2017 Product and Business Acquisitions Drive
Growth
American Vanguard Corporation (NYSE:AVD), today announced
financial results for the second quarter and 6-month period that
ended June 30, 2018.
Financial Highlights: 2018 Second Quarter – versus 2017
Second Quarter
- Net sales of $107.0 million in 2018,
compared with $77.9 million in 2017
- Net income of $5.6 million in 2018,
compared with $4.3 million in 2017
- EBITDA1 of $14.0 million in 2018,
compared to $11.9 million in 2017
- Earnings per diluted share of $0.19 in
2018, compared with $0.15 in 2017
Financial Highlights: First 6-Months of 2018 – versus First
6-Months of 2017
- Net sales of $211.2 million in 2018,
compared to $148.6 million in 2017
- Net income of $10.3 million in 2018,
compared to $7.8 million in 2017
- EBITDA1 of $27.3 million in 2018,
compared to $22.4 million in 2017
- Earnings per diluted share of $0.34 in
2018, compared to $0.26 in 2017
Eric Wintemute, Chairman and CEO of American Vanguard commented,
“Our overall financial performance for this year’s second quarter
and first half improved at both the top and bottom lines. Quarterly
net sales rose 37%, and first-half net sales rose 42% due, in both
periods, to the addition of new product lines from acquisitions
that we completed in 2017. Net sales of pre-existing product lines
were mixed during both periods. For example, while we recorded
stronger sales from soil fumigants, bromacil (for high value
fruits), Folex (for cotton), Impact herbicide (for corn) and
Dacthal herbicide (for fruits and vegetables), we saw decreases in
net sales of Bidrin (in light of high channel inventory and reduced
pest pressure), Aztec® corn soil insecticide and Thimet (in light
of reduced peanut acres).”
Mr. Wintemute continued, “Our manufacturing performance during
the quarter was one of the best in recent history with factory
activity fully absorbing manufacturing costs and yielding a net
benefit during the period. We achieved a gross margin percentage of
40% in both the second quarter and first half of 2018, due to
higher volume sales of lower margin, newly-acquired products.
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 acquisition liabilities.
Throughout the course of 2018, we have continued to integrate
newly-acquired businesses, launch new products, maintain the
regulatory defense of important products, and advance the
development of our SIMPAS precision application technology. With
modest interest expense and a reduced tax rate, our net income
increased by 30% for the quarter and 32% for the first half. Also
EBITDA2 increased during the quarter and half-year by 17% and 22%,
respectively.”
Mr. Wintemute concluded, “During the balance of 2018, we
anticipate strong performance from a number of key components of
our business, including seasonally higher sales of soil fumigants
and our cotton defoliant Folex. Also, our Central American region
and non-crop business are both primed to deliver improved sales in
next two quarters. Further, we anticipate continued demand for our
products in fruit and vegetables, strong sales of our Dibrom®
mosquito adulticide and stable demand for our corn products leading
into the 2019 spring planting season. Taken together, these factors
should enable us to generate annual net sales within the range of
$450 - $470 million for 2018 with little or no change in gross
margin. 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, August 6, 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 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.
______________________________
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 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
June 30,2018
Dec. 31,2017
Current assets: Cash and cash equivalents $ 7,099 $ 11,337
Receivables: Trade, net of allowance for doubtful accounts of $259
and $46, respectively 94,933 102,534 Other 12,011
7,071 Total receivables, net 106,944 109,605 Inventories 163,180
123,124 Prepaid expenses 11,290 10,817 Total current
assets 288,513 254,883 Property, plant and equipment, net 48,399
49,321 Intangible assets, net of applicable amortization 177,512
180,950 Goodwill 21,837 22,184 Other assets 25,753
28,254 Total assets $ 562,014 $ 535,592
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Current installments
of other liabilities $ 3,534 $ 5,395 Accounts payable 64,842 53,748
Deferred revenue 7,320 14,574 Accrued Program costs 54,093 39,054
Accrued expenses and other payables 9,786 12,061 Income taxes
payable 1,085 1,370 Total current liabilities 140,660
126,202 Long-term debt, net of deferred loan fees 74,258 77,486
Other liabilities, excluding current installments 9,641 10,306
Deferred income tax liabilities 17,224 16,284 Total
liabilities 241,783 230,278 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
32,743,504 shares at June 30, 2018 and
32,241,866 shares at December 31, 2017
3,275 3,225 Additional paid-in capital 79,721 75,658 Accumulated
