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| 8-K - FORM 8-K - AMERICAN VANGUARD CORP | d572222d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD REPORTS FIRST QUARTER 2018 RESULTS
Recent Acquisitions and Traditional Business Drive Growth
Newport Beach, CA – May 8, 2018 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the quarter ended March 31, 2018.
Financial Highlights Fiscal 2018 First Quarter – versus Fiscal 2017 First Quarter
| • | Net sales of $104.1 million in 2018, compared to $70.7 million in 2017 |
| • | Net income of $4.66 million in 2018, compared to $3.45 million in 2017 |
| • | EBITDA1 of $13.3 million in 2018, compared to $10.5 million in 2017 |
| • | Earnings per diluted share of $0.16 in 2018, compared to $0.12 in 2017 |
Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our overall financial performance for this year’s first quarter improved significantly, aided by our 2017 product and company acquisitions as well as our diversified participation in many markets. Net sales rose 47%, driven by a 41% increase attributable to acquisitions and a 6% gain in AMVAC’s traditional base business. Our domestic sales experienced solid performance from granular soil insecticides, herbicides, and soil fumigants. Further, our international business grew significantly with the inclusion of AgriCenter’s Central American franchise.”
Mr. Wintemute continued, “Gross profit increased as a result of improved factory performance, organic growth in the Company’s sales and the addition of products and businesses acquired during 2017. As we anticipated in our last conference call, gross margins decreased slightly due to a product mix influenced by the AgriCenter distribution business. Our operating expenses declined as a percentage of sales, but rose on an absolute basis, as we integrated acquired businesses, made new product introductions, funded regulatory defense of important products, incurred bulk freight costs to meet strong soil fumigant demand and advanced the development of our SIMPAS precision application technology. With modest interest expenses and a reduced tax rate, we posted a 35% year-over-year increase in net income and a 27% increase in EBITDA,2 as compared to the first quarter of 2017.”
| 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 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. |
| 2 | The Company believes that 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 condition and results of operations 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 as a substitute for analysis of the Company’s results as reported in accordance with GAAP. |
Mr. Wintemute concluded, “During the balance of 2018, we expect continued growth in our herbicide products, our Central American region and our non-crop business. We also anticipate strong demand for our products in cotton, fruit and vegetables, strong sales of our Dibrom® mosquito adulticide in light of predicted Gulf Coast hurricane activity and stable demand for our corn products in spite of weather-related delays in Midwest planting. In addition, we are scheduled to introduce several new products from our development pipeline. We look forward to providing further detail on our financial performance, market outlook and future initiatives during our upcoming conference 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 Tuesday, May 8, 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.
| Company Contact: | Investor Representative | |||
| American Vanguard Corporation William A. Kuser, Director of Investor Relations (949) 260-1200 williamk@amvac-chemical.com |
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
| March 31, 2018 |
December 31, 2017 |
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| Current assets: |
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| Cash and cash equivalents |
$ | 13,018 | $ | 11,337 | ||||
| Receivables: |
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| Trade, net of allowance for doubtful accounts of $298 and $46, respectively |
111,638 | 102,534 | ||||||
| Other |
10,765 | 7,071 | ||||||
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| Total receivables, net |
122,403 | 109,605 | ||||||
| Inventories |
143,231 | 123,124 | ||||||
| Prepaid expenses |
11,390 | 10,817 | ||||||
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| Total current assets |
290,042 | 254,883 | ||||||
| Property, plant and equipment, net |
48,579 | 49,321 | ||||||
| Intangible assets, net of applicable amortization |
178,283 | 180,950 | ||||||
| Goodwill |
22,983 | 22,184 | ||||||
| Other assets |
26,906 | 28,254 | ||||||
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| Total assets |
$ | 566,793 | $ | 535,592 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Current installments of other liabilities |
$ | 5,475 | $ | 5,395 | ||||
| Accounts payable |
63,820 | 53,748 | ||||||
| Deferred revenue |
11,858 | 14,574 | ||||||
| Accrued program costs |
43,688 | 39,054 | ||||||
| Accrued expenses and other payables |
9,011 | 12,061 | ||||||
| Income taxes payable |
880 | 1,370 | ||||||
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| Total current liabilities |
134,732 | 126,202 | ||||||
| Long-term debt, net |
90,325 | 77,486 | ||||||
| Other liabilities, excluding current installments |
10,328 | 10,306 | ||||||
| Deferred income tax liabilities |
17,250 | 16,284 | ||||||
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| Total liabilities |
252,635 | 230,278 | ||||||
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| Commitments and contingent liabilities |
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| Stockholders’ equity: |
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| 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 32,668,923 shares at March 31, 2018 and 32,241,866 shares at December 31, 2017 |
3,267 | 3,225 | ||||||
| Additional paid-in capital |
77,735 | 75,658 | ||||||
| Accumulated other comprehensive loss |
(3,835 | ) | (4,507 | ) | ||||
| Retained earnings |
245,056 | 238,953 | ||||||
| Less treasury stock at cost, 2,450,634 shares at March 31, 2018 and December 31, 2017 |
(8,269 | ) | (8,269 | ) | ||||
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| American Vanguard Corporation stockholders’ equity |
313,954 | 305,060 | ||||||
| Non-controlling interest |
204 | 254 | ||||||
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| Total stockholders’ equity |
314,158 | 305,314 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 566,793 | $ | 535,592 | ||||
