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06.08.2020 22:05:00
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American Vanguard Reports Second Quarter And Mid-Year 2020 Results
American Vanguard Corporation (NYSE:AVD), today announced financial results for the quarter and half-year ended June 30, 2020.
Financial Highlights Fiscal 2020 Second Quarter – versus Fiscal 2019 Second Quarter
- Net sales of $105 million in 2020, compared with $113 million in 2019
- Net income of $3.9 million in 2020, compared with $3.1 million in 2019
- Earnings per diluted share of $0.13 in 2020, compared with $0.11 in 2019
- EBITDA1 of $12.7 million in 2020, compared with $11.9 million in 2019
Financial Highlights Fiscal 2020 Six Months – versus Fiscal 2019 Six Months
- Net sales of $201 million in 2020, compared with $213 million in 2019
- Net income of $4.4 million in 2020, compared with $7 million in 2019
- Earnings per diluted share of $0.15 in 2020, compared with $0.24 in 2019
- EBITDA of $20.3 million in 2020, compared with $24.5 million in 2019
Eric Wintemute, Chairman and CEO of American Vanguard commented, "During the quarter we recorded improved profitability on lower sales, in spite of pandemic-related effects on new product launches and reduced demand for crop commodities used by restaurants. In the face of market uncertainty, our team responded by maintaining operations without disruption, generating a profitable sales mix, improving manufacturing efficiency and reducing operating expenses in a disciplined fashion. Consequently, we have been able to generate a quarterly improvement in net income, earnings per share and EBITDA. In addition, we recorded lower working capital, improved net cash from operations by $32 million and thereby reduced debt, as compared to the same period in 2019.”
Mr. Wintemute continued, "In light of second quarter profitability and improvement of our balance sheet, I am encouraged by the direction of our financial performance during this unusual time. However, the year got off to a slow start. Thus, our first half results trailed those of the prior year with net sales down approximately 6% and higher operating expenses as a percent of net sales, due largely to a credit taken for deferred purchase price consideration in 2019. Gross margin remained flat at 39%, while factory performance was improved during the first half of 2020 versus that of 2019.”
Mr. Wintemute continued, "We are well-positioned to address our markets over the balance of 2020 and remain poised to perform in line with our peers. Factors that could materially affect our performance include our mosquito control business, which should benefit from forecasted hurricane activity expected to impact the South and Southeastern United States this summer, the strength of our soil fumigants, improved supply of Krovar® and Hyvar® herbicides, and growth of our corn and soybean franchises. At the same time, we will continue to pursue our key strategic initiatives for future growth, including the development and launch of new product formulations, further successful collaboration with respect to Proctor & Gamble’s Zevo® product line, and the expanded full commercial launch of our SIMPAS® precision application system later this year. We look forward to providing investors with additional information during our earnings 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 Thursday, August 6, 2020. 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
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ASSETS |
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June 30,
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December 31,
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Current assets: |
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|
|
|
||||
Cash and cash equivalents |
|
$ |
8,600 |
|
|
$ |
6,581 |
|
Receivables: |
|
|
|
|
||||
Trade, net of allowance for doubtful accounts of $2,658 and $2,300, respectively |
|
|
123,406 |
|
|
|
136,075 |
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Other |
|
|
9,324 |
|
|
|
16,949 |
|
Total receivables, net |
|
|
132,730 |
|
|
|
153,024 |
|
Inventories, net |
|
|
180,993 |
|
|
|
163,313 |
|
Prepaid expenses |
|
|
12,502 |
|
|
|
10,457 |
|
Income taxes receivable |
|
|
1,925 |
|
|
|
2,824 |
|
Total current assets |
|
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336,750 |
|
|
|
336,199 |
|
