American Vanguard Reports Third Quarter and Nine-Month 2020 Results

Conference Call and Audio & Slides Webcast Scheduled for Today at 4:30 pm ET

NEWPORT BEACH, Calif.--()--American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine months ended September 30, 2020.

Financial Highlights Fiscal 2020 Third Quarter – versus Fiscal 2019 Third Quarter

  • Net sales of $117 million in 2020, compared with $125 million in 2019
  • Net income of $2.9 million in 2020, compared with $3.1 million in 2019
  • Earnings per diluted share of $0.10 in 2020, compared with $0.11 in 2019
  • EBITDA1 of $10.4 million in 2020, compared with $12.4 million in 2019

Financial Highlights Fiscal 2020 Nine Months – versus Fiscal 2019 Nine Months

  • Net sales of $318 million in 2020, compared with $338 million in 2019
  • Net income of $7.3 million in 2020, compared with $10.2 million in 2019
  • Earnings per diluted share of $0.25 in 2020, compared with $0.34 in 2019
  • EBITDA of $30.8 million in 2020, compared to $36.9 million in 2019

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our net income for the third quarter was nearly even with that of the comparable period in 2019, despite a modest decline in our top line due largely to conservative procurement in the distribution channel, lower commodity prices and a strained farm economy. During the quarter we continued to maintain tight control over operating expenses, closely manage working capital and optimize our manufacturing assets. We also benefited from lower interest and tax expenses. While the first nine months of 2020 trended below those of 2019, we have recorded sequential top-line improvement since the start of the year in spite of a global pandemic.”

Mr. Wintemute continued, “Looking forward into the fourth quarter, we are already seeing greater optimism in the Agriculture sector spurred, in part, by rising crop commodity prices for corn, soybeans, and cotton, which bodes well for improved grower profitability. In the Midwest, with less crop rotation and more continuous corn planting, we are also beginning to see a resurgence of soil insect pressure. In addition, demand for our industry-leading soil fumigation products continues to rise. Based upon these trends and current sales activity, barring unforeseen weather or pandemic factors, we are encouraged by our prospects for the fourth quarter and into the 2021 season.”

Mr. Wintemute concluded, “While endeavoring to maximize our financial performance, we continue to pursue strategic initiatives in technology development, portfolio expansion and market access. Please listen in to our upcoming earnings call during which I will be devoting my time to our three-to-five-year outlook with a particular focus on new product development, our growing portfolio of green products and our SIMPAS prescription application technology.”

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 9, 2020. Interested parties may participate in the call by dialing (800) 381 7839 or (212) 231-2900 – 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 Company’s web site at www.american-vanguard.com. To listen to the live webcast, which this quarter will be accompanied by slides, go to the web site at least 15 minutes early to register, download and install any necessary audio software. Additionally, presentation slides will be available for download at http://www.american-vanguard.com. 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. 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

 

 

September 30,
2020

 

December 31,
2019

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,581

 

$

6,581

Receivables:

 

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $3,046 and $2,300, respectively

 

 

145,374

 

 

136,075

Other

 

 

9,064

 

 

 

16,949

Total receivables, net

 

 

154,438

 

 

153,024

Inventories, net

 

 

176,287

 

 

163,313

Prepaid expenses

 

 

10,738

 

 

10,457

 

Income taxes receivable

 

 

1,972

 

 

2,824

Total current assets

 

 

353,016

 

 

336,199

Property, plant and equipment, net

 

 

59,801

 

 

56,521

Operating lease right-of-use assets

 

 

12,128

 

 

 

11,258

Intangible assets, net of amortization

 

 

191,133

 

 

 

198,377

Goodwill

 

 

40,737

 

 

 

46,557

Other assets

 

 

18,926

 

 

 

21,186

Total assets

 

$

675,741

 

 

$

670,098

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

 

 

Current installments of other liabilities

 

$

210

 

 

$

1,513

Accounts payable

 

 

61,283

 

 

 

64,881

Deferred revenue

 

 

5,689

 

 

 

6,826

Accrued program costs

 

 

67,745

 

 

 

47,699

Accrued expenses and other payables

 

 

11,266

 

 

 

12,815

Operating lease liabilities, current

 

 

4,312

 

 

 

4,904

Total current liabilities

 

 

150,505

 

 

 

138,638

Long-term debt, net of deferred loan fees

 

 

149,362

 

 

 

