Significant Demand Continues, Gross Margins Increase, Midyear Net Income Doubles, Full Year Performance Targets Reiterated

American Vanguard Corporation (NYSE: AVD) today announced financial results for the second quarter and six months ended June 30, 2022.

Fiscal 2022 Second Quarter Financial Highlights – versus Fiscal 2021 Second Quarter:

  • Net sales were $148 million in 2022, compared to $135 million in 2021
  • Net income was $6.8 million in 2022, compared to $5.1 million in 2021
  • Earnings per diluted share of $0.23 in 2022, compared to $0.17 in 2021
  • Adjusted EBITDA1 of $19.7 million in 2022, compared to $16.5 million in 2021

Fiscal 2022 Mid-Year Financial Highlights – versus Fiscal 2021 Mid-Year:

  • Net sales were $298 million in 2022, compared to $251 million in 2021
  • Net income was $16.8 million in 2022, compared to $8.2 million in 2021
  • Earnings per diluted share of $0.55 in 2022, compared to $0.27 in 2021
  • Adjusted EBITDA1 of $42.5 million in 2022, compared to $30.3 million in 2021

Eric Wintemute, Chairman and CEO of American Vanguard stated: “Conditions within our agricultural markets continue to be favorable with consistently high commodity prices, a strong farm economy and, for US-based companies, a strong US dollar. Having built a portfolio of products that reaches across multiple crops – including corn, soybeans, cotton, potatoes, and high-value fruits and vegetables – we were better able to cross-sell to growers and enjoyed strong demand for our products, both domestically and abroad. Our focused efforts to increase prices and more fully exploit our manufacturing assets enabled us to achieve higher margins despite inflation and supply chain challenges. Within this context, we recorded strong results for the second quarter and first half of 2022, including higher sales and improved profitability.”

Mr. Wintemute continued: “Our second quarter improvement was led by our international business, which generated higher sales of soil fumigants, foliar and soil insecticides, fungicides and micronutrient products across multiple regions. Our domestic crop business enjoyed strong demand for our expanding portfolio of herbicides, partially offset by lower soil fumigant sales due to drought conditions in the West and Southwest, where water allocation has been implemented. During the second quarter of 2022, our U.S. non-crop business experienced relatively steady demand in mosquito control, commercial pest applications and horticulture/ornamental products.”

Mr. Wintemute concluded: “Looking forward, we believe that our Company is situated well in both domestic and international markets and are consequently optimistic, even with weather- and economy-related variables, about meeting or exceeding our previously announced performance targets for FY 2022, including revenue growth between 8% and 11%, gross profit margins of 38-40% of net sales, operating expenses within the range of 31-33% of net sales and a year-over-year net income increase of between 60% and 70%. 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 4:30 pm ET on August 9, 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.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

June 30,

December 31,

 

2022

 

2021

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,057

 

 

$

16,285

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $4,411 and $3,938, respectively

 

 

165,711

 

 

 

149,326

 

Other

 

 

13,208

 

 

 

9,595

 

Total receivables, net

 

 

178,919

 

 

 

158,921

 

Inventories

 

 

182,203

 

 

 

154,306

 

Prepaid expenses

 

 

16,368

 

 

 

12,488

 

Income taxes receivable

 

 

523

 

 

 

 

Total current assets

 

 

400,070

 

 

 

342,000

 

Property, plant and equipment, net

 

 

67,453

 

 

 

66,111

 

Operating lease right-of-use assets

 

 

24,449

 

 

 

25,386

 

Intangible assets, net

 

 

191,560

 

 

 

197,841

 

Goodwill

 

 

46,997

 

 

 

46,260

 

Other assets

 

 

13,099

 

 

 

16,292

 

Deferred income tax assets, net

 

 

16

 

 

 

270

 

Total assets

 

$

743,644

 

 

$

694,160

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

1,367

 

 

$

802

 

Accounts payable

 

 

86,944

 

 

 

67,140

 

Customer prepayments

 

 

272

 

 

 

63,064

 

Accrued program costs

 

 

99,152

 

 

 

63,245

 

Accrued expenses and other payables

 

 

20,180

 

 

 

20,745

 

Income taxes payable

 

 

 

 

 

3,006

 

Current operating lease liabilities

 

 

5,029

 

 

 

5,059

 

Total current liabilities

 

 

212,944

 

 

 

223,061

 

Long-term debt, net

 

 

100,779

 

 

 

52,240

 

Long-term operating lease liabilities

 

 

19,852

 

 

 

20,780

 

Other liabilities, net of current installments

 

 

5,584

 

 

 

5,335

 

Deferred income tax liabilities, net

 

 

19,651

 

 

 

20,006

 

Total liabilities

 

 

358,810

 

 

 

321,422

 

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 34,443,234 shares at June 30, 2022 and 34,248,218 shares at December 31, 2021

 

 

3,445

 

 

 

3,426

 

