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12.03.2018 21:05:00
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American Vanguard Reports Fourth Quarter & Full Year 2017 Results
American Vanguard Corporation (NYSE:AVD) today announced financial results for the fourth quarter and full year ended December 31, 2017.
Fiscal 2017 Fourth Quarter Financial Highlights – versus Fiscal 2016 Fourth Quarter:
- Net sales were $116.5 million versus $87.5 million, an increase of 33%.
- Net income was $8.4 million versus $3.9 million, an increase of 115%.
- EPS was $0.28 (an increase of 115%), of which about $0.11 arose from a one-time tax benefit.
Fiscal 2017 Financial Highlights – versus Fiscal 2016:
- Net sales were $355.0 million versus $312.1 million, an increase of 14%.
- Net income was $20.3 million versus $12.8 million, an increase of 59%.
- EPS was $0.68 (an increase of 55%), of which about $0.11 arose from a one-time tax benefit.
Note: Fourth Quarter and Full-Year Net Income and EPS reflect a one-time tax benefit gained by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017.
Eric Wintemute, Chairman and CEO of American Vanguard, stated: "Our improved revenue performance in 2017 was driven by solid growth (+$11.8 million) of our existing products and the acquisition of new products and businesses during the year (+$31.1 million). These acquisitions which broadened and diversified our product portfolio and expanded our geographic market access were procured at attractive investment values. This acquisition approach has been the generator of steady company growth over the last three decades, and with our strong balance sheet we expect to be able to take advantage of additional acquisition opportunities over the next several years.”
Mr. Wintemute continued: "We experienced dynamic market conditions in 2017; however, due to our balanced portfolio of products, were able to improve both the top and bottom lines. For example, strong contributions from our cotton products and mosquito adulticide more than offset weather-related impact on soil fumigant sales and competitive pricing in corn herbicides. Our full-year gross profit margins remained strong at 42%, aided by improved factory utilization and cost control which reduced our unabsorbed overhead expense by nearly $5 million. Improved sales, operating earnings and working capital management have enabled us to achieve a year-end debt level of $78 million and to increase our credit borrowing capacity to $140 million, despite having completed six acquisitions during the year. Further, we continued to reduce our inventory of existing products year-over-year and generated $59.0 million in cash from operating activities during 2017. Finally, net income rose significantly for both the fourth quarter and the year, aided in part by an estimated $3.4 million tax benefit recorded by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017.”
Mr. Wintemute concluded: "Our outlook for the current year is positive. Within our crop business, we expect that our leading position in the U.S. potato market will remain firm, while our high-margin fruit & vegetable segment is expected to constitute over 30% of our overall business in 2018. In addition, we expect relative stability in the Midwest corn markets which should drive sales of our corn soil insecticides and our expanded herbicide offerings. While U.S. cotton and peanut acreage may be flat-to-slightly down compared to 2017, we expect stable sales in both of these crops. Our non-crop business is expected to expand by nearly 50% with the incorporation of the new OHP horticultural acquisition for the full year in 2018. Internationally, we are poised for modest growth of our traditional product portfolio, boosted by full-year sales of our Latin American acquisition Grupo AgriCenter. While addressing these markets, we will continue to plan for the future by investing in technology innovation, new products and portfolio defense. Please join us on our earnings call, where we will give you more color on our business.”