148,766

Operating lease liabilities, long-term

 

 

7,979

 

 

 

6,503

Other liabilities, excluding current installments

 

 

9,087

 

 

 

12,890

Deferred income tax liabilities

 

 

14,014

 

 

 

19,145

Total liabilities

 

 

330,947

 

 

325,942

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 33,337,075 shares at September 30, 2020 and 33,233,614 shares at December 31, 2019

 

 

3,335

 

 

3,324

Additional paid-in capital

 

 

93,273

 

 

90,572

 

Accumulated other comprehensive loss

 

 

(14,520

)

 

 

(5,698

)

Retained earnings

 

 

280,866

 

 

274,118

 

 

 

362,954

 

 

362,316

Less treasury stock at cost, 3,061,040 shares at September 30, 2020 and December 31, 2019

 

 

(18,160

)

 

 

(18,160

)

Total stockholders’ equity

 

 

344,794

 

 

344,156

Total liabilities and stockholders' equity

 

$

675,741

 

$

670,098

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three-Months
Ended September 30,

 

 

For the Nine-Months
Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

$

117,439

 

 

$

124,884

 

 

$

317,956

 

 

$

337,664

 

Cost of sales

 

 

74,174

 

 

 

77,421

 

 

 

196,004

 

 

 

206,846

 

Gross profit

 

 

43,265

 

 

 

47,463

 

 

 

121,952

 

 

 

130,818

 

Operating expenses

 

 

38,782

 

 

 

40,677

 

 

 

108,882

 

 

 

110,839

 

Operating income

 

 

4,483

 

 

 

6,786

 

 

 

13,070

 

 

 

19,979

 

Interest expense, net

 

 

1,022

 

 

 

2,070

 

 

 

3,804

 

 

 

5,606

 

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

 

 

3,461

 

 

 

4,716

 

 

 

9,266

 

 

 

14,373

 

Income tax expense

 

 

492

 

 

 

1,474

 

 

 

1,852

 

 

 

4,059

 

Income before loss on equity method investment

 

 

2,969

 

 

 

3,242

 

 

 

7,414

 

 

 

10,314

 

Loss from equity method investment

 

 

42

 

 

 

89

 

 

 

80

 

 

 

149

 

Net income attributable to American Vanguard

 

$

2,927

 

 

$

3,153

 

 

$

7,334

 

 

$

10,165

 

Earnings per common share—basic

 

$

.10

 

 

$

.11

 

 

$

.25

 

 

$

.35

 

Earnings per common share—assuming dilution

 

$

.10

 

 

$

.11

 

 

$

.25

 

 

$

.34

 

Weighted average shares outstanding—basic

 

 

29,501

 

 

 

29,057

 

 

 

29,401

 

 

 

29,013

 

Weighted average shares outstanding—assuming dilution

 

 

29,973

 

 

 

29,650

 

 

 

29,926

 

 

 

29,591

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three and nine months ended September 30, 2020 and 2019

(In thousands)

(Unaudited)

 

 

 

For the three-months
ended September 30,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

48,361

 

 

$

55,072

 

 

$

(6,711

)

 

 

-12

%

US non-crop

 

 

18,251

 

 

 

18,995

 

 

 

(744

)

 

 

-4

%

US total

 

 

66,612

 

 

 

74,067

 

 

 

(7,455

)

 

 

-10

%

International

 

 

50,827

 

 

 

50,817

 

 

 

10

 

 

 

0

%

Net sales

 

$

117,439

 

 

$

124,884

 

 

$

(7,445

)

 

 

-6

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

20,146

 

 

$

23,710

 

 

$

(3,564

)

 

 

-15

%

US non-crop

 

 

8,758

 

 

 

9,860

 

 

 

(1,102

)

 

 

-11

%

US total

 

 

28,904

 

 

 

33,570

 

 

 

(4,666

)

 

 

-14

%

International

 

 

14,361

 

 

 

13,893

 

 

 

468

 

 

 

3

%

Total gross profit

 

$

43,265

 

 

$

47,463

 

 

$

(4,198

)

 

 

-9

%

 

 

For the nine-months
ended September 30,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

148,630

 

 

$

158,068

 

 

$

(9,438

)

 

 

-6

%

US non-crop

 

 

37,881

 

 

 

42,068

 

 

 

(4,187

)

 

 

-10

%

US total

 

 

186,511

 

 

 

200,136

 

 

 

