|
05.11.2019 22:05:00
|
American Vanguard Reports Third Quarter and Nine-Month 2019 Results
American Vanguard Corporation (NYSE:AVD), today announced financial results for the three- and nine-month periods ended September 30, 2019.
Financial Highlights Fiscal 2019 Third Quarter – versus Fiscal 2018 Third Quarter
- Net sales of $125 million in 2019, compared with $112 million in 2018
- Net income of $3.2 million in 2019, compared with $6.5 million in 2018
- Earnings per diluted share of $0.11 in 2019, compared with $0.22 in 2018
- EBITDA1 of $12 million in 2019, compared with $17 million in 2018
Financial Highlights Fiscal 2019 First Nine Months – versus Fiscal 2018 First Nine Months
- Net sales of $338 million in 2019, compared with $323 million in 2018
- Net income of $10.2 million in 2019, compared with $16.8 million in 2018
- Earnings per diluted share of $0.34 in 2019, compared with $0.56 in 2018
- EBITDA of $37 million in 2019, compared to $45 million in 2018
Eric Wintemute, Chairman and CEO of American Vanguard commented, "As we noted in our pre-announcement, driven largely by our international business, consolidated net sales for the quarter grew by 12%. At the same time, net income declined for the period, with earnings per share at $0.11 for the quarter. This was due to lower factory activity, higher operating expenses and a comparatively higher benefit in the comparable quarter of 2018 relating to the reassessment of deferred purchase price consideration.”
Mr. Wintemute continued, "Our overall performance was mixed. On the one hand, our international business grew by 27% during the quarter. With further integration of relatively early-stage business operations, we experienced expansion in Central America, Brazil, Mexico and Canada. On the other hand, the domestic business was held to only 3% growth in the quarter due to extreme weather conditions that have set back the entire industry. Persistent rains and cold during the first half of 2019 delayed plantings, pushed harvest times back and reduced demand for post-harvest fumigants. This was followed by record-setting heat in the Southern region during the third quarter that reduced demand for defoliants, fungicides and insecticides. Notwithstanding these weather challenges, our domestic Ag sales increased by 1% in the third quarter and we recorded a 10% increase in our domestic non-crop sales, led by our mosquito adulticide and pest strip product lines.”
Mr. Wintemute continued, "Focusing on full year 2019 results, we expect consolidated sales to increase by about 5% year-over-year with mixed performance among our major markets. International sales should increase by about 25% for the full year. However, our domestic sales will likely decrease by about 5% on a per annum basis, which we believe is consistent with industry-wide forecasts that show domestic markets receding by 6% to 12% for the year. With these considerations in mind, we are expecting full year 2019 net sales of approximately $475 million, gross profit margins around 38%, operating expenses of approximately $155 million and a full corporate tax rate of approximately 29%.”
Mr. Wintemute concluded, "During our earnings conference call, we will cover current and near-term market conditions, provide our preliminary outlook for 2020 and outline continued efforts to improve our balance sheet. We will also update listeners on technology development with a focus on biological products and SIMPAS.”
