American Vanguard Corporation (NYSE:AVD) today announced that lower than
normal purchasing of corn inputs and reduced production levels at the
Company’s manufacturing facilities will affect second quarter 2014
financial performance. Net sales for the second quarter of 2014 will be
approximately 21% below those of the comparable period in 2013, and
reported net earnings are expected to be near a break-even level.
As was reported by the Company previously, surplus inventory of corn
products in the agriculture distribution channel has resulted in
significantly lower re-stocking procurement from manufacturers. Many of
American Vanguard’s industry peers have similarly acknowledged reduced
sales of their corn products in 2014 due to this sluggish procurement
pattern.
Eric Wintemute, Chairman and CEO of American Vanguard, stated, “This
downshift in corn input purchasing accounts for our year-over-year
second quarter revenue decline. While we believe the fundamental demand
for AMVAC’s corn products remains solid, some purchases that would have
ordinarily been realized in this year’s second quarter have not
materialized. Additionally, as we have indicated in prior public
disclosures, reduced production of these products in our manufacturing
facilities has resulted in unabsorbed fixed factory costs which
negatively impacts current period profitability.”
Mr. Wintemute continued: “We believe that channel inventories have been
reduced significantly this spring and that more normal purchasing
patterns are likely to resume later this year and into the pre-planting
months of 2015. Our continuing sales of SmartBox closed delivery
equipment suggests that an increasing number of corn growers intend to
use our granular soil insecticides. Additionally, we have introduced the
first of our liquid soil insecticides Xpedient® which broadens our
market penetration and provides an economical solution for acreage that
has lighter soil infestation pressure. Rounding out our offerings for
corn, we continue our co-marketing relationship with Monsanto to
encourage the use of our Impact® post-emergent herbicide to bolster the
efficacy of Monsanto’s Roundup® glyphosate brands.”
Mr. Wintemute concluded: “We continue to expand our solid participation
in other key crops, notably potato, cotton and numerous vegetable &
fruit markets. Our expansion initiatives continue internationally, in
the non-crop segment of our business and with the pursuit of both
existing product acquisitions and new product development. We are
undertaking cost reduction programs to
right-size our manufacturing function with the product demand that we
are forecasting. We have trimmed our operating expenses and will remain
disciplined in our capital expenditures. With the support of our banking
group we have amended our credit agreement to ensure that the company
has sufficient working capital for current operations and future growth.
We expect that our sales revenue will improve from current levels as we
approach the 2015 planting season and rising factory recovery rates
during 2015 should allow our earnings performance to improve.”
Conference Calls
American Vanguard will conduct a conference call to discuss the
subjects highlighted in this press release on Monday, July 21, 2014 at
9:00am ET / 6:00am PT. 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.
The Company also plans to release full second quarter results on July
31, 2014 after the close of the stock market and conduct a conference
call with analysts and investors to discuss those results at 4:30pm ET /
1:30pm PT that afternoon. Interested parties may use the same
dial-in information as above.
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® & Russell 3000® Indexes and the Standard & Poors Small Cap 600
Index. To learn more about American Vanguard, please reference the
Company’s web site at www.american-vanguard.com.
In its public commentary, the Company 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 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 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.
Copyright Business Wire 2014