American Vanguard Corporation (NYSE:AVD), today announced financial results for the quarter and half-year ended June 30, 2019.
Financial Highlights Fiscal 2019 Second Quarter – versus Fiscal 2018 Second Quarter
- Net sales of $113 million in 2019, compared with $107 million in 2018
- Net income of $3.1 million in 2019, compared with $5.6 million in 2018
- Earnings per diluted share of $0.11 in 2019, compared with $0.19 in 2018
- EBITDA1 of $11.9 million in 2019, compared with $14 million in 2018
Financial Highlights Fiscal 2019 First Six Months – versus Fiscal 2018 First Six Months
- Net sales of $213 million in 2019, compared with $211 million in 2018
- Net income of $7 million in 2019, compared with $10.25 million in 2018
- Earnings per diluted share of $0.24 in 2019, compared with $0.34 in 2018
- EBITDA of $24.5 million in 2019, compared to $27.3 million in 2018
Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our overall financial performance in this year’s second quarter and first half was significantly affected by widespread unfavorable weather in the U.S. Persistent cold and rainfall had a negative influence on our U.S. crop business particularly in both the Midwest and Southeastern regions, where there were planting delays, several million unplanted acres and sluggish crop protection procurement. By contrast, both our domestic non-crop and international businesses posted double-digit growth allowing us to record a 6% quarterly net sales increase over the prior year.”
Mr. Wintemute continued, “Our second quarter gross profit margin was 37% (versus 40% in 2Q2018) as we began moderating manufacturing output in order to achieve significant second-half inventory reductions. As you may recall, recent inventory levels have been driven largely by both the need to stock products in newly acquired businesses and the expedited purchase of goods from China to minimize tariffs. We expect that through inventory reduction and operating performance during the second half, we will be able to reduce debt by $50 million by year end.”
Mr. Wintemute concluded, “As indicated in our earlier announcement, in the second half of the year, we expect solid performance from our soil fumigants, cotton harvest products and the Central and South American businesses. We reiterate our full-year 2019 guidance of approximately $500 million in net sales; gross profit margins around 38%; operating expenses near $155 million; interest expense at $8 million; and a comprehensive tax of 26%. Given the probable reduction of 2019 U.S. harvest results and reduced levels of our products in channel inventory, the domestic market may be poised for a rebound in 2020. We look forward to providing investors with additional information during our earning conference 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 Tuesday, August 6, 2019. 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.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except share data) | ||||||||
(Unaudited) | ||||||||
ASSETS | June 30,
| December 31,
| ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,307 | $ | 6,168 | ||||
Receivables: | ||||||||
Trade, net of allowance for doubtful accounts of $1,707 and $1,263, respectively | 118,351 | 123,320 | ||||||
Other | 12,679 | 10,709 | ||||||
Total receivables, net | 131,030 | 134,029 | ||||||
Inventories, net | 193,393 | 159,895 | ||||||
Prepaid expenses | 11,717 | 10,096 | ||||||
Income taxes receivable | 445 | — | ||||||
Total current assets | 342,892 | 310,188 | ||||||
Property, plant and equipment, net | 53,637 | 49,252 | ||||||
Operating lease right-of-use assets | 12,420 | — | ||||||
Intangible assets, net of amortization | 194,337 | 186,583 | ||||||
Goodwill | 39,436 | 25,790 | ||||||
Other assets | 23,087 | 21,774 | ||||||
Total assets | $ | 665,809 | $ | 593,587 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current installments of other liabilities | $ | 1,320 | $ | 1,609 | ||||
Accounts payable | 62,220 | 66,535 | ||||||
Deferred revenue | 751 | 20,043 | ||||||
