American Vanguard Corporation (NYSE:AVD), today announced financial results for the fourth quarter and full year ended December 31, 2013.
Fiscal 2013 Fourth Quarter Financial Highlights – versus Fiscal 2012 Fourth Quarter:
- Net sales were $75.5 million compared to $104.3 million.
- Net income was $0.3 million compared to $11.3 million.
- Earnings per diluted share were $0.01 versus $0.39.
Fiscal 2013 Financial Highlights – versus Fiscal 2012 Results:
- Net sales were $381.0 million compared to $366.2 million.
- Net income was $34.4 million compared to $36.9 million.
- Earnings per diluted share were $1.19 versus $1.28.
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our performance in 2013 has been significantly influenced by unfavorable, early-season Midwest weather conditions and the resulting cautious purchasing behavior of our customers. Compared to the prior full-year period, sales grew by 4% and gross profit margins improved to 45%. Our balance sheet remains strong; stockholders equity rose for the year by 14%; we were able to provide shareholders with quarterly dividend payments totaling $0.22/share during the year; and finally, we implemented a stock buyback program during the final quarter of the year spending $1.9 million to purchase 70,000 shares.”
Mr. Wintemute continued: “2013 started out very strong for us, as corn growers built inventory in anticipation of a healthy, normal planting season. However, as we reported previously, widespread and prolonged rainfall last spring caused nearly two million flooded acres to remain fallow and deferred spring planting so extensively that some growers were forced to switch from intended corn planting to short maturity soybean varieties. As a result, planted acres of both corn and cotton decreased, and unapplied corn crop inputs from many companies accumulated as excess channel inventory. Last December, the distribution channel sharply curtailed procurement for the 2014 season in order to work through residual 2013 product. At that time, unlike some suppliers in our sector, we opted not to discount prices and extend credit terms in order to garner limited sales from the channel.”
Mr. Wintemute explained further: “We reported last December that we were expecting sales to pick-up during the 2014 first quarter. While we have seen some pick-up, sales activity of our corn soil insecticides are lagging behind what we would expect for this time of year. We are receiving mixed signals as to the prospects for our corn soil insecticides over the course of the quarter. Based upon input from our sales force, our channel partners and our peers, and taking into account current inventory and weather conditions, we believe that our net sales for the first quarter could be down as much as 20% compared to our record sales performance of Q1 2013. We expect to recover a portion of these lost sales in the second quarter, but that depends upon many factors, including how quickly fields can recover from winter conditions, length of planting season, and economic considerations such as corn and soybean commodity prices.”
Mr. Wintemute concluded, “On the more positive side, we continue to see strong demand for our Impact® corn herbicide and expect year-over-year improvements in our cotton, peanut, potato and other crop businesses during 2014. Further, corn market conditions can change quickly, and we stand ready to meet market demand as the planting season unfolds.”
Conference Call
Eric Wintemute, Chairman & CEO 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 Thursday, February 27, 2014. 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.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Years ended December 31, 2013, 2012 and 2011 (In thousands, except per share data) | ||||||||||||||
| 2013 | 2012 | 2011 | ||||||||||||
