EX-99.1 2 d721341dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS FOURTH QUARTER & FULL YEAR 2018 RESULTS

Newport Beach, CA – March 11, 2019 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2018.

Fiscal 2018 Fourth Quarter Financial Highlights versus Fiscal 2017 Fourth Quarter:

 

 

Net sales were $131 million, compared to $116 million in 2017, an increase of 13%

 

 

Operating income was $11.4 million in 2018, compared to $8.4 million in 2017, an increase of 33%

 

 

Net income was $7.4 million in 2018, compared to $8.4 million in 2017 (which included a one-time $3.4 million tax benefit)

 

 

Earnings per diluted share of $0.25 in 2018, compared to $0.28 in 2017 (which included a one-time tax benefit of approximately $0.11)

 

 

EBITDA1 of $16.6 million in 2018, compared to $14.6 million in 2017

Fiscal 2018 Financial Highlights – versus Fiscal 2017:

 

 

Net sales were $454 million in 2018, compared to $355 million in 2017, an increase of 28%

 

 

Operating income was $39 million in 2018, compared to $26.8 million in 2017, an increase of 46%

 

 

Net income was $24.2 million in 2018, compared to $20.3 million in 2017 (which included a one-time $3.4 million tax benefit)

 

 

Earnings per diluted share of $0.81 in 2018, compared to $0.68 in 2017 (which included a one-time tax benefit of approximately $0.11)

 

 

EBITDA of $61.1 million in 2018, compared to $48.8 million in 2017

Financial Note: Fourth Quarter 2017 and Full-Year 2017 Net Income and Earnings per share includes a one-time tax benefit gained by the Company upon the enactment of the Tax Cut and Jobs Act on December 22, 2017. The effect on 2017 was an increase of $3.4 million in Net income for both the quarter and full year periods. This amounts to an earnings per share adjustment of $0.11 for the same periods.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our 46% improvement in operating income was driven by both our existing businesses (approximately one third) and the new products and businesses acquired during the second half of 2017 (approximately two thirds). These acquisitions broadened and diversified our product portfolio and expanded the footprint of our international business, which now constitutes one-third of our consolidated revenue. All of these assets were purchased at attractive investment values, leaving us with ample borrowing capacity to pursue additional acquisitions in 2019 and beyond.”

 

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.


Mr. Wintemute continued: “Our full-year gross profit margin remained strong at 40%, and we experienced outstanding factory utilization with under absorption costs down about $11 million year-over-year. Net income rose 19% for the full year, and, if adjusted for the $3.4 million one-time tax benefit recorded in 2017, it would have been 43%. During the same period, EBITDA2 increased by 25%.”

Mr. Wintemute concluded: “Late last year, during a period of overall equity market volatility, the Board of Directors authorized a share repurchase program, under which we have repurchased approximately $10 million in company common stock. We believe this has served to enhance stock price stability, while reversing dilution from past equity grants. With a full year’s experience in integrating our new businesses, our outlook for 2019 remains positive. Despite early season wet weather conditions in the US, we expect our global revenues for 2019 will exceed $500 million, our gross profit margins should remain in the 38% to 40% range, and our operating expenses are targeted at 31% of sales. We look forward toward giving you a more detailed presentation on the 2018 year 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 11, 2019. 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 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

Lcati@equityny.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.


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2018 and 2017

(In thousands, except share data)

(Unaudited)

 

     2018     2017  
Assets             

Current assets:

    

Cash and cash equivalents

   $ 6,168     $ 11,337  

Receivables:

    

Trade, net of allowance for doubtful accounts of $1,263 and $46, respectively

     123,320       102,534  

Other

     10,709       7,071  
  

 

 

   

 

 

 
     134,029       109,605  
  

 

 

   

 

 

 

Inventories, net

     159,895       123,124  

Prepaid expenses

     10,096       10,817  
  

 

 

   

 

 

 