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 |
||||||||
|
|
September 30, 2019 |
|
|
December 31, 2018 |
|
||
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,887 |
|
|
$ |
6,168 |
|
Receivables: |
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $1,988 and $1,263, respectively |
|
|
140,220 |
|
|
|
123,320 |
|
Other |
|
|
13,783 |
|
|
|
10,709 |
|
Total receivables, net |
|
|
154,003 |
|
|
|
134,029 |
|
Inventories, net |
|
|
186,285 |
|
|
|
159,895 |
|
Prepaid expenses |
|
|
10,731 |
|
|
|
10,096 |
|
Income tax receivable |
|
|
88 |
|
|
|
— |
|
Total current assets |
|
|
356,994 |
|
|
|
310,188 |
|
Property, plant and equipment, net |
|
|
55,330 |
|
|
|
49,252 |
|
Operating lease right-of-use assets |
|
|
12,186 |
|
|
|
— |
|
Intangible assets, net of amortization |
|
|
196,542 |
|
|
|
186,583 |
|
Goodwill |
|
|
38,435 |
|
|
|
25,790 |
|
Other assets |
|
|
21,810 |
|
|
|
21,774 |
|
Total assets |
|
$ |
681,297 |
|
|
$ |
593,587 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|||||||
Current liabilities: |
|
|
|
|
|
|
|
|
Current installments of other liabilities |
|
$ |
1,305 |
|
|
$ |
1,609 |
|
Accounts payable |
|
|
67,188 |
|
|
|
66,535 |
|
Deferred revenue |
|
|
368 |
|
|
|
20,043 |
|
Accrued program costs |
|
|
57,512 |
|
|
|
37,349 |
|
Accrued expenses and other payables |
|
|
11,912 |
|
|
|
15,962 |
|
Operating lease liabilities, current |
|
|
4,889 |
|
|
|
— |
|
Income taxes payable |
|
|
— |
|
|
|
4,030 |
|
Total current liabilities |
|
|
143,174 |
|
|
|
145,528 |
|
Long-term debt, net of deferred loan fees |
|
|
165,008 |
|
|
|
96,671 |
|
Other liabilities, excluding current installments |
|
|
9,808 |
|
|
|
6,795 |
|
Operating lease liabilities, long-term |
|
|
7,414 |
|
|
|
— |
|
Deferred income tax liabilities |
|
|
17,907 |
|
|
|
15,363 |
|
Total liabilities |
|
|
343,311 |
|
|
|
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 33,235,938 shares at September 30, 2019 and 32,752,827 shares at December 31, 2018 |
|
|
3,325 |
|
|
|
3,276 |
|
Additional paid-in capital |
|
|
88,257 |
|
|
|
83,177 |
|
Accumulated other comprehensive loss |
|
|
(6,699 |
) |
|
|
(4,507 |
) |
Retained earnings |
|
|
271,263 |
|
|
|
262,840 |
|
|
|
|
356,146 |
|
|
|
344,786 |
|
Less treasury stock at cost, 3,061,040 shares at September 30, 2019 and 2,902,992 shares at December 31, 2018 |
|
|
(18,160 |
) |
|
|
(15,556 |
) |
Total stockholders’ equity |
|
|
337,986 |
|
|
|
329,230 |
|
Total liabilities and stockholders' equity |
|
$ |
681,297 |
|
|
$ |
593,587 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES |
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(In thousands, except per share data) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Net sales |
|
$ |
124,884 |
|
|
$ |
111,780 |
|
|
$ |
337,664 |
|
|
$ |
322,934 |
|
Cost of sales |
|
|
77,421 |
|
|
|
66,480 |
|
|
|
206,846 |
|
|
|
193,286 |
|
Gross profit |
|
|
47,463 |
|
|
|
45,300 |
|
|
|
130,818 |
|
|
|
129,648 |
|
Operating expenses |
|
|
40,677 |
|
|
|
33,635 |
|
|
|
110,839 |
|
|
|
102,011 |
|
Operating income |
|
|
6,786 |
|
|
|
11,665 |
|
|
|
19,979 |
|
|
|
27,637 |
|
Interest expense, net |
|
|
2,070 |
|
|
|
1,116 |
|
|
|
5,606 |
|
|
|
2,961 |
|
Income before provision for income taxes and loss on equity method investments |
|
|
4,716 |
|
|
|
10,549 |
|
|
|
14,373 |
|
|
|
24,676 |
|
Income tax expense |
|
|
1,474 |
|
|
|
3,526 |
|
|
|
4,059 |
|
|
|
6,966 |
|
Income before loss on equity method investments |
|
