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American Vanguard Reports Fourth Quarter and Full Year 2019 Results

American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2019.

Fiscal 2019 Fourth Quarter Financial Highlights versus Fiscal 2018 Fourth Quarter:

  • Net sales of $131 million in 2019, as compared to $131 million in 2018
  • Net income of $3.4 million in 2019, as compared to $7.4 million in 2018
  • Earnings per diluted share of $0.12 in 2019, as compared to $0.25 in 2018
  • EBITDA1of $12.0 million in 2019, as compared to $16.6 million in 2018

Fiscal 2019 Full Year Financial Highlights – versus Fiscal 2018 Full Year:

  • Net sales of $468 million in 2019, as compared to $454 million in 2018
  • Net income of $13.6 million in 2019, as compared to $24.2 million in 2018
  • Earnings per diluted share of $0.46 in 2019, as compared to $0.81 in 2018
  • EBITDA1 of $48.9 million in 2019, as compared to $61.1 million in 2018

Eric Wintemute, Chairman and CEO of American Vanguard, stated, "Our 2019 financial performance closely corresponds to the guidance that we provided during the fourth quarter and updated in January. In the face of adverse weather, tariffs and supply disruptions that affected the entire industry, we achieved mixed results, with a modestly higher top line and declining profitability as compared to 2018. As has been the case for the past several quarters, revenue growth was driven by our international business, which now constitutes nearly 40% of our consolidated revenue. This growth was partially offset by weather-related declines in our domestic sales."

Mr. Wintemute continued, "Our gross profit margin came in where predicted, while both operating expenses and overall corporate tax rate were more favorable than had been anticipated. However, higher volume sales of lower-margin products in our international businesses, higher interest costs from acquisition-related borrowing and reduced factory activity led to reduced net income for the year."

Mr. Wintemute concluded, "With respect to our 2020 outlook, assuming a return to more normal weather patterns and minimal disruption in trade and supply from COVID-19 or other factors, we are targeting our global revenues to grow at a low double-digit rate, aided by larger corn acreage in the U.S., renewed availability of bromacil herbicides, ten new product introductions, and the growth of our LATAM businesses. At the same time, we will continue to exercise financial discipline in order to strengthen our balance sheet. We look forward toward giving you a more detailed presentation on 2020 during our upcoming 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 4:30 pm ET on March 9, 2020. 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 Securities and Exchange Commission 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, 2019 and 2018 (Unaudited)

(In thousands, except share data)

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,581

 

 

$

6,168

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $2,300 and $1,263, respectively

 

 

136,075

 

 

 

123,320

 

Other

 

 

16,949

 

 

 

10,709

 

 

 

 

153,024

 

 

 

134,029

 

Inventories, net

 

 

163,313

 

 

 

159,895

 

Prepaid expenses

 

 

10,457

 

 

 

10,096

 

Income taxes receivable

 

 

2,824

 

 

 

 

Total current assets

 

 

336,199

 

 

 

310,188

 

Property, plant and equipment, net

 

 

56,521

 

 

 

49,252

 

Operating lease right-of-use assets

 

 

11,258

 

 

 

 

Intangible assets, net

 

 

198,377

 

 

 

186,583

 

Goodwill

 

 

46,557

 

 

 

25,790

 

Other assets

 

 

21,186

 

 

 

21,774

 

Total assets

 

$

670,098

 

 

$

593,587

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

1,513

 

 

$

1,609

 

Accounts payable

 

 

64,881

 

 

 

66,535

 

Deferred revenue

 

 

6,826

 

 

 

20,043

 

Accrued program costs

 

 

47,699

 

 

 

37,349

 

Accrued expenses and other payables

 

 

12,815

 

 

 

15,962

 

Operating lease liabilities, current

 

 

4,904

 

 

 

 

Income taxes payable

 

 

 

 

 

4,030

 

Total current liabilities

 

 

138,638

 

 

 

145,528

 

Long-term debt, net of deferred loan fees

 

 

148,766

 

 

 

96,671

 

Other liabilities, excluding current installments

 

 

12,890

 

 

 

6,795

 

Operating lease liabilities, long-term

 

 

6,503

 

 

 

 

Deferred income tax liabilities, net

 

 

19,145

 

 

 

15,363

 

Total liabilities

 

 

325,942

 

 

 

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 33,233,614 shares in 2019 and 32,752,827 shares in 2018

 

 

3,324

 

 

 

3,276

 

Additional paid-in capital

 

 

90,572

 

 

 

83,177

 

Accumulated other comprehensive loss

 

 

(5,698

)

 

 

(4,507

)

