase in accounts payable


(3,951
)


5,655

Decrease in customer prepayments


(37,037
)


(22,759
)
Increase in accrued program costs


6,399



10,660

Decrease in other payables and accrued expenses


(332
)


(500
)
Net cash used in operating activities


(42,424
)


(41,452
)
Cash flows from investing activities:






Capital expenditures


(3,565
)


(2,590
)
Proceeds from disposal of property, plant and equipment


23



—

Acquisition of a product line


—



(703
)
Intangible assets


(25
)


(15
)
Net cash used in investing activities


(3,567
)


(3,308
)
Cash flows from financing activities:






Payments under line of credit agreement


(35,346
)


(27,300
)
Borrowings under line of credit agreement


83,463



72,000

Net receipt from the issuance of common stock under ESPP


430



480

Net (payment) receipt from the exercise of stock options


—



18

Net payment from common stock purchased for tax withholding


(14
)


(13
)
Repurchase of common stock


—



(557
)
Payment of cash dividends


(834
)


(851
)
Net cash provided by financing activities


47,699



43,777

Net increase (decrease) in cash


1,708



(983
)
Effect of exchange rate changes on cash and cash equivalents


585



223

Cash at beginning of period


11,416



20,328

Cash at end of period

$
13,709


$
19,568

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA (In thousands) (Unaudited)







Reconciliation of Net Income to EBITDA

March 31, 2024


March 31, 2023

Net income, as reported

$
1,552


$
1,918

Provision for income taxes


1,484



(361
)
Interest expense, net


3,693



1,686

Proxy costs


—



541

Depreciation and amortization


5,630



6,253

Stock compensation


2,005



1,474

Transformation costs


1,152



—

Adjusted EBITDA ²

$
15,516


$
11,511

______________________________
¹ Adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted 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, operating income 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 adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently.
² Adjusted earnings before interest, taxes, depreciation, and amortization. Adjusted 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, operating income 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 adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define adjusted EBITDA differently.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240509081007/en/

Company Contact:
American Vanguard Corporation
Anthony Young, Director of Investor Relations
(949) 260-1200
anthonyy@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

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