American Vanguard Reports Second Quarter & Mid-Year 2017 Results
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 Months
Ended June 30,
|
|
|
For the Six Months
Ended 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 Ended
June 30,
|
|
|
Six Months Ended
June 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 Ended
June 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 |
|
|
|
|
|
|
|
American Vanguard Corporation
William A. Kuser, 949-260-1200
Director of Investor Relations
williamk@amvac-chemical.com
or
Investor Representative
The Equity Group Inc.
Lena Cati, 212-836-9611
Lcati@equityny.com
www.theequitygroup.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170731006141/en/