AVD - American Vanguard Reports Third Quarter and Nine-Month 2018 Results

November, 05 2018 04:05 PM American Vanguard Corporation

Product and Business Acquisitions Drive Continued Corporate Growth

American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine-month period that ended September 30, 2018.

Financial Highlights: Third Quarter of 2018 — versus Third Quarter of 2017

Net sales of $112 million in 2018, compared to $90 million in 2017
Net income of $6.5 million in 2018, compared to $4.1 million in 2017
EBITDA¹ of $17 million in 2018, compared to $12 million in 2017
Earnings per diluted share of $0.22 in 2018, compared to $0.14 in 2017

Financial Highlights: First Nine-Months of 2018 — versus First Nine-Months of 2017

Net sales of $323 million in 2018, compared to $239 million in 2017
Net income of $16.7 million in 2018, compared to $11.8 million in 2017
EBITDA of $45 million in 2018, compared to $34 million in 2017
Earnings per diluted share of $0.56 in 2018, compared to $0.40 in 2017

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our overall financial performance for the third quarter and first nine months of 2018 improved at both the top and bottom lines. Net sales rose 24% in the quarter and 35% year-to-date due to businesses acquired in 2017, including OHP and AgriCenter. Net sales of pre-acquisition product lines were comparatively stable during both periods. In the quarter, we had strong performance from our cotton products and, on a year to date basis, our fumigants. Offsetting these performances, in the quarter, we recorded lower sales of DibromÂ® mosquito adulticide - which, in the prior year, had experienced extraordinary demand in the aftermath of Hurricanes Harvey and Irma.”

Mr. Wintemute continued, “Manufacturing performance continued its recent strength, contributing positively to our gross margin percentage of 41% in the third quarter and 40% year-to-date. Further, while our operating expenses rose on an absolute basis, they declined as a percentage of net sales, due in part to improved economies of scale across our businesses and in part to a G&A benefit from our quarterly revaluation of deferred purchase price consideration relating to 2017 acquisitions. Throughout the course of 2018, we have continued to integrate businesses acquired in 2017, launch innovative new products, maintain necessary regulatory compliance, and advance the development of our SIMPAS precision application technology. During the third quarter, we recorded a one-time charge related to a change in the original estimate for the transition tax section of the 2017 Tax Cuts and Jobs Act. Overall, our net income increased by 60% for the quarter and 42% for the first nine months and, during the same periods, EBITDA² increased by 45% and 30%, respectively.”

Mr. Wintemute concluded, “During the final quarter of 2018, we expect solid year-over-year sales of our soil fumigants and our Equus fungicide, as well as from our domestic non-crop and our Central America distribution businesses. Further, we anticipate continued demand for our products in fruits and vegetables and pre-season purchasing demand for our corn products leading into the 2019 spring planting season. Taken together we anticipate achieving sales revenues in the range of $450 - $460 million for full year 2018 and gross margins in line with our year to date performance. We will provide additional detail on our financial performance and business prospects during the 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 at 4:30 pm ET / 1:30 pm PT on Monday, November 5, 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.

_______________

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 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 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









September 30,


December 31,



2018


2017

Current assets:








Cash and cash equivalents

$
9,368


$
11,337

Receivables:








Trade, net of allowance for doubtful accounts of $587 and $46, respectively


125,046



102,534

Other


12,282



7,071

Total receivables, net


137,328



109,605

Inventories, net


162,760



123,124

Prepaid expenses


11,352



10,817

Total current assets


320,808



254,883

Property, plant and equipment, net


48,315



49,321

Intangible assets, net of applicable amortization


174,801



180,950

Goodwill


21,837



22,184

Other assets


24,150



28,254

Total assets

$
589,911


$
535,592










LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:








Current installments of other liabilities

$
481


$
5,395

Accounts payable


59,769



53,748

Deferred revenue


609



14,574

Accrued program costs


61,936



39,054

Accrued expenses and other payables


11,686



12,061

Income taxes payable


3,446



1,370

Total current liabilities


137,927



126,202

Long-term debt, net of deferred loan fees


97,313



77,486

Other liabilities, excluding current installments


8,831



10,306

Deferred income tax liabilities


17,216



16,284

Total liabilities


261,287



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 32,757,098 shares at September 30, 2018 and 32,241,866 shares at December 31, 2017


3,276



3,225

Additional paid-in capital


81,573



75,658

Accumulated other comprehensive loss


(4,095
)


(4,507
)
Retained earnings


256,005



238,953




336,759



313,329

Less treasury stock at cost, 2,450,634 shares at September 30, 2018 and December 31, 2017


(8,269
)