|
3,242 |
|
|
|
7,023 |
|
|
|
10,314 |
|
|
|
17,710 |
|
Loss from equity method investments |
|
|
89 |
|
|
|
533 |
|
|
|
149 |
|
|
|
1,051 |
|
Net income |
|
|
3,153 |
|
|
|
6,490 |
|
|
|
10,165 |
|
|
|
16,659 |
|
Net loss attributable to non-controlling interest |
|
|
— |
|
|
|
35 |
|
|
|
— |
|
|
|
120 |
|
Net income attributable to American Vanguard |
|
$ |
3,153 |
|
|
$ |
6,525 |
|
|
$ |
10,165 |
|
|
$ |
16,779 |
|
Earnings per common share—basic |
|
$ |
.11 |
|
|
$ |
.22 |
|
|
$ |
.35 |
|
|
$ |
.57 |
|
Earnings per common share—assuming dilution |
|
$ |
.11 |
|
|
$ |
.22 |
|
|
$ |
.34 |
|
|
$ |
.56 |
|
Weighted average shares outstanding—basic |
|
|
29,057 |
|
|
|
29,399 |
|
|
|
29,013 |
|
|
|
29,340 |
|
Weighted average shares outstanding—assuming dilution |
|
|
29,650 |
|
|
|
30,209 |
|
|
|
29,591 |
|
|
|
30,146 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES |
||||||||||||||||
ANALYSIS OF SALES |
||||||||||||||||
For the three months and nine months ended September 30, 2019 and 2018 |
||||||||||||||||
(In thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
For the three months ended September 30, |
|
|
|
|
|
|
|
|
|
|||||
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US crop |
|
$ |
55,952 |
|
|
$ |
55,285 |
|
|
$ |
667 |
|
|
|
1 |
% |
US non-crop |
|
|
18,036 |
|
|
|
16,426 |
|
|
|
1,610 |
|
|
|
10 |
% |
US total |
|
|
73,988 |
|
|
|
71,711 |
|
|
|
2,277 |
|
|
|
3 |
% |
International |
|
|
50,896 |
|
|
|
40,069 |
|
|
|
10,827 |
|
|
|
27 |
% |
Net sales: |
|
$ |
124,884 |
|
|
$ |
111,780 |
|
|
$ |
13,104 |
|
|
|
12 |
% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US crop |
|
$ |
23,926 |
|
|
$ |
27,106 |
|
|
$ |
(3,180 |
) |
|
|
-12 |
% |
US non-crop |
|
|
9,491 |
|
|
|
7,991 |
|
|
|
1,500 |
|
|
|
19 |
% |
US total |
|
|
33,417 |
|
|
|
35,097 |
|
|
|
(1,680 |
) |
|
|
-5 |
% |
International |
|
|
14,046 |
|
|
|
10,203 |
|
|
|
3,843 |
|
|
|
38 |
% |
Total gross profit: |
|
$ |
47,463 |
|
|
$ |
45,300 |
|
|
$ |
2,163 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin domestic |
|
|
45 |
% |
|
|
49 |
% |
|
|
|
|
|
|
|
|
Gross margin international |
|
|
28 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
Gross margin total |
|
|
38 |
% |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
|
|
|
|
|
|
|
|
|
|||||
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US crop |
|
$ |
152,512 |
|
|
$ |
166,397 |
|
|
$ |
(13,885 |
) |
|
|
-8 |
% |
US non-crop |
|
|
47,543 |
|
|
|
39,492 |
|
|
|
8,051 |
|
|
|
20 |
% |
US total |
|
|
200,055 |
|
|
|
205,889 |
|
|
|
(5,834 |
) |
|
|
-3 |
% |
International |
|
|
137,609 |
|
|
|
117,045 |
|
|
|
20,564 |
|
|
|
18 |
% |
Net sales: |
|
$ |
337,664 |
|
|
$ |
322,934 |
|
|
$ |
14,730 |
|
|
|
5 |
% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US crop |
|
$ |
66,140 |
|
|
$ |
78,439 |
|
|
$ |
(12,299 |
) |
|
|
-16 |
% |
US non-crop |
|
|
24,363 |
|
|
|
19,843 |
|
|
|
4,520 |
|
|
|
23 |
% |
US total |
|
|
90,503 |
|
|
|
98,282 |
|
|
|
(7,779 |
) |
|
|
-8 |
% |
International |
|
|
40,315 |
|
|
|
31,366 |
|
|
|
8,949 |
|
|
|
29 |
% |
Total gross profit: |
|
$ |
130,818 |
|
|
$ |
129,648 |
|
|
$ |
1,170 |
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin domestic |
|
|
45 |
% |
|
|
48 |
% |
|
|
|
|
|
|
|
|
Gross margin international |
|
|
29 |
% |
|
|
27 |
% |
|
|
|
|
|
|
|
|
Gross margin total |
|
|
39 |
% |
|
|
40 |
% |
|
|
|
|
|
|
|
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
|
For the Nine Months Ended
|
|
||||||