(13,625

)

 

 

-7

%

International

 

 

131,445

 

 

 

137,528

 

 

 

(6,083

)

 

 

-4

%

Net sales

 

$

317,956

 

 

$

337,664

 

 

$

(19,708

)

 

 

-6

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US crop

 

$

68,119

 

 

$

69,059

 

 

$

(940

)

 

 

-1

%

US non-crop

 

 

18,535

 

 

 

21,444

 

 

 

(2,909

)

 

 

-14

%

US total

 

 

86,654

 

 

 

90,503

 

 

 

(3,849

)

 

 

-4

%

International

 

 

35,298

 

 

 

40,315

 

 

 

(5,017

)

 

 

-12

%

Total gross profit

 

$

121,952

 

 

$

130,818

 

 

$

(8,866

)

 

 

-7

%

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Nine-Months Ended
September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

7,334

 

 

$

10,165

 

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

activities:

 

 

 

 

 

 

 

 

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

 

 

14,584

 

 

 

13,892

 

Amortization of other long-term assets and deferred loan fees

 

 

3,185

 

 

 

3,174

 

Amortization of discounted liabilities

 

 

9

 

 

 

41

 

Provision for bad debts

 

 

777

 

 

 

728

 

Revision of deferred consideration

 

 

 

 

 

(3,539

)

Stock-based compensation

 

 

3,776

 

 

 

5,159

 

Change in deferred income taxes

 

 

(1,757

)

 

 

(459

)

Change in investment fair value

 

 

(281

)

 

 

 

Loss from equity method investment

 

 

80

 

 

 

149

 

Net foreign currency adjustment

 

 

(711

)

 

 

550

 

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

 

 

Increase in net receivables

 

 

(5,089

)

 

 

(15,839

)

Increase in inventories

 

 

(16,941

)

 

 

(19,713

)

Increase in prepaid expenses and other assets

 

 

(532

)

 

 

(849

)

Decrease (increase) in income tax receivable

 

 

873

 

 

 

(4,477

)

Increase in net operating lease liability

 

 

14

 

 

 

117

 

Decrease in accounts payable

 

 

(1,759

)

 

 

(5,548

)

Decrease in deferred revenue

 

 

(1,079

)

 

 

(19,800

)

Increase in accrued program costs

 

 

20,058

 

 

 

20,163

 

Decrease in other payables and accrued expenses

 

 

(3,344

)

 

 

(4,967

)

Net cash provided by (used in) operating activities

 

 

19,197

 

 

 

(21,053

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,988

)

 

 

(10,546

)

Acquisition of business, product lines, and intangible assets

 

 

(3,942

)

 

 

(31,836

)

Investment

 

 

(1,190

)

 

 

 

Net cash used in investing activities

 

 

(14,120

)

 

 

(42,382

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net borrowings under line of credit agreement

 

 

377

 

 

 

68,200

 

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

 

 

(1,064

)

 

 

(30

)

Repurchase of common stock

 

 

 

 

 

(2,604

)

Payment of cash dividends

 

 

(1,168

)

 

 

(1,741

)

Net cash (used in) provided by financing activities

 

 

(1,855

)

 

 

63,825

 

Net increase (decrease) in cash and cash equivalents

 

 

3,222

 

 

 

390

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(222

)

 

 

(671

)

Cash and cash equivalents at beginning of period

 

 

6,581

 

 

 

6,168

 

Cash and cash equivalents at end of period

 

$

9,581

 

 

$

5,887

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

3,960

 

 

$

5,524

 

Income taxes, net

 

$

2,868

 

 

$

8,066

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three and nine months September 30, 2020 and 2019

(Unaudited)

 

 

 

Three-Months Ended
September 30,

 

 

Nine-Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income attributable to American Vanguard, as reported

 

$

2,927

 

 

$

3,153

 

 

$

7,334

 

 

$

10,165

 

Provision for income taxes

 

 

492

 

 

 

1,474

 

 

 

1,852

 

 

 

4,059

 

Interest expense, net

 

 

1,022

 

 

 

2,070

 

 

 

3,804

 

 

 

5,606

 

Depreciation and amortization

 

 

6,000

 

 

 

5,688

 

 

 

17,769

 

 

 

17,066

 

EBITDA2

 

$

10,441

 

 

$

12,385

 

 

$

30,759

 

 

$

36,896

 


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 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.

Contacts

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

Contacts

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