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 Monday, March 12, 2018. 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 | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| December 31, 2017 and 2016 | ||||||||
| (In thousands, except share data) | ||||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 11,337 | $ | 7,869 | ||||
| Receivables: | ||||||||
| Trade, net of allowance for doubtful accounts of $46 and $42, respectively | 102,534 | 83,777 | ||||||
| Other | 7,071 | 3,429 | ||||||
| 109,605 | 87,206 | |||||||
| Inventories | 123,124 | 120,576 | ||||||
| Prepaid expenses | 10,817 | 11,424 | ||||||
| Total current assets | 254,883 | 227,075 | ||||||
| Property, plant and equipment, net | 49,321 | 50,295 | ||||||
| Intangible assets, net of applicable amortization | 180,950 | 121,433 | ||||||
| Goodwill | 22,184 | — | ||||||
| Other assets | 28,254 | 31,153 | ||||||
| Total assets | $ | 535,592 | $ | 429,956 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current installments of other liabilities | $ | 5,395 | $ | 26 | ||||
| Accounts payable | 53,748 | 24,358 | ||||||
| Deferred revenue | 14,574 | 3,848 | ||||||
| Accrued program costs | 39,054 | 42,930 | ||||||
| Accrued expenses and other payables | 12,061 | 12,072 | ||||||
| Income taxes payable | 1,370 | 13,840 | ||||||
| Total current liabilities | 126,202 | 97,074 | ||||||
| Long-term debt, excluding current installments | 77,486 | 40,951 | ||||||
| Other liabilities, excluding current installments | 10,306 | 2,868 | ||||||
| Deferred income tax liabilities, net | 16,284 | 6,706 | ||||||
| Total liabilities | 230,278 | 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 32,241,866 shares in 2017 and 31,819,695 shares in 2016 | 3,225 | 3,183 | ||||||
| Additional paid-in capital | 75,658 | 71,699 | ||||||
| Accumulated other comprehensive loss | (4,507 | ) | (4,851 | ) | ||||
| Retained earnings | 238,953 | 220,428 | ||||||
| 313,329 | 290,459 | |||||||
| Less treasury stock at cost, 2,450,634 shares in 2017 and in 2016 | (8,269 | ) | (8,269 | ) | ||||
| American Vanguard Corporation stockholders’ equity | 305,060 | 282,190 | ||||||
| Non-controlling interest | 254 | 167 | ||||||
| Total stockholders’ equity | 305,314 | 282,357 | ||||||
| Total liabilities and stockholders’ equity | $ | 535,592 | $ | 429,956 | ||||
| AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| Years ended December 31, 2017, 2016 and 2015 | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Net sales | $ | 355,047 | $ | 312,113 | $ | 289,382 | ||||||
| Cost of sales | 207,655 | 183,825 | 177,480 | |||||||||
| Gross profit | 147,392 | 128,288 | 111,902 | |||||||||
| Operating expenses | 120,598 | 107,748 | 100,378 | |||||||||
| Operating income | 26,794 | 20,540 | 11,524 | |||||||||
| Interest expense, net | 1,941 | 1,623 | 2,562 | |||||||||
| Income before provision for income taxes and loss on equity investments | 24,853 | 18,917 | 8,962 | |||||||||
| Provision for income taxes | 4,443 | 5,540 | 2,009 | |||||||||
| Income before loss on equity investments | 20,410 | 13,377 | 6,953 | |||||||||
| Less net loss from equity method investments | (49 | ) | (353 | ) | (636 | ) | ||||||
| Net income | 20,361 | 13,024 | 6,317 | |||||||||
| Net (income) loss attributable to non-controlling interest | (87 | ) | (236 | ) | 274 | |||||||
| Net income attributable to American Vanguard | $ | 20,274 | $ | 12,788 | $ | 6,591 | ||||||
| Earnings per common share—basic | $ | 0.70 | $ | 0.44 | $ | 0.23 | ||||||
| Earnings per common share—assuming dilution | $ | 0.68 | $ | 0.44 | $ | 0.23 | ||||||
| Weighted average shares outstanding—basic | 29,100 | 28,859 | 28,673 | |||||||||
| Weighted average shares outstanding—assuming dilution | 29,703 | 29,394 | 29,237 | |||||||||
| ANALYSIS OF SALES | |||||||||||
| For the Three Years Ended December 31, 2017 | |||||||||||
| (In thousands) | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| Net sales: | |||||||||||
| Insecticides | $ | 132,137 | $ | 119,226 | $ | 117,180 | |||||
| Herbicides/soil fumigants/fungicides | 121,581 | 123,540 | 111,897 | ||||||||