Total current assets

     310,188       254,883  

Property, plant and equipment, net

     49,252       49,321  

Intangible assets, net of applicable amortization

     186,583       180,950  

Goodwill

     25,790       22,184  

Other assets

     21,774       28,254  
  

 

 

   

 

 

 

Total assets

   $ 593,587     $ 535,592  
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity             

Current liabilities:

    

Current installments of other liabilities

   $ 1,609     $ 5,395  

Accounts payable

     66,535       53,748  

Deferred revenue

     20,043       14,574  

Accrued program costs

     37,349       39,054  

Accrued expenses and other payables

     15,962       12,061  

Income taxes payable

     4,030       1,370  
  

 

 

   

 

 

 

Total current liabilities

     145,528       126,202  

Long-term debt

     96,671       77,486  

Other liabilities, excluding current installments

     6,795       10,306  

Deferred income tax liabilities, net

     15,363       16,284  
  

 

 

   

 

 

 

Total liabilities

     264,357       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 32,752,827 shares in 2018 and 32,241,866 shares in 2017

     3,276       3,225  

Additional paid-in capital

     83,177       75,658  

Accumulated other comprehensive loss

     (4,507     (4,507

Retained earnings

     262,840       238,953  
  

 

 

   

 

 

 
     344,786       313,329  

Less treasury stock at cost, 2,902,992 shares in 2018 and 2,450,634 shares in 2017

     (15,556     (8,269
  

 

 

   

 

 

 

American Vanguard Corporation stockholders’ equity

     329,230       305,060  

Non-controlling interest

     —         254  
  

 

 

   

 

 

 

Total stockholders’ equity

     329,230       305,314  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 593,587     $ 535,592  
  

 

 

   

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2018, 2017 and 2016

(In thousands, except per share data)

(Unaudited)

 

     2018      2017     2016  

Net sales

   $ 454,272      $ 355,047     $ 312,113  

Cost of sales

     271,641        207,655       183,825  
  

 

 

    

 

 

   

 

 

 

Gross profit

     182,631        147,392       128,288  

Operating expenses

     143,610        120,598       107,748  
  

 

 

    

 

 

   

 

 

 

Operating income

     39,021        26,794       20,540  

Change in fair value of derivative instrument

     1,401        —         —    

Interest expense, net

     4,024        1,941       1,623  
  

 

 

    

 

 

   

 

 

 

Income before provision for income taxes and loss on equity investments

     33,596        24,853       18,917  

Provision for income taxes

     9,145        4,443       5,540  
  

 

 

    

 

 

   

 

 

 

Income before loss on equity investments

     24,451        20,410       13,377  

Less net loss from equity method investments

     389        49       353  
  

 

 

    

 

 

   

 

 

 

Net income

     24,062        20,361       13,024  

Net loss (income) attributable to non-controlling interest

     133        (87     (236
  

 

 

    

 

 

   

 

 

 

Net income attributable to American Vanguard

   $ 24,195      $ 20,274     $ 12,788  
  

 

 

    

 

 

   

 

 

 

Earnings per common share—basic

   $ 0.83      $ 0.70     $ 0.44  
  

 

 

    

 

 

   

 

 

 

Earnings per common share—assuming dilution

   $ 0.81      $ 0.68     $ 0.44  
  

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding—basic

     29,326        29,100       28,859  
  

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding—assuming dilution

     30,048        29,703       29,394  
  

 

 

    

 

 

   

 

 

 

ANALYSIS OF SALES

For the Three Years Ended December 31, 2018

(In thousands)

(Unaudited)

 

     2018      2017      2016  

Net sales:

        

Insecticides

   $ 150,595      $ 134,377      $ 119,226  

Herbicides/soil fumigants/fungicides

     183,350        124,529        123,540  

Other, including plant growth regulators

     58,360        42,503        29,438  
  

 

 

    

 

 

    

 

 

 

Total crop:

     392,305        301,409        272,204  

Non-crop

     61,967        53,638        39,909  
  

 

 

    

 

 

    

 

 

 

Total net sales:

   $ 454,272      $ 355,047      $ 312,113  
  

 

 

    

 

 

    

 

 

 

Net Sales:

        

U.S.

