AVD American Vanguard Corporation

Revenues and Earnings Increase

American Vanguard Corporation (NYSE:AVD) today announced financial results for the second quarter and six months ended June 30, 2017.

Second Quarter Financial Highlights

• Net sales were $77.9 million in Q2 2017 compared to $72.7 million in Q2 2016.
• Net income was $4.3 million in Q2 2017 compared to $3.2 million in Q2 2016.
• Earnings per diluted share were $0.15 in Q2 2017 compared to $0.11 in Q2 2016.

Six Months 2017 Financial Highlights

• Net sales were $148.6 million at mid-year 2017 compared to $142.2 million at mid-year 2016.
• Net income was $7.8 million at mid-year 2017 compared to $6.0 million at mid-year 2016.
• Earnings per diluted share were $0.26 at mid-year 2017 compared to $0.21 at mid-year 2016.

Eric Wintemute, Chairman and CEO of American Vanguard, stated, “We are pleased to report revenue increases of 7% for the second quarter and 4% for the first half of the year arising from a solid, diversified base business. Further, by maintaining our focus on manufacturing performance and overall cost control, we generated year-over-year earnings growth of 33% in the second quarter and 28% for the first half of 2017.”

Mr. Wintemute continued, “Our top line performance was driven in part by continued, strong demand for our cotton products in light of a 20% increase in planted acres this year and the anticipation of greater foliar pest pressure. In addition, we experienced solid international sales and growth in our granular soil insecticide products in the quarter and first half, driven by increased demand in domestic corn, peanuts and sugar crops. These gains were partially offset by weather-related declines in soil fumigant sales and competitive pricing pressure in corn herbicides. With respect to profitability, our gross profit margins increased in this year’s second quarter and half year, due primarily to product mix. Further, during the first six months of 2017, we generated $34 million in cash flow which we have used to make product line acquisitions, invest in growth initiatives, develop our international structure and reduce debt by $15 million. Our financial performance and debt reduction have, in turn, increased our borrowing capacity. This positions the Company for further acquisitions that are emerging from the current round of consolidation in the Agriculture Industry. We are looking at a number of these opportunities and will, of course, report to investors as these prospects come to fruition.”

Mr. Wintemute concluded: “Our outlook for the balance of 2017 remains positive, and the various acquisitions that we are pursuing will enable the Company to grow at an accelerated rate should they be consummated. The significant increase in U.S. cotton acreage should provide additional second half sales of our Bidrin® foliar insecticide and Folex® harvest defoliant. We expect modest international growth, our soil fumigant business should rebound this autumn, and in our non-crop business, we expect to see continued demand for our Dibrom® mosquito adulticide. Furthermore, we are pleased to have already recorded sales from the three products that we acquired from Adama in early June and expect that these sales will continue over the balance of 2017. Finally, we continue to manage working capital and operational costs while investing prudently in technology innovation, such as SIMPAS, for future growth. We look forward to giving further comment during our next 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 4:30pm Eastern / 1:30pm Pacific on Monday, July 31, 2017. 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.

  AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) ASSETS    

June 30,2017

   

Dec. 31,2016

Current assets: Cash and cash equivalents $ 7,597 $ 7,869 Receivables: Trade, net of allowance for doubtful accounts of $41 and $42, respectively 63,291 83,777 Other   3,912     3,429   Total receivables, net 67,203 87,206 Inventories 126,865 120,576 Prepaid expenses   12,609     11,424   Total current assets 214,274 227,075 Property, plant and equipment, net 50,383 50,295 Intangible assets, net of applicable amortization 130,806 121,433 Other assets   30,135     31,153   $ 425,598   $ 429,956     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current installments of other liabilities $ 66 $ 26 Accounts payable 25,560 24,358 Deferred revenue 1,722 3,848 Accrued program costs 61,749 42,930 Accrued expenses and other payables 7,988 12,072 Income taxes payable   1,063     13,840   Total current liabilities 98,148 97,074 Long-term debt, net of deferred loan fees 26,348 40,951 Other liabilities, excluding current installments 2,815 2,868 Deferred income tax liabilities   6,713     6,706   Total liabilities   134,024     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

32,212,124 shares at June 30, 2017 and 31,819,695 shares at December 31, 2016

3,222 3,183 Additional paid-in capital 72,768 71,699 Accumulated other comprehensive loss (3,814 ) (4,851 ) Retained earnings   227,312     220,428   299,488 290,459

Less treasury stock at cost, 2,450,634 shares at June 30, 2017 and December 31, 2016

  (8,269 )   (8,269 ) American Vanguard Corporation stockholders’ equity 291,219 282,190 Non-controlling interest   355     167   Total stockholders’ equity   291,574     282,357   $ 425,598   $ 429,956       AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)    