Additional paid-in capital

 

 

103,456

 

 

 

101,450

 

Accumulated other comprehensive loss

 

 

(12,768

)

 

 

(13,784

)

Retained earnings

 

 

319,672

 

 

 

304,385

 

Less treasury stock at cost, 3,694,050 shares at June 30, 2022

 

 

 

 

 

 

and 3,361,040 shares at

 

December 31, 2021

(28,971

)

(22,739

Total stockholders’ equity

 

 

384,834

 

 

 

372,738

 

Total liabilities and stockholders' equity

 

$

743,644

 

 

$

694,160

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (In thousands, except per share data)

(Unaudited)

 

For the Three Months

For the Six Months

 

Ended June 30,

 

Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

Net sales

 

$

148,084

 

 

$

134,610

 

 

$

297,519

 

 

$

250,765

 

Cost of sales

 

 

(88,305

)

 

 

(82,471

)

 

 

(176,547

)

 

 

(153,495

)

Gross profit

 

 

59,779

 

 

 

52,139

 

 

 

120,972

 

 

 

97,270

 

Operating expenses

 

 

(48,966

)

 

 

(43,080

)

 

 

(95,410

)

 

 

(84,524

)

Adjustment to bargain purchase gain on business acquisition

 

 

 

 

 

(88

)

 

 

 

 

 

(121

)

Operating income

 

 

10,813

 

 

 

8,971

 

 

 

25,562

 

 

 

12,625

 

Change in fair value of an equity investment

 

 

(486

)

 

 

(295

)

 

 

(403

)

 

 

771

 

Other income

 

 

 

 

 

 

 

 

 

 

 

672

 

Interest expense, net

 

 

(772

)

 

 

(1,013

)

 

 

(1,170

)

 

 

(1,959

)

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

 

 

9,555

 

 

 

7,663

 

 

 

23,989

 

 

 

12,109

 

Income tax expense

 

 

(2,725

)

 

 

(2,445

)

 

 

(7,224

)

 

 

(3,807

)

Income before loss on equity method investment

 

 

6,830

 

 

 

5,218

 

 

 

16,765

 

 

 

8,302

 

Loss on equity method investment

 

 

 

 

 

(74

)

 

 

 

 

 

(87

)

Net income

 

$

6,830

 

 

$

5,144

 

 

$

16,765

 

 

$

8,215

 

Earnings per common share—basic

 

$

.23

 

 

$

.17

 

 

$

.57

 

 

$

.28

 

Earnings per common share—assuming dilution

 

$

.23

 

 

$

.17

 

 

$

.55

 

 

$

.27

 

Weighted average shares outstanding—basic

 

 

29,602

 

 

 

29,930

 

 

 

29,639

 

 

 

29,834

 

Weighted average shares outstanding—assuming dilution

 

 

30,225

 

 

 

30,499

 

 

 

30,289

 

 

 

30,511

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands)

(Unaudited)

 

For the three months

 

 

 

ended June 30,

 

 

 

 

 

 

 

 

 

 

2022

 

2021

 

Change

 

% Change

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

63,195

 

 

$

62,575

 

 

$

620

 

 

 

1

%

U.S. non-crop

 

 

21,316

 

 

 

21,488

 

 

 

(172

)

 

 

-1

%

U.S. total

 

 

84,511

 

 

 

84,063

 

 

 

448

 

 

 

1

%

International

 

 

63,573

 

 

 

50,547

 

 

 

13,026

 

 

 

26

%

Net sales:

 

$

148,084

 

 

$

134,610

 

 

$

13,474

 

 

 

10

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

29,753

 

 

$

26,805

 

 

$

2,948

 

 

 

11

%

U.S. non-crop

 

 

10,049

 

 

 

9,782

 

 

 

267

 

 

 

3

%

U.S. total

 

 

39,802

 

 

 

36,587

 

 

 

3,215

 

 

 

9

%

International

 

 

19,977

 

 

 

15,552

 

 

 

4,425

 

 

 

28

%

Total gross profit:

 

$

59,779

 

 

$

52,139

 

 

$

7,640

 

 

 

15

%

For the six months

 

 

 

ended June 30,

 

 

 

 

 

 

 

 

 

 

2022

 

2021

 

Change

 

% Change

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

151,388

 

 

$

117,330

 

 

$

34,058

 

 

 

29

%

U.S. non-crop

 

 

34,712

 

 

 

38,941

 

 

 

(4,229

)

 

 

-11

%

U.S. total

 

 

186,100

 

 

 

156,271

 

 

 

29,829

 

 

 

19

%

International

 

 

111,419

 

 

 

94,494

 

 

 

16,925

 

 

 

18

%

Net sales:

 

$

297,519

 

 

$

250,765

 

 

$

46,754

 

 

 

19

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

70,098

 

 

$

48,076

 

 

$

22,022

 

 

 

46

%

U.S. non-crop

 

 

16,014

 

 