   $ 300,314      $ 256,142      $ 228,854  

International

     153,958        98,905        83,259  
  

 

 

    

 

 

    

 

 

 

Total net sales:

   $ 454,272      $ 355,047      $ 312,113  
  

 

 

    

 

 

    

 

 

 


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2018, 2017 and 2016

(In thousands)

(Unaudited)

 

     2018     2017     2016  

Increase cash

      

Cash flows from operating activities:

      

Net income

   $ 24,062     $ 20,361     $ 13,024  

Adjustments to reconcile net income to net cash provided by (used in)

operating activities:

      

Depreciation and amortization of fixed and intangible assets

     18,891       16,959       16,327  

Amortization of other long term assets and debt issuance costs

     4,884       5,221       5,203  

Amortization of discounted liabilities

     359       110       16  

Stock-based compensation

     5,805       4,714       3,167  

Excess tax benefit from share based compensation

     —         —         (96

(Decrease) increase in deferred income taxes

     (561     398       (151

Operating loss from equity method investments

     389       49       353  

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

combinations:

      

(Increase) decrease in net receivables

     (21,320     754       (11,817

(Increase) decrease in inventories

     (31,440     16,183       15,901  

Decrease (increase) decrease in income tax receivable/payable, net

     2,655       (12,073     1,186  

Decrease (increase) in prepaid expenses and other assets

     186       647       (3,872

Increase in accounts payable

     9,097       3,322       9,015  

Increase (decrease) in deferred revenue

     5,468       10,726       (5,040

Decrease in accrued program costs

     (1,705     (4,529     (1,441

(Decrease) increase in other payables

     (5,424     (3,841     4,631  
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     11,346       59,001       46,406  
  

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

      

Capital expenditures

     (8,050     (6,666     (10,630

Investments

     —         (950     (3,283

Acquisitions of businesses and intangible assets

     (19,647     (81,896     (224
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (27,697     (89,512     (14,137
  

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

      

Payments under line of credit agreement

     (117,325     (103,975     (107,600

Borrowings under line of credit agreement

     136,300       141,000       80,000  

Debt issuance cost

     —         (751     —    

Cash paid to acquire non-controlling interest

     (73     —         —    

Payment on other long-term liabilities

     —         (26     (704

Excess tax benefit from share based compensation

     —         —         96  

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

exercise of stock options and shares purchased for tax withholding)

     1,717       (713     241  

Treasury shares

     (7,287     —         —    

Payment of cash dividends

     (2,199     (1,600     (578
  

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     11,133       33,935       (28,545
  

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (5,218     3,424       3,724  

Effect of exchange rate changes on cash and cash equivalents

     49       44       (1,379

Cash and cash equivalents at beginning of year

     11,337       7,869       5,524  
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of year

   $ 6,168     $ 11,337     $ 7,869  
  

 

 

   

 

 

   

 

 

 

Supplemental cash flow information:

      

Cash paid during the year for:

      

Interest

   $ 3,319     $ 1,500     $ 1,748  
  

 

 

   

 

 

   

 

 

 

Income taxes, net

   $ 8,449     $ 17,841     $ 4,947  
  

 

 

   

 

 

   

 

 

 

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

For the three years ended December 31, 2018, 2017 and 2016

(Unaudited)

 

     2018      2017      2016  

Net income attributable to American Vanguard

   $ 24,195      $ 20,274      $ 12,788  

Provision for income taxes

     9,145        4,443        5,540  

Interest expense, net

     4,024        1,941        1,623  

Depreciation and amortization

     23,775        22,180        21,530  
  

 

 

    

 

 

    

 

 

 

EBITDA3

   $ 61,139      $ 48,838      $ 41,481  

 

 

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.