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| For the three months ended March 31 |
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| 2018 | 2017 | |||||||
| Net sales |
$ | 104,108 | $ | 70,673 | ||||
| Cost of sales |
63,057 | 40,589 | ||||||
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| Gross profit |
41,051 | 30,084 | ||||||
| Operating expenses |
33,700 | 24,951 | ||||||
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| Operating income |
7,351 | 5,133 | ||||||
| Interest expense, net |
837 | 298 | ||||||
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| Income before provision for income taxes and loss on equity method investments |
6,514 | 4,835 | ||||||
| Income tax expense |
1,692 | 1,380 | ||||||
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| Income before loss on equity method investments |
4,822 | 3,455 | ||||||
| Loss from equity method investments |
217 | 42 | ||||||
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| Net income |
4,605 | 3,413 | ||||||
| Loss attributable to non-controlling interest |
50 | 39 | ||||||
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| Net income attributable to American Vanguard |
$ | 4,655 | $ | 3,452 | ||||
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| Earnings per common share—basic |
$ | 0.16 | $ | 0.12 | ||||
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| Earnings per common share—assuming dilution |
$ | 0.16 | $ | 0.12 | ||||
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| Weighted average shares outstanding—basic |
29,282 | 28,947 | ||||||
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| Weighted average shares outstanding—assuming dilution |
29,972 | 29,654 | ||||||
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ANALYSIS OF SALES
For the three months ended March 31, 2018 and 2017
(In thousands)
(Unaudited)
| Three Months Ended March 31 |
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| 2018 | 2017 | |||||||
| Net sales: |
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| Crop: |
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| Insecticides |
$ | 41,293 | $ | 37,942 | ||||
| Herbicides/soil fumigants/fungicides |
32,185 | 20,021 | ||||||
| Other, including plant growth regulators and distribution |
17,840 | 3,392 | ||||||
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| 91,318 | 61,355 | |||||||
| Non-crop, including distribution |
12,790 | 9,318 | ||||||
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| Total net sales: |
$ | 104,108 | $ | 70,673 | ||||
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| Net sales: |
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| US |
$ | 69,815 | $ | 52,244 | ||||
| International |
34,293 | 18,429 | ||||||
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| Total net sales: |
$ | 104,108 | $ | 70,673 | ||||
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the three months ended March 31 |
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| 2018 | 2017 | |||||||
| Cash flows from operating activities: |
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| Net income |
$ | 4,605 | $ | 3,413 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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| Depreciation and amortization of fixed and intangible assets |
4,983 | 3,939 | ||||||
| Amortization of other long term assets |
1,163 | 1,423 | ||||||
| Amortization of discounted liabilities |
102 | 6 | ||||||
| Stock-based compensation |
1,309 | 1,080 | ||||||
| Increase in deferred income taxes |
— | 8 | ||||||
| Operating loss from equity method investment |
217 | 42 | ||||||
| Changes in assets and liabilities associated with operations: |
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| (Increase) decrease in net receivables |
(9,303 | ) | 11,422 | |||||
| Increase in inventories |
(19,558 | ) | (1,366 | ) | ||||
| Increase in prepaid expenses and other assets |
(562 | ) | (1,126 | ) | ||||
| (Increase) decrease in income tax receivable/payable, net |
(497 | ) | 793 | |||||
| Increase (decrease) in accounts payable |
9,613 | (3,025 | ) | |||||
| Decrease in deferred revenue |
(2,740 | ) | (394 | ) | ||||
| Increase in accrued program costs |
4,634 | 6,612 | ||||||
| Decrease in other payables and accrued expenses |
(3,201 | ) | (5,657 | ) | ||||
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| Net cash (used in) provided by operating activities |
(9,235 | ) | 17,170 | |||||
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| Cash flows from investing activities: |
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| Capital expenditures |
(1,553 | ) | (3,080 | ) | ||||
| Acquisitions of businesses and intangible assets |
(815 | ) | (300 | ) | ||||
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| Net cash used in investing activities |
(2,368 | ) | (3,380 | ) | ||||
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| Cash flows from financing activities: |
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| Payments under line of credit agreement |
(23,000 | ) | (27,000 | ) | ||||
| Borrowings under line of credit agreement |
35,800 | 16,000 | ||||||
| Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings) |
810 | 303 | ||||||
| Payment of cash dividends |
(438 | ) | (289 | ) | ||||
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| Net cash provided by (used in) financing activities |
13,172 | (10,986 | ) | |||||
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| Net increase in cash and cash equivalents |
1,569 | 2,804 | ||||||
| Cash and cash equivalents at beginning of period |
11,337 | 7,869 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
112 | 119 | ||||||
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| Cash and cash equivalents at end of period |
$ | 13,018 | $ | 10,792 | ||||
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Unaudited Reconciliation of Net Income to EBITDA
For the three months ended March 31, 2018 and March 31, 2017
(Unaudited)
| March 31, 2018 |
March 31, 2017 |
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| Net income attributable to American Vanguard, as reported |
$ | 4,655 | $ | 3,452 | ||||
| Provision for income taxes |
1,692 | 1,380 | ||||||
| Interest expense, net |
837 | 298 | ||||||
| Depreciation and amortization |
6,146 | 5,362 | ||||||
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| EBITDA3 |
$ | 13,330 | $ | 10,492 | ||||
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| 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. |