 

19,165

 

 

 

(3,151

)

 

 

-16

%

U.S. total

 

 

86,112

 

 

 

67,241

 

 

 

18,871

 

 

 

28

%

International

 

 

34,860

 

 

 

30,029

 

 

 

4,831

 

 

 

16

%

Total gross profit:

 

$

120,972

 

 

$

97,270

 

 

$

23,702

 

 

 

24

%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

For the Six Months Ended

 

 

June 30,

 

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

16,765

 

 

$

8,215

 

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

 

 

 

 

 

 

 

 

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

 

 

11,004

 

 

 

10,697

 

Amortization of other long-term assets

 

 

1,739

 

 

 

2,044

 

Loss on disposal of property, plant and equipment

 

 

256

 

 

 

 

Accretion of discounted liabilities

 

 

17

 

 

 

(11

)

Amortization of deferred loan fees

 

 

139

 

 

 

162

 

Provision for bad debts

 

 

470

 

 

 

945

 

Loan principal and interest forgiveness

 

 

 

 

 

(672

)

Fair value adjustment to contingent consideration

 

 

635

 

 

 

1,013

 

Stock-based compensation

 

 

2,836

 

 

 

3,598

 

Change in deferred income taxes

 

 

109

 

 

 

(353

)

Change in fair value of an equity investment

 

 

403

 

 

 

(771

)

Loss on equity method investment

 

 

 

 

 

87

 

Adjustment to bargain purchase gain on business acquisition

 

 

 

 

 

121

 

Net foreign currency adjustments

 

 

(20

)

 

 

(145

)

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

 

 

Increase in net receivables

 

 

(18,645

)

 

 

(25,317

)

Increase in inventories

 

 

(27,774

)

 

 

(11,464

)

Increase in prepaid expenses and other assets

 

 

(3,652

)

 

 

(3,696

)

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

 

 

(3,526

)

 

 

1,374

 

(Decrease) in net operating lease liability

 

 

(21

)

 

 

(120

)

Increase in accounts payable

 

 

19,439

 

 

 

6,190

 

Decrease in customer prepayments

 

 

(62,789

)

 

 

(30,407

)

Increase in accrued program costs

 

 

35,987

 

 

 

19,098

 

(Decrease) increase in other payables and accrued expenses

 

 

(602

)

 

 

507

 

Net cash used in operating activities

 

 

(27,230

)

 

 

(18,905

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(5,654

)

 

 

(5,075

)

Proceeds from disposal of property, plant and equipment

 

 

27

 

 

 

 

Acquisition of product line

 

 

 

 

 

(10,000

)

Intangible assets

 

 

(1,044

)

 

 

(241

)

Investments

 

 

 

 

 

(184

)

Net cash used in investing activities

 

 

(6,671

)

 

 

(15,500

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(56,600

)

 

 

(24,226

)

Borrowings under line of credit agreement

 

 

105,000

 

 

 

66,000

 

Payment of contingent consideration

 

 

 

 

 

(250

)

Net receipt from the issuance of common stock under ESPP

 

 

436

 

 

 

340

 

Net receipt from the exercise of stock options

 

 

765

 

 

 

167

 

Payment for tax withholding on stock-based compensation awards

 

 

(2,012

)

 

 

(2,900

)

Repurchase of common stock

 

 

(6,232

)

 

 

 

Payment of cash dividends

 

 

(1,330

)

 

 

(1,188

)

Net cash provided by financing activities

 

 

40,027

 

 

 

37,943

 

Net increase in cash and cash equivalents

 

 

6,126

 

 

 

3,538

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(354

)

 

 

98

 

Cash and cash equivalents at beginning of period

 

 

16,285

 

 

 

15,923

 

Cash and cash equivalents at end of period

 

$

22,057

 

 

$

19,559

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited)

 

Three Months Ended

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income, as reported

 

$

6,830

 

 

$

5,144

 

 

$

16,765

 

 

$

8,215

 

Provision for income taxes

 

 

2,725

 

 

 

2,445

 

 

 

7,224

 

 

 

3,807

 

Interest expense, net

 

 

772

 

 

 

1,013

 

 

 

1,170

 

 

 

1,959

 

Depreciation and amortization

 

 

6,271

 

 

 

6,138

 

 

 

12,743

 

 

 

12,741

 

Stock compensation

 

 

1,273

 

 

 

1,806

 

 

 

2,836

 

 

 

3,598

 

Proxy contest activities

 

 

1,785

 

 

 

 

 

 

1,785

 

 

 

 

Adjusted EBITDA2

 

$

19,656

 

 

$

16,546

 

 

$

42,523

 

 

$

30,320

 

1 Adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock compensation, and proxy contest activities. 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 (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 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, amortization, non-cash stock compensation, and proxy contest activities. 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 (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. We provide these measures because we believe that they provide helpful comparisons to other companies in our industry and peer group. 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.

Company 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

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