(8,269
)
American Vanguard Corporation stockholders’ equity


328,490



305,060

Non-controlling interest


134



254

Total stockholders’ equity


328,624



305,314

Total liabilities and stockholders' equity

$
589,911


$
535,592


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









For the Three Months Ended September 30,


For the Nine Months Ended September 30,



2018


2017


2018


2017

Net sales

$
111,780


$
89,975


$
322,934


$
238,553

Cost of sales


66,480



51,943



193,286



136,102

Gross profit


45,300



38,032



129,648



102,451

Operating expenses


33,635



31,570



102,011



84,175

Operating income


11,665



6,462



27,637



18,276

Interest expense, net


1,116



375



2,961



1,073

Income before provision for income taxes and loss on equity method investments


10,549



6,087



24,676



17,203

Income tax expense


3,526



1,954



6,966



5,015

Income before loss on equity method investments


7,023



4,133



17,710



12,188

Loss from equity method investments


533



115



1,051



226

Net income


6,490



4,018



16,659



11,962

Net (loss) income attributable to non-controlling interest


35



71



120



(117
)
Net income attributable to American Vanguard

$
6,525


$
4,089


$
16,779


$
11,845

Earnings per common share–basic

$
.22


$
.14


$
.57


$
.41

Earnings per common share–assuming dilution

$
.22


$
.14


$
.56


$
.40

Weighted average shares outstanding–basic


29,399



29,193



29,340



29,064

Weighted average shares outstanding–assuming dilution


30,209



29,783



30,146



29,648


ANALYSIS OF SALES For the three and nine months ended September 30, 2018 and 2017 (In thousands) (Unaudited)








Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017
Net sales:















Insecticides

$
25,475


$
24,866


$
99,433


$
102,249
Herbicides/soil fumigants/fungicides


34,577



32,717



98,163



68,783
Other, including plant growth regulators


35,302



17,191



83,519



30,680
Total crop:


95,354



74,774



281,115



201,712
Non-crop


16,426



15,201



41,819



36,841
Total net sales:

$
111,780


$
89,975


$
322,934


$
238,553
Net sales:















US

$
71,711


$
65,842


$
205,889


$
173,877
International


40,069



24,133



117,045



64,676
Total net sales:

$
111,780


$
89,975


$
322,934


$
238,553


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






For the Nine Months Ended September 30,



2018


2017

Cash flows from operating activities:








Net income

$
16,659


$
11,962

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








Depreciation and amortization of fixed and intangible assets


14,233



12,358

Amortization of other long term assets


3,630



3,995

Amortization of discounted liabilities


314



20

Stock-based compensation


4,235



3,585

(Decrease) increase in deferred income taxes


(34
)


6

Loss from equity method investments


1,051



226

Changes in assets and liabilities associated with operations:








Increase in net receivables


(24,382
)


(15,746
)
Increase in inventories


(39,305
)


(2,213
)
Increase in prepaid expenses and other assets


(959
)


(3,678
)
Increase (decrease) in income tax receivable/payable, net


2,069



(12,137
)
Increase in accounts payable


5,711



4,556

Decrease in deferred revenue


(13,965
)


(3,848
)
Increase in accrued program costs


22,882



22,720

Decrease in other payables and accrued expenses


(7,229
)


(3,562
)
Net cash (used) provided by operating activities


(15,090
)


18,244

Cash flows from investing activities:








Capital expenditures


(5,154
)


(5,333
)
Investments


–



(950
)
Acquisition of product lines and other intangible assets


(1,634
)


(25,904
)
Net cash used in investing activities


(6,788
)


(32,187
)
Cash flows from financing activities:








Payments under line of credit agreement


(71,125
)


(59,025
)
Borrowings under line of credit agreement


90,800



76,000

Payments on other long-term liabilities


–



(26
)
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)


1,731



(820
)
Payment of cash dividends


(1,611
)


(1,161
)
Net cash provided by financing activities


19,795



14,968

Net (decrease) increase in cash and cash equivalents


(2,083
)


1,025

Effect of exchange rate changes on cash and cash equivalents


114



151

Cash and cash equivalents at beginning of period


11,337



7,869

Cash and cash equivalents at end of period

$
9,368


$
9,045


UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA For the three and nine months ended September 30, 2018 and September 30, 2017 (Unaudited)








For the Three Months Ended Sept 30,


For the Nine Months Ended Sept 30,


2018


2017


2018


2017
Net income attributable to American Vanguard, as reported

$
6,525


$
4,089


$
16,779


$
11,845
Provision for income taxes


3,526



1,954



6,966



5,015
Interest expense, net


1,116



375



2,961



1,073
Depreciation and amortization


6,034



5,482



17,863



16,353
EBITDA³

$
17,201


$
11,900


$
44,569


$
34,286

_______________

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/20181105005936/en/

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

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

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