Product and Business Acquisitions Drive
Continued Corporate Growth
American Vanguard Corporation (NYSE:AVD) today announced
financial results for the third quarter and nine-month period that
ended September 30, 2018.
Financial Highlights: Third Quarter of 2018 – versus Third
Quarter of 2017
- Net sales of $112 million in 2018,
compared to $90 million in 2017
- Net income of $6.5 million in 2018,
compared to $4.1 million in 2017
- EBITDA1 of $17 million in 2018,
compared to $12 million in 2017
- Earnings per diluted share of $0.22 in
2018, compared to $0.14 in 2017
Financial Highlights: First Nine-Months of 2018 – versus
First Nine-Months of 2017
- Net sales of $323 million in 2018,
compared to $239 million in 2017
- Net income of $16.7 million in 2018,
compared to $11.8 million in 2017
- EBITDA of $45 million in 2018, compared
to $34 million in 2017
- Earnings per diluted share of $0.56 in
2018, compared to $0.40 in 2017
Eric Wintemute, Chairman and CEO of American Vanguard commented,
“Our overall financial performance for the third quarter and first
nine months of 2018 improved at both the top and bottom lines. Net
sales rose 24% in the quarter and 35% year-to-date due to
businesses acquired in 2017, including OHP and AgriCenter. Net
sales of pre-acquisition product lines were comparatively stable
during both periods. In the quarter, we had strong performance from
our cotton products and, on a year to date basis, our fumigants.
Offsetting these performances, in the quarter, we recorded lower
sales of Dibrom® mosquito adulticide - which, in the prior year,
had experienced extraordinary demand in the aftermath of Hurricanes
Harvey and Irma.”
Mr. Wintemute continued, “Manufacturing performance continued
its recent strength, contributing positively to our gross margin
percentage of 41% in the third quarter and 40% year-to-date.
Further, while our operating expenses rose on an absolute basis,
they declined as a percentage of net sales, due in part to improved
economies of scale across our businesses and in part to a G&A
benefit from our quarterly revaluation of deferred purchase price
consideration relating to 2017 acquisitions. Throughout the course
of 2018, we have continued to integrate businesses acquired in
2017, launch innovative new products, maintain necessary regulatory
compliance, and advance the development of our SIMPAS precision
application technology. During the third quarter, we recorded a
one-time charge related to a change in the original estimate for
the transition tax section of the 2017 Tax Cuts and Jobs Act.
Overall, our net income increased by 60% for the quarter and 42%
for the first nine months and, during the same periods, EBITDA2
increased by 45% and 30%, respectively.”
Mr. Wintemute concluded, “During the final quarter of 2018, we
expect solid year-over-year sales of our soil fumigants and our
Equus fungicide, as well as from our domestic non-crop and our
Central America distribution businesses. Further, we anticipate
continued demand for our products in fruits and vegetables and
pre-season purchasing demand for our corn products leading into the
2019 spring planting season. Taken together we anticipate achieving
sales revenues in the range of $450 - $460 million for full year
2018 and gross margins in line with our year to date performance.
We will provide additional detail on our financial performance and
business prospects during the 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 at 4:30 pm ET / 1:30 pm PT on
Monday, November 5, 2018. 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.
_______________
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 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 in 2017 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.
AMERICAN VANGUARD CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
(Unaudited)
ASSETS
September 30, December 31, 2018
2017 Current assets: Cash and cash equivalents $ 9,368 $
11,337 Receivables: Trade, net of allowance for doubtful accounts
of $587 and $46, respectively 125,046 102,534 Other 12,282
7,071 Total receivables, net 137,328 109,605 Inventories,
net 162,760 123,124 Prepaid expenses 11,352 10,817
Total current assets 320,808 254,883 Property, plant and equipment,
net 48,315 49,321 Intangible assets, net of applicable amortization
174,801 180,950 Goodwill 21,837 22,184 Other assets 24,150
28,254 Total assets $ 589,911 $ 535,592
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Current installments of other liabilities $ 481 $ 5,395 Accounts
payable 59,769 53,748 Deferred revenue 609 14,574 Accrued program
costs 61,936 39,054 Accrued expenses and other payables 11,686
12,061 Income taxes payable 3,446 1,370 Total current
liabilities 137,927 126,202 Long-term debt, net of deferred loan
fees 97,313 77,486 Other liabilities, excluding current
installments 8,831 10,306 Deferred income tax liabilities
17,216 16,284 Total liabilities 261,287
230,278 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 32,757,098 shares at
September 30, 2018 and 32,241,866 shares at December 31, 2017 3,276
3,225 Additional paid-in capital 81,573 75,658 Accumulated other