|
|
2019 |
|
|
2018 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
10,165 |
|
|
$ |
16,659 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization of property, plant and equipment and intangible assets |
|
|
13,892 |
|
|
|
14,233 |
|
Amortization of other long term assets |
|
|
3,174 |
|
|
|
3,630 |
|
Amortization of discounted liabilities |
|
|
41 |
|
|
|
314 |
|
Provision for bad debts |
|
|
728 |
|
|
|
540 |
|
Reassessment of deferred consideration |
|
|
(3,539 |
) |
|
|
(5,437 |
) |
Stock-based compensation |
|
|
5,159 |
|
|
|
4,235 |
|
Deferred income taxes |
|
|
(459 |
) |
|
|
(34 |
) |
Loss from equity method investments |
|
|
149 |
|
|
|
1,051 |
|
Changes in assets and liabilities associated with operations: |
|
|
|
|
|
|
|
|
Increase in net receivables |
|
|
(15,983 |
) |
|
|
(24,922 |
) |
Increase in inventories |
|
|
(19,713 |
) |
|
|
(39,305 |
) |
Increase in prepaid expenses and other assets |
|
|
(849 |
) |
|
|
(959 |
) |
Increase in net operating lease liability |
|
|
117 |
|
|
|
— |
|
(Decrease) increase in income tax receivable/payable, net |
|
|
(4,477 |
) |
|
|
2,069 |
|
(Decrease) increase in accounts payable |
|
|
(5,516 |
) |
|
|
5,711 |
|
Decrease in deferred revenue |
|
|
(19,800 |
) |
|
|
(13,965 |
) |
Increase in accrued program costs |
|
|
20,163 |
|
|
|
22,882 |
|
Decrease in other payables and accrued expenses |
|
|
(4,936 |
) |
|
|
(1,792 |
) |
Net cash used in operating activities |
|
|
(21,684 |
) |
|
|
(15,090 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(10,546 |
) |
|
|
(5,154 |
) |
Acquisition of business, product lines, and intangible assets |
|
|
(31,836 |
) |
|
|
(1,634 |
) |
Net cash used in investing activities |
|
|
(42,382 |
) |
|
|
(6,788 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Payments under line of credit agreement |
|
|
(73,800 |
) |
|
|
(71,125 |
) |
Borrowings under line of credit agreement |
|
|
142,000 |
|
|
|
90,800 |
|
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding) |
|
|
(30 |
) |
|
|
1,731 |
|
Repurchase of common stock |
|
|
(2,604 |
) |
|
|
— |
|
Payment of cash dividends |
|
|
(1,741 |
) |
|
|
(1,611 |
) |
Net cash provided by financing activities |
|
|
63,825 |
|
|
|
19,795 |
|
Net decrease in cash and cash equivalents |
|
|
(241 |
) |
|
|
(2,083 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(40 |
) |
|
|
114 |
|
Cash and cash equivalents at beginning of period |
|
|
6,168 |
|
|
|
11,337 |
|
Cash and cash equivalents at end of period |
|
$ |
5,887 |
|
|
$ |
9,368 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES |
||||||||||||||||
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA |
||||||||||||||||
For the three months and nine months ended September 30, 2019 and 2018 |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Net income attributable to American Vanguard, as reported |
|
$ |
3,153 |
|
|
$ |
6,525 |
|
|
$ |
10,165 |
|
|
$ |
16,779 |
|
Provision for income taxes |
|
|
1,474 |
|
|
|
3,526 |
|
|
|
4,059 |
|
|
|
6,966 |
|
Interest expense, net |
|
|
2,070 |
|
|
|
1,116 |
|
|
|
5,606 |
|
|
|
2,961 |
|
Depreciation and amortization |
|
|
5,687 |
|
|
|
6,034 |
|
|
|
17,066 |
|
|
|
17,863 |
|
EBITDA2 |
|
$ |
12,384 |
|
|
$ |
17,201 |
|
|
$ |
36,896 |
|
|
$ |
44,569 |
|
| ___________________________ |
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/20191105006168/en/
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10.11.24 |
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