Property, plant and equipment, net |
|
|
59,161 |
|
|
|
56,521 |
|
Operating lease right-of-use assets |
|
|
10,034 |
|
|
|
11,258 |
|
Intangible assets, net of amortization |
|
|
194,357 |
|
|
|
198,377 |
|
Goodwill |
|
|
41,278 |
|
|
|
46,557 |
|
Other assets |
|
|
19,754 |
|
|
|
21,186 |
|
Total assets |
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$ |
661,334 |
|
|
$ |
670,098 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Current installments of other liabilities |
|
$ |
217 |
|
|
$ |
1,513 |
|
Accounts payable |
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52,599 |
|
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|
64,881 |
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Deferred revenue |
|
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4,347 |
|
|
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6,826 |
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Accrued program costs |
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60,264 |
|
|
|
47,699 |
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Accrued expenses and other payables |
|
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9,610 |
|
|
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12,815 |
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Operating lease liabilities, current |
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4,771 |
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|
|
4,904 |
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Total current liabilities |
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131,808 |
|
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138,638 |
|
Long-term debt, net of deferred loan fees |
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159,407 |
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148,766 |
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Operating lease liabilities, long-term |
|
|
5,419 |
|
|
|
6,503 |
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Other liabilities, excluding current installments |
|
|
10,595 |
|
|
|
12,890 |
|
Deferred income tax liabilities |
|
|
14,445 |
|
|
|
19,145 |
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Total liabilities |
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321,674 |
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325,942 |
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Commitments and contingent liabilities |
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Stockholders' equity: |
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Preferred stock, $.10 par value per share; authorized 400,000 shares; none issued |
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— |
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— |
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Common stock, $.10 par value per share; authorized 40,000,000 shares; issued 33,229,078 shares at June 30, 2020 and 33,233,614 shares at December 31, 2019 |
|
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3,324 |
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3,324 |
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Additional paid-in capital |
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90,994 |
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90,572 |
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Accumulated other comprehensive loss |
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(14,437 |
) |
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(5,698 |
) |
Retained earnings |
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277,939 |
|
|
|
274,118 |
|
|
|
|
357,820 |
|
|
|
362,316 |
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Less treasury stock at cost, 3,061,040 shares at June 30, 2020 and December 31, 2019 |
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(18,160 |
) |
|
|
(18,160 |
) |
Total stockholders’ equity |
|
|
339,660 |
|
|
|
344,156 |
|
Total liabilities and stockholders' equity |
|
$ |
661,334 |
|
|
$ |
670,098 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
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For the Three Months
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For the Six Months
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2020 |
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2019 |
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2020 |
