EX-99.1 2 d583427dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS SECOND QUARTER AND MID-YEAR 2018 RESULTS

2017 Product and Business Acquisitions Drive Growth

Newport Beach, CA – August 6, 2018 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the second quarter and 6-month period that ended June 30, 2018.

Financial Highlights: 2018 Second Quarter – versus 2017 Second Quarter

 

   

Net sales of $107.0 million in 2018, compared with $77.9 million in 2017

 

   

Net income of $5.6 million in 2018, compared with $4.3 million in 2017

 

   

EBITDA1 of $14.0 million in 2018, compared to $11.9 million in 2017

 

   

Earnings per diluted share of $0.19 in 2018, compared with $0.15 in 2017

Financial Highlights: First 6-Months of 2018 – versus First 6-Months of 2017

 

   

Net sales of $211.2 million in 2018, compared to $148.6 million in 2017

 

   

Net income of $10.3 million in 2018, compared to $7.8 million in 2017

 

   

EBITDA1 of $27.3 million in 2018, compared to $22.4 million in 2017

 

   

Earnings per diluted share of $0.34 in 2018, compared to $0.26 in 2017

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our overall financial performance for this year’s second quarter and first half improved at both the top and bottom lines. Quarterly net sales rose 37%, and first-half net sales rose 42% due, in both periods, to the addition of new product lines from acquisitions that we completed in 2017. Net sales of pre-existing product lines were mixed during both periods. For example, while we recorded stronger sales from soil fumigants, bromacil (for high value fruits), Folex (for cotton), Impact herbicide (for corn) and Dacthal herbicide (for fruits and vegetables), we saw decreases in net sales of Bidrin (in light of high channel inventory and reduced pest pressure), Aztec® corn soil insecticide and Thimet (in light of reduced peanut acres).”

Mr. Wintemute continued, “Our manufacturing performance during the quarter was one of the best in recent history with factory activity fully absorbing manufacturing costs and yielding a net benefit during the period.

 

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.


We achieved a gross margin percentage of 40% in both the second quarter and first half of 2018, due to higher volume sales of lower margin, newly-acquired products. 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 acquisition liabilities. Throughout the course of 2018, we have continued to integrate newly-acquired businesses, launch new products, maintain the regulatory defense of important products, and advance the development of our SIMPAS precision application technology. With modest interest expense and a reduced tax rate, our net income increased by 30% for the quarter and 32% for the first half. Also EBITDA2 increased during the quarter and half-year by 17% and 22%, respectively.”

Mr. Wintemute concluded, “During the balance of 2018, we anticipate strong performance from a number of key components of our business, including seasonally higher sales of soil fumigants and our cotton defoliant Folex. Also, our Central American region and non-crop business are both primed to deliver improved sales in next two quarters. Further, we anticipate continued demand for our products in fruit and vegetables, strong sales of our Dibrom® mosquito adulticide and stable demand for our corn products leading into the 2019 spring planting season. Taken together, these factors should enable us to generate annual net sales within the range of $450 – $470 million for 2018 with little or no change in gross margin. 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, August 6, 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.

 

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.


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.

 

Company Contact:

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 (212) 836-9611

Lcati@equityny.com


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

     June 30,
2018
    Dec. 31,
2017
 

Current assets:

    

Cash and cash equivalents

   $ 7,099     $ 11,337  

Receivables:

    

Trade, net of allowance for doubtful accounts of $259 and $46, respectively

     94,933       102,534  

Other

     12,011       7,071  
  

 

 

   

 

 

 

Total receivables, net

     106,944       109,605  

Inventories

     163,180       123,124  

Prepaid expenses

     11,290       10,817  
  

 

 

   

 

 

 

Total current assets

     288,513       254,883  

Property, plant and equipment, net

     48,399       49,321  

Intangible assets, net of applicable amortization

     177,512       180,950  

Goodwill

     21,837       22,184  

Other assets

     25,753       28,254  
  

 

 

   

 

 

 

Total assets

   $ 562,014     $ 535,592  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

    

Current installments of other liabilities

   $ 3,534     $ 5,395  

Accounts payable

     64,842       53,748  

Deferred revenue

     7,320       14,574  

Accrued Program costs

     54,093       39,054  

Accrued expenses and other payables

     9,786       12,061  

Income taxes payable

     1,085       1,370  
  

 

 

   

 

 

 

Total current liabilities

     140,660       126,202  

Long-term debt, net of deferred loan fees

     74,258       77,486  

Other liabilities, excluding current installments

     9,641       10,306  

Deferred income tax liabilities

     17,224       16,284  
  

 

 

   

 

 

 

Total liabilities

     241,783       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 32,743,504 shares at June 30, 2018 and 32,241,866 shares at December 31, 2017

     3,275       3,225  

Additional paid-in capital

     79,721       75,658  

Accumulated other comprehensive loss

     (4,733     (4,507

Retained earnings

     250,068       238,953  
  

 

 

   

 

 

 
     328,331       313,329  

Less treasury stock at cost, 2,450,634 shares at June 30, 2018 and December 31, 2017

     (8,269     (8,269
  

 

 

   

 

 

 

