American Vanguard Corporation (NYSE:AVD) announced financial results for
the second quarter and six month period ended June 30, 2014.
Fiscal 2014 Second Quarter Financial Highlights – versus Fiscal 2013
Second Quarter:
-
Net sales of $68.3 million, compared with $86.8 million
-
Net income of $0.1 million, compared with $8.4 million
-
Earnings per diluted share were $0.01, compared with $0.29
Fiscal 2014 First Half Financial Highlights – versus Fiscal 2013
First Half
-
Net sales of $149.4 million, compared with $208.3 million
-
Net income of $2.3 million, compared with $25.3 million
-
Earnings per diluted share were $0.08, compared with $0.88
Note: Complete details are available in the financial schedules attached
to this press release
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “As we
previously reported, surplus inventory of corn products in the
agriculture distribution channel resulted in significantly lower
re-stocking procurement from manufacturers this season. Additionally, as
we indicated, reduced production of these products in our manufacturing
facilities has resulted in increased unabsorbed fixed factory costs
which have negatively impacted profitability for the quarter and year to
date.”
Mr. Wintemute concluded: “We believe that channel inventories have been
reduced significantly this spring and that more normal purchasing
patterns are likely to resume for the 2015 season which should start
later this year and into the pre-planting months of 2015. 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. We look forward to providing additional color on
business and financial conditions in our earnings call later today.”
Conference Call
Eric Wintemute, Chairman & CEO and David Johnson, VP & CFO, will conduct
a conference call focusing on the financial results at 4:30 pm ET / 1:30
pm PT on Thursday, July 31, 2014. 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 as well as the S&P Small Cap 600 Index.
To learn more about American Vanguard, please reference the Company’s
web site at www.amvac-chemical.com.
The Company, from time to time, may discuss forward-looking information.
Except for the historical information contained in the conference call
referenced 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.
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
For the three months
ended June 30
|
|
|
For the six months
ended June 30
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Net sales
|
|
|
|
|
$
|
68,313
|
|
|
|
$
|
86,761
|
|
|
|
$
|
149,408
|
|
|
|
$
|
208,298
|
|
|
Cost of sales
|
|
|
|
|
|
42,253
|
|
|
|
|
44,695
|
|
|
|
|
94,443
|
|
|
|
|
112,451
|
|
|
Gross profit
|
|
|
|
|
|
26,060
|
|
|
|
|
42,066
|
|
|
|
|
54,965
|
|
|
|
|
95,847
|
|
|
Operating expenses
|
|
|
|
|
|
25,337
|
|
|
|
|
29,169
|
|
|
|
|
50,280
|
|
|
|
|
56,798
|
|
|
Operating income
|
|
|
|
|
|
723
|
|
|
|
|
12,897
|
|
|
|
|
4,685
|
|
|
|
|
39,049
|
|
|
Interest expense
|
|
|
|
|
|
857
|
|
|
|
|
701
|
|
|
|
|
1,488
|
|
|
|
|
1,248
|
|
|
Less interest capitalized
|
|
|
|
|
|
(13
|
)
|
|
|
|
(31
|
)
|
|
|
|
(31
|
)
|
|
|
|
(225
|
)
|
|
(Loss) income before income taxes and loss on equity investment
|
|
|
|
|
|
(121
|
)
|
|
|
|
12,227
|
|
|
|
|
3,228
|
|
|
|
|
38,026
|
|
|
Income taxes (benefit) expense
|
|
|
|
|
|
(160
|
)
|
|
|
|
3,961
|
|
|
|
|
856
|
|
|
|
|
12,941
|
|
|
Income before loss on equity investment
|
|
|
|
|
|
39
|
|
|
|
|
8,266
|
|
|
|
|
2,372
|
|
|
|
|
25,085
|
|
|