For the Three MonthsEnded June 30,

   

For the Six MonthsEnded June 30,

2017     2016 2017   2016 Net sales $ 77,905 $ 72,724 $ 148,578 $ 142,198 Cost of sales   43,570     41,329     84,159   83,300   Gross profit 34,335 31,395 64,419 58,898 Operating expenses   27,654     26,270     52,605   49,143   Operating income 6,681 5,125 11,814 9,755 Interest expense, net   400     462     698   1,003   Income before provision for income taxes and loss on equity method investment 6,281 4,663 11,116 8,752 Income tax expense   1,681     1,234     3,061   2,294   Income before loss on equity method investment 4,600 3,429 8,055 6,458 Loss from equity method investment   69     47     111   129   Net income 4,531 3,382 7,944 6,329 Income attributable to non-controlling interest   (227 )   (136 )   (188 )   (289 ) Net income attributable to American Vanguard $

4,304

  $ 3,246   $ 7,756 $ 6,040   Earnings per common share—basic

$

.15

 

$

.11

 

$

.27

$

.21

  Earnings per common share—assuming dilution

$

.15

 

$

.11

 

$

.26

$

.21

  Weighted average shares outstanding—basic   29,050     28,893     28,999   28,851   Weighted average shares outstanding—assuming dilution   29,605     29,377     29,561   29,342       ANALYSIS OF SALES For the Three and Six Months Ended June 30, 2017 (In thousands)    

Three Months EndedJune 30,

   

Six Months EndedJune 30,

2017     2016 2017     2016 Net sales: Insecticides $ 39,442 $ 30,912 $ 77,384 $ 64,018 Herbicides/soil fumigants/fungicides 16,045 21,093 36,066 45,767 Other, including plant growth regulators   10,096   6,331   13,488   9,820 Net sales: 65,583 58,336 126,938 119,605 Non-crop   12,322   14,388   21,640   22,593 Total net sales: $ 77,905 $ 72,724 $ 148,578 $ 142,198 Net sales: US $ 55,760 $ 51,773 $ 108,004 $ 101,628 International   22,145   20,951   40,574   40,570 Total net sales: $ 77,905 $ 72,724 $ 148,578 $ 142,198     AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)    

For the Six Months EndedJune 30,

2017   2016 Cash flows from operating activities: Net income $ 7,944 $ 6,329 Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization of fixed and intangible assets 8,094 8,359 Amortization of other long term assets 2,777 2,358 Amortization of discounted liabilities 13 19 Stock-based compensation 2,322 1,068 Excess tax benefit from exercise of stock options — (47 ) Increase in deferred income taxes 7 — Loss from equity method investment 111 129 Changes in assets and liabilities associated with operations: Decrease (increase) in net receivables 20,749 (4,156 ) Increase in inventories (5,506 ) (14,625 ) Increase in prepaid expenses and other assets (2,658 ) (2,661 ) (Increase) decrease in income tax receivable/payable, net (12,752 ) 1,244 Increase in accounts payable 579 9,837 Decrease in deferred revenue (2,126 ) (1,932 ) Increase in program payables 18,819 17,956 (Decrease) increase in other payables and accrued expenses   (4,256 )   1,612   Net cash provided by operating activities   34,117   25,490   Cash flows from investing activities: Capital expenditures (4,155 ) (1,729 ) Investment (950 ) (3,283 ) Acquisition of product lines and other intangible assets   (13,400 )   (224 ) Net cash used in investing activities   (18,505 )   (5,236 ) Cash flows from financing activities: Payments under line of credit agreement (59,025 ) (45,850 ) Borrowings under line of credit agreement 45,000 27,000 Payments on other long-term liabilities (26 ) (457 ) Tax benefit from exercise of stock options — 47 Net payments from the issuance of common stock (sale of stock under ESPP,

exercise of stock options, and shares purchased for tax withholding)

(1,214 ) (195 ) Payment of cash dividends   (724 )   —   Net cash used in by financing activities   (15,989 )   (19,455 ) Net (decrease) increase in cash and cash equivalents (377 ) 799 Effect of exchange rate changes on cash and cash equivalents 105 (524 ) Cash and cash equivalents at beginning of period   7,869   5,524   Cash and cash equivalents at end of period $ 7,597 $ 5,799    

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American Vanguard CorporationWilliam A. Kuser, 949-260-1200Director of Investor Relationswilliamk@amvac-chemical.comorInvestor RepresentativeThe Equity Group Inc.Lena Cati, 212-836-9611Lcati@equityny.comwww.theequitygroup.com