other comprehensive loss (4,733 ) (4,507 ) Retained earnings
250,068 238,953 328,331 313,329
Less treasury stock at cost, 2,450,634
shares at June 30, 2018 and December 31, 2017
(8,269 ) (8,269 ) American Vanguard Corporation
stockholders’ equity 320,062 305,060 Non-controlling interest
169 254 Total stockholders’ equity 320,231
305,314 Total liabilities and stockholders' equity $ 562,014
$ 535,592
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,
2018 2017 2018
2017 Net sales $ 107,046 $ 77,905 $ 211,154 $ 148,578 Cost
of sales 63,749 43,570 126,806 84,159
Gross profit 43,297 34,335 84,348 64,419 Operating expenses
34,718 27,654 68,418 52,605 Operating income
8,579 6,681 15,930 11,814 Interest expense, net 966
400 1,803 698
Income before provision for income taxes
and loss on equity method investments
7,613 6,281 14,127 11,116 Income tax expense 1,748
1,681 3,440 3,061 Income before loss on equity method
investments 5,865 4,600 10,687 8,055 Loss from equity method
investments 301 69 518 111 Net income
5,564 4,531 10,169 7,944 Net loss (income) attributable to
non-controlling interest 35 (227 ) 85
(188 ) Net income attributable to American Vanguard $ 5,599 $ 4,304
$ 10,254 $ 7,756 Earnings per common share—basic $ .19 $ .15 $ .35
$ .27 Earnings per common share—assuming dilution $ .19 $ .15 $ .34
$ .26 Weighted average shares outstanding—basic 29,330
29,050 29,309 28,999 Weighted average shares
outstanding—assuming dilution 30,190 29,605
30,113 29,561
ANALYSIS OF SALES For
the three and six months ended June 30, 2018 and 2017 (In
thousands) (Unaudited)
Three Months EndedJune
30,
Six Months EndedJune 30,
2018 2017 2018
2017 Net sales: Crop: Insecticides $ 32,665 $ 39,442 $
73,958 $ 77,384 Herbicides/soil fumigants/fungicides 31,401 16,045
63,586 36,066 Other, including plant growth regulators
30,377 10,096 48,217 13,488 Total crop: 94,443
65,583 185,761 126,938 Non-crop 12,603 12,322
25,393 21,640 Total net sales: $ 107,046 $ 77,905 $ 211,154
$ 148,578 Net sales: US $ 64,363 $ 55,760 $ 134,178 $ 108,004
International 42,683 22,145 76,976
40,574 Total net sales: $ 107,046 $ 77,905 $ 211,154 $ 148,578
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) For the Six Months
Ended June 30, 2018 2017 Cash flows from
operating activities: Net income $ 10,169 $ 7,944
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of fixed and intangible assets 9,516
8,094 Amortization of other long term assets 2,313 2,777
Amortization of discounted liabilities 202 13 Stock-based
compensation 2,778 2,322 Change in deferred income taxes (26 ) 7
Loss from equity method investments 518 111 Changes in assets and
liabilities associated with operations: Decrease in net receivables
5,478 20,749 Increase in inventories (40,194 ) (5,506 ) Increase in
prepaid expenses and other assets (707 ) (2,658 ) (Increase) in
income tax receivable/payable, net (271 ) (12,752 ) Increase in
accounts payable 11,309 579 Decrease in deferred revenue (7,254 )
(2,126 ) Increase in accrued Program costs 15,039 18,819 Decrease
in other payables and accrued expenses (5,151 )
(4,256 ) Net cash provided by operating activities 3,719
34,117 Cash flows from investing activities: Capital
expenditures (3,230 ) (4,155 ) Investment — (950 ) Acquisition of
other intangible assets and businesses (1,631 )
(13,400 ) Net cash used in investing activities (4,861 )
(18,505 ) Cash flows from financing activities: Payments
under line of credit agreement (62,125 ) (59,025 ) Borrowings under
line of credit agreement 58,800 45,000 Payments on other long-term
liabilities — (26 )
Net receipts from the issuance of common
stock (sale of stock under ESPP, exercise of stock options, and
shares purchased for tax withholding)
1,335 (1,214 ) Payment of cash dividends (1,024 )
(724 ) Net cash used by financing activities (3,014 )
(15,989 ) Net decrease in cash and cash equivalents (4,156 ) (377 )
Effect of exchange rate changes on cash and cash equivalents (82 )
105 Cash and cash equivalents at beginning of period 11,337
7,869 Cash and cash equivalents at end of period $ 7,099 $
7,597
Unaudited Reconciliation of Net Income to
EBITDA For the three and six months ended June 30, 2018 and
June 30, 2017 (Unaudited)
For the Three MonthsEnded June
30,
For the Six MonthsEnded June
30,
2018 2017 2018
2017 Net income attributable to American Vanguard, as
reported $ 5,599 $ 4,304 $ 10,254 $ 7,756 Provision for income
taxes 1,748 1,681 3,440 3,061 Interest expense, net 966 400 1,803
698 Depreciation and amortization 5,683 5,509
11,829 10,871
EBITDA3
$ 13,996 $ 11,894 $ 27,326 $ 22,386
______________________________
3 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/20180806005534/en/
American Vanguard CorporationWilliam A. Kuser, Director of
Investor Relations(949)
260-1200williamk@amvac-chemical.comorInvestor
RepresentativeThe Equity Group Inc.www.theequitygroup.comLena
Cati (212) 836-9611Lcati@equityny.com
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