Deduct net loss from equity method investment
|
|
|
|
|
|
(68
|
)
|
|
|
|
—
|
|
|
|
|
(396
|
)
|
|
|
|
—
|
|
|
Net (loss) income
|
|
|
|
|
|
(29
|
)
|
|
|
|
8,266
|
|
|
|
|
1,976
|
|
|
|
|
25,085
|
|
|
Add back net loss attributable to non-controlling interest
|
|
|
|
|
|
174
|
|
|
|
|
120
|
|
|
|
|
328
|
|
|
|
|
216
|
|
|
Net income attributable to American Vanguard Corporation
|
|
|
|
|
|
145
|
|
|
|
|
8,386
|
|
|
|
|
2,304
|
|
|
|
|
25,301
|
|
|
Change in fair value of interest rate swaps
|
|
|
|
|
|
145
|
|
|
|
|
174
|
|
|
|
|
281
|
|
|
|
|
352
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
92
|
|
|
|
|
(476
|
)
|
|
|
|
143
|
|
|
|
|
(69
|
)
|
|
Comprehensive income
|
|
|
|
|
$
|
382
|
|
|
|
$
|
8,084
|
|
|
|
$
|
2,728
|
|
|
|
$
|
25,584
|
|
|
Earnings per common share—basic
|
|
|
|
|
$
|
.01
|
|
|
|
$
|
.29
|
|
|
|
$
|
.08
|
|
|
|
$
|
.89
|
|
|
Earnings per common share—assuming dilution
|
|
|
|
|
$
|
.01
|
|
|
|
$
|
.29
|
|
|
|
$
|
.08
|
|
|
|
$
|
.88
|
|
|
Weighted average shares outstanding—basic
|
|
|
|
|
|
28,408
|
|
|
|
|
28,295
|
|
|
|
|
28,404
|
|
|
|
|
28,280
|
|
|
Weighted average shares outstanding—assuming dilution
|
|
|
|
|
|
28,795
|
|
|
|
|
28,886
|
|
|
|
|
28,877
|
|
|
|
|
28,884
|
|
|
|
|
|
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
Dec. 31,
2013
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
4,189
|
|
|
|
$
|
6,680
|
|
|
Receivables:
|
|
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $414 and $392,
respectively
|
|
|
|
|
|
73,239
|
|
|
|
|
74,060
|
|
|
Other
|
|
|
|
|
|
2,738
|
|
|
|
|
892
|
|
|
Total receivables
|
|
|
|
|
|
75,977
|
|
|
|
|
74,952
|
|
|
Inventories
|
|
|
|
|
|
175,240
|
|
|
|
|
139,830
|
|
|
Prepaid expenses
|
|
|
|
|
|
14,049
|
|
|
|
|
11,435
|
|
|
Income taxes receivable
|
|
|
|
|
|
10,230
|
|
|
|
|
10,088
|
|
|
Deferred income tax assets
|
|
|
|
|
|
6,521
|
|
|
|
|
6,521
|
|
|
Total current assets
|
|
|
|
|
|
286,206
|
|
|
|
|
249,506
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
51,621
|
|
|
|
|
52,468
|
|
|
Intangible assets, net of applicable amortization
|
|
|
|
|
|
103,865
|
|
|
|
|
107,007
|
|
|
Other assets
|
|
|
|
|
|
37,750
|
|
|
|
|
38,462
|
|
|
|
|
|
|
|
$
|
479,442
|
|
|
|
$
|
447,443
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
|
|
|
|
$
|
70
|
|
|
|
$
|
69
|
|
|
Current installments of other liabilities
|
|
|
|
|
|
1,440
|
|
|
|
|
2,132
|
|
|
Accounts payable
|
|
|
|
|
|
23,900
|
|
|
|
|
40,702
|
|
|
Deferred revenue
|
|
|
|
|
|
1,512
|
|
|
|
|
3,788
|
|
|
Accrued program costs
|
|
|
|
|
|
74,359
|
|
|
|
|
53,630
|
|
|
Accrued expenses and other payables
|
|
|
|
|
|
5,996
|
|
|
|
|
10,178
|
|
|
Total current liabilities
|
|
|
|
|
|
107,277
|
|
|
|
|
110,499
|
|
|
Long-term debt, excluding current installments
|
|
|
|
|
|
86,091
|
|
|
|
|
51,676
|
|
|
Other liabilities, excluding current installments
|
|
|
|
|
|
3,981
|
|
|
|
|
4,143
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
23,002
|
|
|
|
|
23,330
|
|
|
Total liabilities
|
|
|
|
|
|
220,351
|
|
|
|
|
189,648
|
|
|
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
31,528,400 shares at June 30, 2014 and 31,092,782 shares at
December 31, 2013
|
|
|
|
|
|
3,153
|
|
|
|
|
3,109
|
|
|
Additional paid-in capital
|
|
|
|
|
|
63,380
|
|
|
|
|
60,160
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
(624
|
)
|
|
|
|
(1,048
|
)
|
|
Retained earnings
|
|
|
|
|
|
201,937
|
|
|
|
|
202,470
|
|
|
|
|
|
|
|
|
267,846
|
|
|
|
|
264,691
|
|
|