| Other, including plant growth regulators | 47,691 | 29,438 | 29,013 | ||||||||
| Total crop | 301,409 | 272,204 | 258,090 | ||||||||
| Non-crop | 53,638 | 39,909 | 31,292 | ||||||||
| $ | 355,047 | $ | 312,113 | $ | 289,382 | ||||||
| Net Sales: | |||||||||||
| U.S. | $ | 256,142 | $ | 228,854 | $ | 212,087 | |||||
| International | 98,905 | 83,259 | 77,295 | ||||||||
| $ | 355,047 | $ | 312,113 | $ | 289,382 | ||||||
| AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| Years ended December 31, 2017, 2016 and 2015 | ||||||||||||
| (In thousands) | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Increase cash | ||||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 20,361 | $ | 13,024 | $ | 6,317 | ||||||
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||||||
| Depreciation and amortization of fixed and intangible assets | 16,959 | 16,327 | 16,474 | |||||||||
| Amortization of other long term assets and debt issuance costs | 5,221 | 5,203 | 5,275 | |||||||||
| Amortization of discounted liabilities | 110 | 16 | 140 | |||||||||
| Stock-based compensation | 4,714 | 3,167 | 3,881 | |||||||||
| Excess tax benefit from share based compensation | — | (96 | ) | (23 | ) | |||||||
| Increase (decrease) in deferred income taxes | 398 | (151 | ) | 27 | ||||||||
| Operating loss from equity method investment | 49 | 353 | 629 | |||||||||
| Loss from dilution of equity method investment | — | — | 7 | |||||||||
| Changes in assets and liabilities associated with operations, net of business combinations: | ||||||||||||
| Decrease (increase) in net receivables | 754 | (11,817 | ) | 13,034 | ||||||||
| Decrease in inventories | 16,183 | 15,901 | 29,154 | |||||||||
| (Increase) decrease in income tax receivable/payable, net | (12,073 | ) | 1,186 | 4,872 | ||||||||
| Decrease (increase) in prepaid expenses and other assets | 647 | (3,872 | ) | 2,082 | ||||||||
| Increase (decrease) in accounts payable | 3,322 | 9,015 | (5,068 | ) | ||||||||
| Increase (decrease) in deferred revenue | 10,726 | (5,040 | ) | 7,990 | ||||||||
| Decrease in accrued program costs | (4,529 | ) | (1,441 | ) | (8,175 | ) | ||||||
| (Decrease) increase in other payables | (3,841 | ) | 4,631 | 1,952 | ||||||||
| Net cash provided by operating activities | 59,001 | 46,406 | 78,568 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (6,666 | ) | (10,630 | ) | (6,899 | ) | ||||||
| Investment | (950 | ) | (3,283 | ) | (125 | ) | ||||||
| Acquisitions of businesses and intangible assets | (81,896 | ) | (224 | ) | (36,667 | ) | ||||||
| Net cash used in investing activities | (89,512 | ) | (14,137 | ) | (43,691 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Payments under line of credit agreement | (103,975 | ) | (107,600 | ) | (121,400 | ) | ||||||
| Borrowings under line of credit agreement | 141,000 | 80,000 | 90,880 | |||||||||
| Debt issuance cost | (751 | ) | — | — | ||||||||
| Payment on other long-term liabilities | (26 | ) | (704 | ) | (1,543 | ) | ||||||
| Excess tax benefit from share based compensation | — | 96 | 23 | |||||||||
| Net payment from the issuance of common stock (sale of stock under ESPP, exercise of stock options and shares purchased for tax withholding) | (713 | ) | 241 | 317 | ||||||||
| Payment of cash dividends | (1,600 | ) | (578 | ) | (1,141 | ) | ||||||
| Net cash provided by (used in) financing activities | 33,935 | (28,545 | ) | (32,864 | ) | |||||||
| Net increase in cash and cash equivalents | 3,424 | 3,724 | 2,013 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 44 | (1,379 | ) | (1,374 | ) | |||||||
| Cash and cash equivalents at beginning of year | 7,869 | 5,524 | 4,885 | |||||||||
| Cash and cash equivalents at end of year | $ | 11,337 | $ | 7,869 | $ | 5,524 | ||||||
| Supplemental cash flow information: | ||||||||||||
| Cash paid (received) during the year for: | ||||||||||||
| Interest | $ | 1,500 | $ | 1,748 | $ | 2,750 | ||||||
| Income taxes, net | $ | 17,841 | $ | 4,947 | $ | (3,697 | ) | |||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180312006116/en/
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