Retained earnings

 

 

274,118

 

 

 

262,840

 

 

 

 

362,316

 

 

 

344,786

 

Less treasury stock at cost, 3,061,040 shares in 2019 and 2,902,992 shares in 2018

 

 

(18,160

)

 

 

(15,556

)

Total stockholders’ equity

 

 

344,156

 

 

 

329,230

 

Total liabilities and stockholders’ equity

 

$

670,098

 

 

$

593,587

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands, except per share data)

 

 

 

2019

 

 

2018

 

 

2017

 

Net sales

 

$

468,186

 

 

$

454,272

 

 

$

355,047

 

Cost of sales

 

 

290,832

 

 

 

271,641

 

 

 

207,655

 

Gross profit

 

 

177,354

 

 

 

182,631

 

 

 

147,392

 

Operating expenses

 

 

151,133

 

 

 

143,610

 

 

 

120,598

 

Operating income

 

 

26,221

 

 

 

39,021

 

 

 

26,794

 

Change in fair value of derivative instrument

 

 

 

 

 

1,401

 

 

 

 

Interest expense, net

 

 

7,209

 

 

 

4,024

 

 

 

1,941

 

Income before provision for income taxes and loss on equity method investments

 

 

19,012

 

 

 

33,596

 

 

 

24,853

 

Provision for income taxes

 

 

5,202

 

 

 

9,145

 

 

 

4,443

 

Income before loss on equity method investments

 

 

13,810

 

 

 

24,451

 

 

 

20,410

 

Less net loss from equity method investments

 

 

209

 

 

 

389

 

 

 

49

 

Net income

 

 

13,601

 

 

 

24,062

 

 

 

20,361

 

Net loss (income) attributable to non-controlling interest

 

 

 

 

 

133

 

 

 

(87

)

Net income attributable to American Vanguard

 

$

13,601

 

 

$

24,195

 

 

$

20,274

 

Earnings per common share—basic

 

$

0.47

 

 

$

0.83

 

 

$

0.70

 

Earnings per common share—assuming dilution

 

$

0.46

 

 

$

0.81

 

 

$

0.68

 

Weighted average shares outstanding—basic

 

 

29,030

 

 

 

29,326

 

 

 

29,100

 

Weighted average shares outstanding—assuming dilution

 

 

29,656

 

 

 

30,048

 

 

 

29,703

 

ANALYSIS OF SALES

Years Ended December 31, 2019. 2018 and 2017 (Unaudited)

(In thousands)

 

 

 

2019

 

 

2018

 

 

2017

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Insecticides

 

$

153,448

 

 

$

150,595

 

 

$

134,377

 

Herbicides/soil fumigants/fungicides

 

 

181,686

 

 

 

183,350

 

 

 

124,529

 

Other, including plant growth regulators

 

 

67,266

 

 

 

58,360

 

 

 

42,503

 

Total crop

 

 

402,400

 

 

 

392,305

 

 

 

301,409

 

Non-crop

 

 

65,786

 

 

 

61,967

 

 

 

53,638

 

 

 

$

468,186

 

 

$

454,272

 

 

$

355,047

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

Crop

 

$

140,806

 

 

$

150,986

 

 

$

117,892

 

Non-crop

 

 

36,548

 

 

 

31,645

 

 

 

29,500

 

 

 

$

177,354

 

 

$

182,631

 

 

$

147,392

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

 

 

2019

 

 

2018

 

 

2017

 

Increase cash

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,601

 

 

$

24,062

 

 

$

20,361

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of property, plant and equipment and intangible assets

 

 

18,643

 

 

 

18,891

 

 

 

16,959

 

Amortization of other long term assets

 

 

4,207

 

 

 

4,884

 

 

 

5,221

 

Amortization of discounted liabilities

 

 

72

 

 

 

359

 

 

 

110

 

Provision for bad debts

 

 

1,035

 

 

 

1,216

 

 

 

5

 

Reassessment of deferred consideration

 

 

(4,120

)

 

 

(6,050

)

 

 

 

Stock-based compensation

 

 

7,160

 

 

 

5,805

 

 

 

4,714

 

Increase (decrease) in deferred income taxes

 

 

2,616

 

 

 

(561

)

 

 

398

 

Loss from equity method investments

 

 

209

 

 

 

389

 

 

 

49

 

Changes in assets and liabilities associated with operations, net of business combinations:

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in net receivables

 

 

(11,383

)

 

 

(22,536

)

 

 

749

 

(Increase) decrease in inventories

 

 

3,817

 

 

 

(31,440

)

 

 

16,183

 