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2019 |
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Net sales |
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$ |
104,555 |
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$ |
113,104 |
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$ |
200,517 |
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$ |
212,780 |
Cost of sales |
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64,249 |
|
|
71,451 |
|
|
121,830 |
|
|
129,425 |
Gross profit |
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|
40,306 |
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|
41,653 |
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|
78,687 |
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|
83,355 |
Operating expenses |
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|
33,555 |
|
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35,362 |
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|
70,100 |
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|
70,162 |
Operating income |
|
|
6,751 |
|
|
6,291 |
|
|
8,587 |
|
|
13,193 |
Interest expense, net |
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|
1,274 |
|
|
1,925 |
|
|
2,782 |
|
|
3,537 |
Income before provision for income taxes and loss on equity method investment |
|
|
5,477 |
|
|
4,366 |
|
|
5,805 |
|
|
9,656 |
Income tax expense |
|
|
1,565 |
|
|
1,224 |
|
|
1,360 |
|
|
2,584 |
Income before loss on equity method investment |
|
|
3,912 |
|
|
3,142 |
|
|
4,445 |
|
|
7,072 |
Loss from equity method investment |
|
|
25 |
|
|
36 |
|
|
38 |
|
|
60 |
Net income attributable to American Vanguard |
|
$ |
3,887 |
|
$ |
3,106 |
|
$ |
4,407 |
|
$ |
7,012 |
Earnings per common share—basic |
|
$ |
.13 |
|
$ |
.11 |
|
$ |
.15 |
|
$ |
.24 |
Earnings per common share—assuming dilution |
|
$ |
.13 |
|
$ |
.11 |
|
$ |
.15 |
|
$ |
.24 |
Weighted average shares outstanding—basic |
|
|
29,413 |
|
|
29,001 |
|
|
29,350 |
|
|
28,989 |
Weighted average shares outstanding—assuming dilution |
|
|
29,854 |
|
|
29,540 |
|
|
29,904 |
|
|
29,560 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
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For the three months
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|
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|
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2020 |
|
2019 |
|
Change |
|
% Change |
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Net sales: |
|
|
|
|
|
|
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|
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US crop |
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$ |
44,670 |
|
$ |
47,575 |
|
$ |
(2,905 |
) |
|
-6 |
% |
US non-crop |
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13,872 |
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|
16,955 |
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(3,083 |
) |
|
-18 |
% |
US total |
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|
58,542 |
|
|
64,530 |
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|
(5,988 |
) |
|
-9 |
% |
International |
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|
46,013 |
|
|
48,574 |
|
|
(2,561 |
) |
|
-5 |
% |
Net sales: |
|
$ |
104,555 |
|
$ |
113,104 |
|
$ |
(8,549 |
) |
|
-8 |
% |
Gross profit: |
|
|
|
|
|
|
|
|
|||||
US crop |
|
$ |
21,758 |
|
$ |
18,719 |
|
$ |
3,039 |
|
|
16 |
% |
US non-crop |
|
|
7,029 |
|
|
8,558 |
|
|
(1,529 |
) |
|
-18 |
% |
US total |
|
|
28,787 |
|
|
27,277 |
|
|
1,510 |
|
|
6 |
% |
International |
|
|
11,519 |
|
|
14,376 |
|
|
(2,857 |
) |
|
-20 |
% |
Total gross profit: |
|
$ |
40,306 |
|
$ |
41,653 |
|
$ |
(1,347 |
) |
|
-3 |
% |
|
|
For the six months
|
|
|
|
|
|||||||
|
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2020 |
|
2019 |
|
Change |
|
% Change |
|||||
Net sales: |
|
|
|
|
|
|
|
|
|||||
US crop |
|
$ |
95,032 |
|
$ |
97,845 |
|
$ |
(2,813 |
) |
|
-3 |
% |
US non-crop |
|
|
24,865 |
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|
28,222 |
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(3,357 |
) |
|
-12 |
% |
US total |
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|
119,897 |
|
|
126,067 |
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|
(6,170 |
) |
|
-5 |
% |
International |
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|
80,620 |
|
|
86,713 |
|
|
(6,093 |
) |
|
-7 |
% |
Net sales: |
|
$ |
200,517 |
|
$ |
212,780 |