Less treasury stock, at cost, 2,450,634 shares at June 30, 2014
and 2,380,634 shares at
December 31, 2013
|
|
|
|
|
|
(8,269
|
)
|
|
|
|
(6,738
|
)
|
|
American Vanguard Corporation stockholders’ equity
|
|
|
|
|
|
259,577
|
|
|
|
|
257,953
|
|
|
Non-controlling interest
|
|
|
|
|
|
(486
|
)
|
|
|
|
(158
|
)
|
|
Total stockholders’ equity
|
|
|
|
|
|
259,091
|
|
|
|
|
257,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
479,442
|
|
|
|
$
|
447,443
|
|
|
|
|
|
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
|
For The Six Months Ended June 30, 2014 and 2013
(Unaudited)
|
|
|
|
Increase (decrease) in cash
|
|
|
|
|
2014
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
1,976
|
|
|
|
$
|
25,085
|
|
|
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of fixed and intangible assets
|
|
|
|
|
|
7,996
|
|
|
|
|
7,461
|
|
|
Amortization of other long term assets
|
|
|
|
|
|
3,027
|
|
|
|
|
1,802
|
|
|
Amortization of discounted liabilities
|
|
|
|
|
|
175
|
|
|
|
|
86
|
|
|
Stock-based compensation
|
|
|
|
|
|
1,806
|
|
|
|
|
1,747
|
|
|
Tax benefit from exercise of stock options
|
|
|
|
|
|
(262
|
)
|
|
|
|
(57
|
)
|
|
Loss from equity method investment
|
|
|
|
|
|
396
|
|
|
|
|
—
|
|
|
Gain on dilution of equity method investment
|
|
|
|
|
|
(256
|
)
|
|
|
|
—
|
|
|
Changes in assets and liabilities associated with operations:
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in net receivables
|
|
|
|
|
|
(1,025
|
)
|
|
|
|
8,513
|
|
|
Increase in inventories
|
|
|
|
|
|
(35,410
|
)
|
|
|
|
(39,199
|
)
|
|
Increase in prepaid expenses and other assets
|
|
|
|
|
|
(5,069
|
)
|
|
|
|
(9,837
|
)
|
|
Decrease (increase) in income tax receivable
|
|
|
|
|
|
120
|
|
|
|
|
(1,404
|
)
|
|
Decrease in accounts payable
|
|
|
|
|
|
(16,521
|
)
|
|
|
|
(8,532
|
)
|
|
Decrease in deferred revenue
|
|
|
|
|
|
(2,276
|
)
|
|
|
|
(20,149
|
)
|
|
Increase in other payables and accrued expenses
|
|
|
|
|
|
16,264
|
|
|
|
|
54,529
|
|
|
Net cash (used in) provided by operating activities
|
|
|
|
|
|
(29,059
|
)
|
|
|
|
20,045
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(3,954
|
)
|
|
|
|
(8,360
|
)
|
|
Investment
|
|
|
|
|
|
—
|
|
|
|
|
(3,687
|
)
|
|
Net cash used in investing activities
|
|
|
|
|
|
(3,954
|
)
|
|
|
|
(12,047
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Net borrowings under line of credit agreement
|
|
|
|
|
|
34,450
|
|
|
|
|
40,750
|
|
|
Payments on long-term debt
|
|
|
|
|
|
—
|
|
|
|
|
(46,000
|
)
|
|
Payments on other long-term liabilities
|
|
|
|
|
|
(1,109
|
)
|
|
|
|
(1,238
|
)
|
|
Tax benefit from exercise of stock options
|
|
|
|
|
|
262
|
|
|
|
|
57
|
|
|
Decrease in other notes payable
|
|
|
|
|
|
—
|
|
|
|
|
(6,154
|
)
|
|
Repurchases of common stock
|
|
|
|
|
|
(1,531
|
)
|
|
|
|
—
|
|
|
Payment of cash dividends
|
|
|
|
|
|
(2,836
|
)
|
|
|
|
(1,976
|
)
|
|
Proceeds from the issuance of common stock (sale of stock under
ESPP and exercise of stock
options)
|
|
|
|
|
|
1,196
|
|
|
|
|
527
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
30,432
|
|
|
|
|
(14,034
|
)
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
(2,581
|
)
|
|
|
|
(6,036
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
6,680
|
|
|
|
|
38,476
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
90
|
|
|
|
|
(26
|
)
|
|
Cash and cash equivalents as of the end of the period
|
|
|
|
|
$
|
4,189
|
|
|
|
$
|
32,414
|
|
|
|
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