comprehensive loss (4,095 ) (4,507 ) Retained earnings
256,005 238,953 336,759 313,329
Less treasury stock at cost, 2,450,634
shares at September 30, 2018 and December 31, 2017
(8,269 ) (8,269 ) American Vanguard Corporation
stockholders’ equity 328,490 305,060 Non-controlling interest
134 254 Total stockholders’ equity 328,624
305,314 Total liabilities and stockholders' equity $ 589,911
$ 535,592
AMERICAN VANGUARD CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
data)
(Unaudited)
For the Three MonthsEnded
September 30,
For the Nine Months Ended
September 30,
2018 2017 2018
2017 Net sales $ 111,780 $ 89,975 $ 322,934 $ 238,553 Cost
of sales 66,480 51,943 193,286 136,102
Gross profit 45,300 38,032 129,648 102,451 Operating expenses
33,635 31,570 102,011 84,175 Operating
income 11,665 6,462 27,637 18,276 Interest expense, net
1,116 375 2,961 1,073
Income before provision for income taxes
and loss on equity method investments
10,549 6,087 24,676 17,203 Income tax expense 3,526
1,954 6,966 5,015 Income before loss on equity method
investments 7,023 4,133 17,710 12,188 Loss from equity method
investments 533 115 1,051 226 Net
income 6,490 4,018 16,659 11,962 Net (loss) income attributable to
non-controlling interest 35 71 120 (117
) Net income attributable to American Vanguard $ 6,525 $ 4,089 $
16,779 $ 11,845 Earnings per common share—basic $ .22 $ .14 $ .57 $
.41 Earnings per common share—assuming dilution $ .22 $ .14 $ .56 $
.40 Weighted average shares outstanding—basic 29,399
29,193 29,340 29,064 Weighted average shares
outstanding—assuming dilution 30,209 29,783
30,146 29,648
ANALYSIS OF SALES
For the three and nine months ended
September 30, 2018 and 2017
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2018 2017 2018
2017 Net sales: Insecticides $ 25,475 $ 24,866 $ 99,433 $
102,249 Herbicides/soil fumigants/fungicides 34,577 32,717 98,163
68,783 Other, including plant growth regulators 35,302
17,191 83,519 30,680 Total crop: 95,354 74,774
281,115 201,712 Non-crop 16,426 15,201 41,819
36,841 Total net sales: $ 111,780 $ 89,975 $ 322,934 $
238,553 Net sales: US $ 71,711 $ 65,842 $ 205,889 $ 173,877
International 40,069 24,133 117,045
64,676 Total net sales: $ 111,780 $ 89,975 $ 322,934 $ 238,553
AMERICAN VANGUARD CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
For the Nine Months Ended
September 30,
2018 2017 Cash flows from operating
activities: Net income $ 16,659 $ 11,962
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of fixed and intangible assets 14,233
12,358 Amortization of other long term assets 3,630 3,995
Amortization of discounted liabilities 314 20 Stock-based
compensation 4,235 3,585 (Decrease) increase in deferred income
taxes (34 ) 6 Loss from equity method investments 1,051 226 Changes
in assets and liabilities associated with operations: Increase in
net receivables (24,382 ) (15,746 ) Increase in inventories (39,305
) (2,213 ) Increase in prepaid expenses and other assets (959 )
(3,678 ) Increase (decrease) in income tax receivable/payable, net
2,069 (12,137 ) Increase in accounts payable 5,711 4,556 Decrease
in deferred revenue (13,965 ) (3,848 ) Increase in accrued program
costs 22,882 22,720 Decrease in other payables and accrued expenses
(7,229 ) (3,562 ) Net cash (used) provided by
operating activities (15,090 ) 18,244 Cash flows from
investing activities: Capital expenditures (5,154 ) (5,333 )
Investments — (950 ) Acquisition of product lines and other
intangible assets (1,634 ) (25,904 ) Net cash used in
investing activities (6,788 ) (32,187 ) Cash flows
from financing activities: Payments under line of credit agreement
(71,125 ) (59,025 ) Borrowings under line of credit agreement
90,800 76,000 Payments on other long-term liabilities — (26 )
Net payments from the issuance of common
stock (sale of stock under ESPP, exercise of stock options, and
shares purchased for tax withholding)
1,731 (820 ) Payment of cash dividends (1,611 )
(1,161 ) Net cash provided by financing activities 19,795
14,968 Net (decrease) increase in cash and cash equivalents
(2,083 ) 1,025 Effect of exchange rate changes on cash and cash
equivalents 114 151 Cash and cash equivalents at beginning of
period 11,337 7,869 Cash and cash equivalents at end
of period $ 9,368 $ 9,045
UNAUDITED RECONCILIATION OF NET INCOME
TO EBITDA
For the three and nine months ended
September 30, 2018 and September 30, 2017
(Unaudited)
For the Three Months Ended
Sept 30,
For the Nine Months Ended Sept
30,
2018 2017 2018
2017 Net income attributable to American Vanguard, as
reported $ 6,525 $ 4,089 $ 16,779 $ 11,845 Provision for income
taxes 3,526 1,954 6,966 5,015 Interest expense, net 1,116 375 2,961
1,073 Depreciation and amortization 6,034 5,482
17,863 16,353
EBITDA3
$ 17,201 $ 11,900 $ 44,569 $ 34,286
_______________
3
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/20181105005936/en/
Company:American Vanguard CorporationWilliam A. Kuser,
Director of Investor Relations(949)
260-1200williamk@amvac-chemical.comorInvestor
Representative:The Equity Group Inc.www.theequitygroup.comLena
Cati, (212) 836-9611Lcati@equityny.com
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