| Net sales | $ | 381,021 | $ | 366,190 | $ | 301,080 | ||||||||
| Cost of sales | 209,674 | 205,065 | 178,012 | |||||||||||
| Gross profit | 171,347 | 161,125 | 123,068 | |||||||||||
| Operating expenses | 115,612 | 101,802 | 83,842 | |||||||||||
| Operating income | 55,735 | 59,323 | 39,226 | |||||||||||
| Interest expense | 2,176 | 2,872 | 3,569 | |||||||||||
| Interest income | (1 | ) | (1 | ) | (3 | ) | ||||||||
| Interest capitalized | (274 | ) | (400 | ) | (109 | ) | ||||||||
| Extinguishment of debt | — | — | 546 | |||||||||||
| Income before provision for income taxes and loss on equity investment | 53,834 | 56,852 | 35,223 | |||||||||||
| Income taxes expense | 18,916 | 20,026 | 13,155 | |||||||||||
| Income before loss on equity investment | 34,918 | 36,826 | 22,068 | |||||||||||
| Less loss from equity method investment | 986 | — | — | |||||||||||
| Net income | 33,932 | 36,826 | 22,068 | |||||||||||
| Add back net loss attributable to non-controlling interest | 517 | 41 | — | |||||||||||
| Net income attributable to American Vanguard | $ | 34,449 | $ | 36,867 | $ | 22,068 | ||||||||
| Change in fair value of interest rate swaps | 388 | 158 | (869 | ) | ||||||||||
| Foreign currency translation adjustment | 326 | 330 | (933 | ) | ||||||||||
| Comprehensive income | $ | 35,163 | $ | 37,355 | $ | 20,266 | ||||||||
| Earnings per common share—basic | $ | 1.22 | $ | 1.32 | $ | 0.80 | ||||||||
| Earnings per common share—assuming dilution | $ | 1.19 | $ | 1.28 | $ | 0.79 | ||||||||
| Weighted average shares outstanding—basic | 28,301 | 27,914 | 27,559 | |||||||||||
| Weighted average shares outstanding—assuming dilution | 28,899 | 28,756 | 27,875 | |||||||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2013 and 2012 (In thousands, except per share data) | |||||||||||
| 2013 | 2012 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 6,680 | $ | 38,476 | |||||||
| Receivables: | |||||||||||
| Trade, net of allowance for doubtful accounts of $392 and $623, respectively | 74,060 | 76,073 | |||||||||
| Other | 892 | 1,230 | |||||||||
| 74,952 | 77,303 | ||||||||||
| Inventories | 139,830 | 87,951 | |||||||||
| Prepaid expenses | 11,435 | 13,710 | |||||||||
| Income taxes receivable | 10,088 | — | |||||||||
| Deferred income tax assets | 6,521 | 4,877 | |||||||||
| Total current assets | 249,506 | 222,317 | |||||||||
| Property, plant and equipment, net | 52,468 | 45,701 | |||||||||
| Intangible assets, net of applicable amortization | 107,007 | 113,521 | |||||||||
| Other assets | 38,462 | 18,351 | |||||||||
| $ | 447,443 | $ | 399,890 | ||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current installments of long-term debt | $ | 69 | $ | 16,247 | |||||||
| Current installments of other liabilities | 2,132 | 1,839 | |||||||||
| Accounts payable | 40,702 | 32,838 | |||||||||
| Deferred revenue | 3,788 | 20,427 | |||||||||
| Accrued program costs | 53,630 | 32,335 | |||||||||
| Tax payable | — | 1,313 | |||||||||
| Accrued expenses and other payables | 10,178 | 8,671 | |||||||||
| Total current liabilities | 110,499 | 113,670 | |||||||||
| Long-term debt, excluding current installments | 51,676 | 36,196 | |||||||||
| Other liabilities, excluding current installments | 4,143 | 5,425 | |||||||||
| Deferred income tax liabilities | 23,330 | 19,163 | |||||||||
| Total liabilities | 189,648 | 174,454 | |||||||||
| 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 31,092,782 shares in 2013 and 30,766,730 shares in 2012 | 3,109 | 3,077 | |||||||||
| Additional paid-in capital | 60,160 | 54,323 | |||||||||
| Accumulated other comprehensive loss | (1,048 | ) | (1,762 | ) | |||||||
| Retained earnings | 202,470 | 174,243 | |||||||||
| 264,691 | 229,881 | ||||||||||
| Less treasury stock at cost, 2,380,634 shares in 2013 and 2,310,634 shares in 2012 | (6,738 | ) | (4,804 | ) | |||||||