(Increase) decrease in income tax receivable, net

 

 

(6,855

)

 

 

2,655

 

 

 

(12,073

)

(Increase) decrease in prepaid expenses and other assets

 

 

(876

)

 

 

186

 

 

 

647

 

Increase in net operating lease liability

 

 

149

 

 

 

 

 

 

 

Increase (decrease) in accounts payable

 

 

(7,977

)

 

 

9,097

 

 

 

3,322

 

Increase (decrease) in deferred revenue

 

 

(13,355

)

 

 

5,468

 

 

 

10,726

 

Increase (decrease) in accrued program costs

 

 

5,797

 

 

 

(1,705

)

 

 

(4,529

)

Increase (decrease) in other payables and accrued expenses

 

 

(3,337

)

 

 

626

 

 

 

(3,841

)

Net cash provided by operating activities

 

 

9,403

 

 

 

11,346

 

 

 

59,001

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(12,985

)

 

 

(8,050

)

 

 

(6,666

)

Investments

 

 

 

 

 

 

 

 

(950

)

Acquisitions of businesses and product lines, and intangible assets addition

 

 

(41,852

)

 

 

(19,647

)

 

 

(81,896

)

Net cash used in investing activities

 

 

(54,837

)

 

 

(27,697

)

 

 

(89,512

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net borrowings under line of credit agreement

 

 

51,900

 

 

 

18,975

 

 

 

37,025

 

Debt issuance cost

 

 

 

 

 

 

 

 

(751

)

Cash paid to acquire non-controlling interest

 

 

 

 

 

(73

)

 

 

 

Payment on deferred consideration

 

 

(850

)

 

 

 

 

 

(26

)

Net receipt (payment) from the issuance of common stock (sale of stock
under ESPP, exercise of stock options and shares purchased for tax withholding)

 

 

283

 

 

 

1,717

 

 

 

(713

)

Repurchase of common stock

 

 

(2,604

)

 

 

(7,287

)

 

 

 

Payment of cash dividends

 

 

(2,323

)

 

 

(2,199

)

 

 

(1,600

)

Net cash provided by financing activities

 

 

46,406

 

 

 

11,133

 

 

 

33,935

 

Net increase (decrease) in cash and cash equivalents

 

 

972

 

 

 

(5,218

)

 

 

3,424

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(559

)

 

 

49

 

 

 

44

 

Cash and cash equivalents at beginning of year

 

 

6,168

 

 

 

11,337

 

 

 

7,869

 

Cash and cash equivalents at end of year

 

$

6,581

 

 

$

6,168

 

 

$

11,337

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

7,121

 

 

$

3,319

 

 

$

1,500

 

Income taxes, net

 

$

9,276

 

 

$

8,449

 

 

$

17,841

 

Non-cash investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Consideration paid in January 2019 in connection with an asset acquisition completed in 2018

 

$

 

 

$

3,530

 

 

$

 

RECONCILIATION OF NET INCOME TO EBITDA

Quarters ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

 

2019

 

 

2018

 

 

2017

 

Net income attributable to American Vanguard

$

3,436

 

 

$

7,416

 

 

$

8,429

 

Provision for income taxes

 

1,143

 

 

 

2,179

 

 

 

(572

)

Interest expense, net

 

1,603

 

 

 

1,063

 

 

 

868

 

Depreciation and amortization

 

5,784

 

 

 

5,912

 

 

 

5,827

 

EBITDA2

$

11,966

 

 

$

16,570

 

 

$

14,552

 

Years ended December 31, 2019, 2018 and 2017 (Unaudited)

(In thousands)

 

 

2019

 

 

2018

 

 

2017

 

Net income attributable to American Vanguard

$

13,601

 

 

$

24,195

 

 

$

20,274

 

Provision for income taxes

 

5,202

 

 

 

9,145

 

 

 

4,443

 

Interest expense, net

 

7,209

 

 

 

4,024

 

 

 

1,941

 

Depreciation and amortization

 

22,850

 

 

 

23,775

 

 

 

22,180

 

EBITDA2

$

48,862

 

 

$

61,139

 

 

$

48,838

 

1 The Company believes that the use of EBITDA (earnings before interest, taxes, depreciation and amortization) 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 condition and results of operations without giving effect to the cost of increased acquisition activity and 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 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/20200309005768/en/

Contacts

Company:
American Vanguard Corporation
William A. Kuser, Director of Investor Relations
(949) 260-1200
williamk@amvac-chemical.com

Investor Representative
The Equity Group Inc.
www.theequitygroup.com
Lena Cati
Lcati@equityny.com