|
$ |
(12,263 |
) |
|
-6 |
% |
Gross profit: |
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|
|
|
|
|
|
|
|||||
US crop |
|
$ |
46,003 |
|
$ |
42,214 |
|
$ |
3,789 |
|
|
9 |
% |
US non-crop |
|
|
11,748 |
|
|
14,872 |
|
|
(3,124 |
) |
|
-21 |
% |
US total |
|
|
57,751 |
|
|
57,086 |
|
|
665 |
|
|
1 |
% |
International |
|
|
20,936 |
|
|
26,269 |
|
|
(5,333 |
) |
|
-20 |
% |
Total gross profit: |
|
$ |
78,687 |
|
$ |
83,355 |
|
$ |
(4,668 |
) |
|
-6 |
% |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
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For the Six Months Ended
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2020 |
|
2019 |
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Cash flows from operating activities: |
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|
|
|
||||
Net income |
|
$ |
4,407 |
|
|
$ |
7,012 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
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Depreciation and amortization of property, plant and equipment and intangible assets |
|
|
9,665 |
|
|
|
9,233 |
|
Amortization of other long-term assets and deferred loan fees |
|
|
2,104 |
|
|
|
2,146 |
|
Amortization of discounted liabilities |
|
|
7 |
|
|
|
— |
|
Provision for bad debts |
|
|
392 |
|
|
|
445 |
|
Revision of deferred consideration |
|
|
— |
|
|
|
(2,888 |
) |
Stock-based compensation |
|
|
2,545 |
|
|
|
2,995 |
|
Change in deferred income taxes |
|
|
(1,562 |
) |
|
|
(572 |
) |
Loss from equity method investment |
|
|
38 |
|
|
|
60 |
|
Net foreign currency adjustment |
|
|
594 |
|
|
|
86 |
|
Changes in assets and liabilities associated with operations: |
|
|
|
|
||||
Decrease in net receivables |
|
|
16,421 |
|
|
|
7,841 |
|
Increase in inventories |
|
|
(21,706 |
) |
|
|
(27,635 |
) |
Increase in prepaid expenses and other assets |
|
|
(2,297 |
) |
|
|
(1,844 |
) |
Increase in net operating lease liability |
|
|
7 |
|
|
|
73 |
|
Decrease (increase) in income tax receivable |
|
|
899 |
|
|
|
(4,480 |
) |
Decrease in accounts payable |
|
|
(12,351 |
) |
|
|
(10,224 |
) |
Decrease in deferred revenue |
|
|
(2,431 |
) |
|
|
(19,438 |
) |
Increase in accrued program costs |
|
|
12,577 |
|
|
|
11,823 |
|
Decrease in other payables and accrued expenses |
|
|
(3,621 |
) |
|
|
(6,719 |
) |
Net cash provided by (used in) operating activities |
|
|
5,688 |
|
|
|
(32,086 |
) |
Cash flows from investing activities: |
|
|
|
|
||||
Capital expenditures |
|
|
(6,386 |
) |
|
|
(7,216 |
) |
Acquisition of business, product lines, and intangible assets |
|
|
(3,889 |
) |
|
|
(24,302 |
) |
Investments |
|
|
(1,190 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(11,465 |
) |
|
|
(31,518 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Net borrowings under line of credit agreement |
|
|
10,502 |
|
|
|
67,800 |
|
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding) |
|
|
(2,123 |
) |
|
|
(513 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
(2,604 |
) |
Payment of cash dividends |
|
|
(1,168 |
) |
|
|
(1,160 |
) |
Net cash provided by financing activities |
|
|
7,211 |
|
|
|
63,523 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
1,434 |
|
|
|
(81 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
585 |
|
|
|
220 |
|
Cash and cash equivalents at beginning of period |
|
|
6,581 |
|
|
|
6,168 |
|
Cash and cash equivalents at end of period |
|
$ |
8,600 |
|
|
$ |
6,307 |
|
Supplemental cash flow information: |
|
|
|
|
||||
Cash paid during the period for: |
|
|
|
|
||||
Interest |
|
$ |
2,902 |
|
|
$ |
3,339 |
|
Income taxes, net |
|
$ |
1,901 |
|
|
$ |
7,583 |
|
|
|
|
|
|
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
|
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|
Three Months
|
|
Six Months
|
|||||||||||
|
|
2020 |
|
|
2019 |
|
2020 |
|
|
2019 |
||||
Net income attributable to American Vanguard, as reported |
|
$ |
3,887 |
|
|
$ |
3,106 |
|
$ |
4,407 |
|
|
$ |
7,012 |
Provision for income taxes |
|
|
1,565 |
|
|
|
1,224 |
|
|
1,360 |
|
|
|
2,584 |
Interest expense, net |
|
|
1,274 |
|
|
|
1,925 |
|
|
2,782 |
|
|
|
3,537 |
Depreciation and amortization |
|
|
5,981 |
|
|
|
5,688 |
|
|
11,769 |
|
|
|
11,379 |
EBITDA2 |
|
$ |
12,707 |
|
|
$ |
11,943 |
|
$ |
20,318 |
|
|
$ |
24,512 |
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.
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/20200806005988/en/
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