Accrued program costs | 49,172 | 37,349 | ||||||
Accrued expenses and other payables | 11,085 | 15,962 | ||||||
Operating lease liabilities, current | 4,749 | — | ||||||
Income taxes payable | — | 4,030 | ||||||
Total current liabilities | 129,297 | 145,528 | ||||||
Long-term debt, net of deferred loan fees | 164,574 | 96,671 | ||||||
Operating lease liabilities, long-term | 7,744 | — | ||||||
Other liabilities, excluding current installments | 10,982 | 6,795 | ||||||
Deferred income tax liabilities | 19,364 | 15,363 | ||||||
Total liabilities | 331,961 | 264,357 | ||||||
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 33,204,191 shares at June 30, 2019 and 32,752,827 shares at December 31, 2018 | 3,321 | 3,276 | ||||||
Additional paid-in capital | 85,614 | 83,177 | ||||||
Accumulated other comprehensive loss | (5,619 | ) | (4,507 | ) | ||||
Retained earnings | 268,692 | 262,840 | ||||||
352,008 | 344,786 | |||||||
Less treasury stock at cost, 3,061,040 shares at June 30, 2019 and 2,902,992 shares at December 31, 2018 | (18,160 | ) | (15,556 | ) | ||||
Total stockholders’ equity | 333,848 | 329,230 | ||||||
Total liabilities and stockholders' equity | $ | 665,809 | $ | 593,587 | ||||
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
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 113,104 | $ | 107,046 | $ | 212,780 | $ | 211,154 | |||||||
Cost of sales | 71,451 | 63,749 | 129,425 | 126,806 | |||||||||||
Gross profit | 41,653 | 43,297 | 83,355 | 84,348 | |||||||||||
Operating expenses | 35,362 | 34,718 | 70,162 | 68,418 | |||||||||||
Operating income | 6,291 | 8,579 | 13,193 | 15,930 | |||||||||||
Interest expense, net | 1,925 | 966 | 3,537 | 1,803 | |||||||||||
Income before provision for income taxes and loss on equity method investments | 4,366 | 7,613 | 9,656 | 14,127 | |||||||||||
Income tax expense | 1,224 | 1,748 | 2,584 | 3,440 | |||||||||||
Income before loss on equity method investments | 3,142 | 5,865 | 7,072 | 10,687 | |||||||||||
Loss from equity method investments | 36 | 301 | 60 | 518 | |||||||||||
Net income | 3,106 | 5,564 | 7,012 | 10,169 | |||||||||||
Net income attributable to non-controlling interest | — | 35 | — | 85 | |||||||||||
Net income attributable to American Vanguard | $ | 3,106 | $ | 5,599 | $ | 7,012 | $ | 10,254 | |||||||
Earnings per common share—basic | $ | .11 | $ | .19 | $ | .24 | $ | .35 | |||||||
Earnings per common share—assuming dilution | $ | .11 | $ | .19 | $ | .24 | $ | .34 | |||||||
Weighted average shares outstanding—basic | 29,001 | 29,330 | 28,989 | 29,309 | |||||||||||
Weighted average shares outstanding—assuming dilution | 29,540 | 30,190 | 29,560 | 30,113 | |||||||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | ||||||||||||||||
ANALYSIS OF SALES | ||||||||||||||||
For the three months and six months ended June 30, 2019 and 2018 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the three months ended
| ||||||||||||||||
2019 | 2018 | Change | %
| |||||||||||||
Net sales: | ||||||||||||||||
US crop | $ | 47,311 | $ | 51,760 | $ | (4,449 | ) | -9 | % | |||||||
US non-crop | 17,219 | 12,603 | 4,616 | 37 | % | |||||||||||
US total | 64,530 | 64,363 | 167 | 0 | % | |||||||||||
International | 48,574 | 42,683 | 5,891 | 14 | % | |||||||||||
Net sales: | $ | 113,104 | $ | 107,046 | $ | 6,058 | 6 | % | ||||||||
Gross profit: | ||||||||||||||||
US crop | $ | 18,719 | $ | 26,222 | $ | (7,503 | ) | -29 | % | |||||||
US non-crop | 8,558 | 6,352 | 2,206 | 35 | % | |||||||||||
US total | 27,277 | 32,574 | (5,297 | ) | -16 | % | ||||||||||
International | 14,376 | 10,723 | 3,653 | 34 | % | |||||||||||
Total gross profit: | $ | 41,653 | $ | 43,297 | $ | (1,644 | ) | -4 | % | |||||||
For the six months ended
| ||||||||||||||||
2019 | 2018 | Change | %
| |||||||||||||
Net sales: | ||||||||||||||||
US crop | $ | 96,560 | $ | 108,785 | $ | (12,225 | ) | -11 | % | |||||||
US non-crop | 29,507 | 25,393 | 4,114 | 16 | % | |||||||||||
US total | 126,067 | 134,178 | (8,111 | ) | -6 | % | ||||||||||
International | 86,713 | 76,976 | 9,737 | 13 | % | |||||||||||