| American Vanguard Corporation stockholders’ equity | 257,953 | 225,077 | |||||||||
| Non-controlling interest | (158 | ) | 359 | ||||||||
| Total stockholders’ equity | 257,795 | 225,436 | |||||||||
| $ | 447,443 | $ | 399,890 | ||||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2013, 2012 and 2011 (In thousands) | |||||||||||||
| 2013 | 2012 | 2011 | |||||||||||
| Increase cash | |||||||||||||
| Cash flows from operating activities: | |||||||||||||
| Net income | $ | 33,932 | $ | 36,826 | $ | 22,068 | |||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||||
| Depreciation and amortization of fixed and intangible assets | 14,845 | 13,487 | 13,546 | ||||||||||
| Amortization of other long term assets | 4,598 | 2,925 | 1,983 | ||||||||||
| Amortization of discounted liabilities | 174 | 818 | 1,371 | ||||||||||
| Stock-based compensation | 3,819 | 2,950 | 1,994 | ||||||||||
| Tax benefit from exercise of stock options | (440 | ) | (621 | ) | — | ||||||||
| Increase (decrease) in deferred income taxes | 2,523 | (886 | ) | 4,711 | |||||||||
| Loss from equity method investment | 986 | — | — | ||||||||||
| Changes in assets and liabilities associated with operations: | |||||||||||||
| Decrease (increase) in net receivables | 2,351 | (7,505 | ) | (35,021 | ) | ||||||||
| (Increase) decrease in inventories | (51,879 | ) | (16,883 | ) | 2,986 | ||||||||
| (Increase) decrease in income tax receivable/payable, net | (10,961 | ) | 2,137 | 6,512 | |||||||||
| Increase in prepaid expenses and other assets | (19,733 | ) | (23,725 | ) | (1,823 | ) | |||||||
Increase in accounts payable | 8,252 | 9,781 | 8,384 | ||||||||||
| (Decrease) increase in deferred revenue | (16,639 | ) | 12,856 | 2,003 | |||||||||
| Increase in other payables and accrued expenses | 21,958 | 8,264 | 10,552 | ||||||||||
| Net cash (used in) provided by operating activities | (6,214 | ) | 40,424 | 39,266 | |||||||||
| Cash flows from investing activities: | |||||||||||||
| Capital expenditures | (15,260 | ) | (17,628 | ) | (6,261 | ) | |||||||
| Investment | (3,687 | ) | — | — | |||||||||
| Acquisitions of intangible assets | — | (3,473 | ) | (316 | ) | ||||||||
| Net cash used in investing activities | (18,947 | ) | (21,101 | ) | (6,577 | ) | |||||||
| Cash flows from financing activities: | |||||||||||||
| Net borrowings (repayments) under line of credit agreement | 51,550 | — | (7,300 | ) | |||||||||
| Payments on long-term debt | (46,000 | ) | (8,443 | ) | (8,429 | ) | |||||||
| Payment on other long-term liabilities | (1,831 | ) | (6,035 | ) | (401 | ) | |||||||
| Tax benefit from exercise of stock options | 440 | 621 | — | ||||||||||
| (Increase) decrease in other notes payable | (6,154 | ) | (51 | ) | 20,063 | ||||||||
| Repurchases of common stock | (1,934 | ) | — | — | |||||||||
Proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock options) | 1,610 | 3,227 | 580 | ||||||||||
| Non-controlling interest contribution | — | 400 | — | ||||||||||
| Payment of cash dividends | (4,804 | ) | (6,148 | ) | (2,205 | ) | |||||||
| Net cash (used in) provided by financing activities | (7,123 | ) | (16,429 | ) | 2,308 | ||||||||
| Net (decrease) increase in cash | (32,284 | ) | 2,894 | 34,997 | |||||||||
| Effect of exchange rate changes on cash | 488 | 497 | (1,070 | ) | |||||||||
| Cash at beginning of year | 38,476 | 35,085 | 1,158 | ||||||||||
| Cash at end of year | $ | 6,680 | $ | 38,476 | $ | 35,085 | |||||||
| Supplemental cash flow information: | |||||||||||||
| Cash paid during the year for: | |||||||||||||
| Interest | $ | 1,777 | $ | 1,891 | $ | 2,055 | |||||||
| Income taxes | $ | 25,271 | $ | 18,048 | $ | 6,359 | |||||||
Contacts:
William A. Kuser, 949-260-1200
Director
of Investor Relations
williamk@amvac-chemical.com
or
Investor
Representative
The Equity Group Inc.
www.theequitygroup.com
Lena
Cati, 212-836-9611
Lcati@equityny.com