American Vanguard Corporation stockholders’ equity

     320,062       305,060  

Non-controlling interest

     169       254  
  

 

 

   

 

 

 

Total stockholders’ equity

     320,231       305,314  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 562,014     $ 535,592  
  

 

 

   

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
     2018      2017     2018      2017  

Net sales

   $ 107,046      $ 77,905     $ 211,154      $ 148,578  

Cost of sales

     63,749        43,570       126,806        84,159  
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     43,297        34,335       84,348        64,419  

Operating expenses

     34,718        27,654       68,418        52,605  
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     8,579        6,681       15,930        11,814  

Interest expense, net

     966        400       1,803        698  
  

 

 

    

 

 

   

 

 

    

 

 

 

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

     7,613        6,281       14,127        11,116  

Income tax expense

     1,748        1,681       3,440        3,061  
  

 

 

    

 

 

   

 

 

    

 

 

 

Income before loss on equity method investments

     5,865        4,600       10,687        8,055  

Loss from equity method investments

     301        69       518        111  
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

     5,564        4,531       10,169        7,944  

Net loss (income) attributable to non-controlling interest

     35        (227     85        (188
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income attributable to American Vanguard

   $ 5,599      $ 4,304     $ 10,254      $ 7,756  
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per common share—basic

   $ .19      $ .15     $ .35      $ .27  
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per common share—assuming dilution

   $ .19      $ .15     $ .34      $ .26  
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average shares outstanding—basic

     29,330        29,050       29,309        28,999  
  

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average shares outstanding—assuming dilution

     30,190        29,605       30,113        29,561  
  

 

 

    

 

 

   

 

 

    

 

 

 

ANALYSIS OF SALES

For the three and six months ended June 30, 2018 and 2017

(In thousands)

(Unaudited)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2018      2017      2018      2017  

Net sales:

           

Crop:

           

Insecticides

   $ 32,665      $ 39,442      $ 73,958      $ 77,384  

Herbicides/soil fumigants/fungicides

     31,401        16,045        63,586        36,066  

Other, including plant growth regulators

     30,377        10,096        48,217        13,488  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total crop:

     94,443        65,583        185,761        126,938  

Non-crop

     12,603        12,322        25,393        21,640  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales:

   $ 107,046      $ 77,905      $ 211,154      $ 148,578  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net sales:

           

US

   $ 64,363      $ 55,760      $ 134,178      $ 108,004  

International

     42,683        22,145        76,976        40,574  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net sales:

   $ 107,046      $ 77,905      $ 211,154      $ 148,578  
  

 

 

    

 

 

    

 

 

    

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     For the Six Months
Ended June 30,
 
     2018     2017  

Cash flows from operating activities:

    

Net income

   $ 10,169     $ 7,944  

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

    

Depreciation and amortization of fixed and intangible assets

     9,516       8,094  

Amortization of other long term assets

     2,313       2,777  

Amortization of discounted liabilities

     202       13  

Stock-based compensation

     2,778       2,322  

Change in deferred income taxes

     (26     7  

Loss from equity method investments

     518       111  

Changes in assets and liabilities associated with operations:

    

Decrease in net receivables

     5,478       20,749  

Increase in inventories

     (40,194     (5,506

Increase in prepaid expenses and other assets

     (707     (2,658

(Increase) in income tax receivable/payable, net

     (271     (12,752

Increase in accounts payable

     11,309       579  

Decrease in deferred revenue

     (7,254     (2,126

Increase in accrued Program costs

     15,039       18,819  

Decrease in other payables and accrued expenses

     (5,151     (4,256
  

 

 

   

 

 

 

Net cash provided by operating activities

     3,719       34,117  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (3,230     (4,155

Investment

           (950

Acquisition of other intangible assets and businesses

     (1,631     (13,400
  

 

 

   

 

 

 

Net cash used in investing activities

     (4,861     (18,505
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Payments under line of credit agreement

     (62,125     (59,025

Borrowings under line of credit agreement

     58,800       45,000  

Payments on other long-term liabilities

           (26

Net receipts from the issuance of common stock (sale of stock under ESPP,

exercise of stock options, and shares purchased for tax withholding)

     1,335       (1,214

Payment of cash dividends

     (1,024     (724
  

 

 

   

 

 

 

Net cash used by financing activities

     (3,014     (15,989
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (4,156     (377

Effect of exchange rate changes on cash and cash equivalents

     (82     105  

Cash and cash equivalents at beginning of period

     11,337       7,869  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 7,099     $ 7,597  
  

 

 

   

 

 

 


Unaudited Reconciliation of Net Income to EBITDA

For the three and six months ended June 30, 2018 and June 30, 2017

(Unaudited)

 

     For the Three Months
Ended June 30,
     For the Six Months
Ended June 30,
 
     2018      2017      2018      2017  

Net income attributable to American Vanguard, as reported

   $ 5,599      $ 4,304      $ 10,254      $ 7,756  

Provision for income taxes

     1,748        1,681        3,440        3,061  

Interest expense, net

     966        400        1,803        698  

Depreciation and amortization

     5,683        5,509        11,829        10,871  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA3

   $ 13,996      $ 11,894      $ 27,326      $ 22,386  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

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.