Net sales: | $ | 212,780 | $ | 211,154 | $ | 1,626 | 1 | % | ||||||||
Gross profit: | ||||||||||||||||
US crop | $ | 42,214 | $ | 50,753 | $ | (8,539 | ) | -17 | % | |||||||
US non-crop | 14,872 | 12,432 | 2,440 | 20 | % | |||||||||||
US total | 57,086 | 63,185 | (6,099 | ) | -10 | % | ||||||||||
International | 26,269 | 21,163 | 5,106 | 24 | % | |||||||||||
Total gross profit: | $ | 83,355 | $ | 84,348 | $ | (993 | ) | -1 | % | |||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
For the Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,012 | $ | 10,169 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization of property, plant and equipment and intangible assets | 9,233 | 9,516 | ||||||
Amortization of other long term assets | 2,146 | 2,313 | ||||||
Amortization of discounted liabilities | — | 202 | ||||||
Provision for bad debts | 445 | 181 | ||||||
Revision of deferred compensation | (2,888 | ) | (1,468 | ) | ||||
Stock-based compensation | 2,995 | 2,778 | ||||||
Change in deferred income taxes | (572 | ) | (26 | ) | ||||
Loss from equity method investments | 60 | 518 | ||||||
Changes in assets and liabilities associated with operations: | ||||||||
Decrease in net receivables | 7,841 | 5,297 | ||||||
Increase in inventories | (27,635 | ) | (40,194 | ) | ||||
Increase in prepaid expenses and other assets | (1,844 | ) | (707 | ) | ||||
Increase in net operating lease liability | 73 | — | ||||||
Increase in income tax receivable/payable, net | (4,480 | ) | (271 | ) | ||||
(Decrease) increase in accounts payable | (10,138 | ) | 11,309 | |||||
Decrease in deferred revenue | (19,438 | ) | (7,254 | ) | ||||
Increase in accrued program costs | 11,823 | 15,039 | ||||||
Decrease in other payables and accrued expenses | (6,719 | ) | (3,683 | ) | ||||
Net cash (used in) provided by operating activities | (32,086 | ) | 3,719 | |||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (7,216 | ) | (3,230 | ) | ||||
Acquisition of business, product lines, and intangible assets | (24,302 | ) | (1,631 | ) | ||||
Net cash used in investing activities | (31,518 | ) | (4,861 | ) | ||||
Cash flows from financing activities: | ||||||||
Payments under line of credit agreement | (54,200 | ) | (62,125 | ) | ||||
Borrowings under line of credit agreement | 122,000 | 58,800 | ||||||
Net (payments) receipts from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding) | (513 | ) | 1,335 | |||||
Repurchase of common stock | (2,604 | ) | — | |||||
Payment of cash dividends | (1,160 | ) | (1,024 | ) | ||||
Net cash provided by (used in) financing activities | 63,523 | (3,014 | ) | |||||
Net decrease in cash and cash equivalents | (81 | ) | (4,156 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 220 | (82 | ) | |||||
Cash and cash equivalents at beginning of period | 6,168 | 11,337 | ||||||
Cash and cash equivalents at end of period | $ | 6,307 | $ | 7,099 | ||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | |||||||||||||||
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA | |||||||||||||||
For the three months and six months ended June 30, 2019 and 2018 | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months
| Six Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributable to American Vanguard, as reported | $ | 3,106 | $ | 5,599 | $ | 7,012 | $ | 10,254 | |||||||
Provision for income taxes | 1,224 | 1,748 | 2,584 | 3,440 | |||||||||||
Interest expense, net | 1,925 | 966 | 3,537 | 1,803 | |||||||||||
Depreciation and amortization | 5,688 | 5,683 | 11,379 | 11,829 | |||||||||||
EBITDA2 | $ | 11,943 | $ | 13,996 | $ | 24,512 | $ | 27,326 | |||||||
___________________________
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. 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 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.
2 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/20190806005948/en/
Contacts:
American Vanguard Corporation
William A. Kuser, Director of Investor Relations
(949) 260-1200
williamk@amvac-chemical.com
