American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine-month period ended September 30, 2014.
Fiscal 2014 Third Quarter Financial Highlights – versus Fiscal 2013 Third Quarter Results
• Net sales declined from $97.2 million to $71.6 million
• Net income declined from $8.9 million to $0.7 million
• Earnings per diluted share declined from $0.31 to $0.03
Fiscal 2014 Nine Month Financial Highlights – versus Fiscal 2013 Nine Month Results
• Net sales declined from $305.5 million to $221.0 million
• Net income declined from $34.2 million to $3.0 million
• Earnings per diluted share declined from $1.18 to $0.11
Note: Further details are available in the financial schedules attached to this press release
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our third quarter and nine month financial results are considerably below our record-setting performance for the same periods during the prior year. As you may recall, adverse weather in the Midwest led to surplus inventory of corn products in the distribution channel. Over 80% of our diminished sales revenue in the third quarter of 2014 resulted from lower restocking orders for granular soil insecticides, as the distribution channel worked off excess 2013 carryover inventory. At this point in the year, we believe that current inventory levels in the channel are much closer to the historical average. While we experienced some softness in our cotton and mosquito control insecticides, most of our other product lines performed at or above their seasonal expectations.”
Mr. Wintemute concluded, “As we approach the 2015 planting season, we expect to see improving demand for our industry-leading portfolio of granular SmartBox® products as well as for our new liquid, fertilizer-ready corn soil insecticide Xpedient®. We intend to gradually raise our manufacturing utilization rates and expect to benefit from the process improvements, in-sourcing and cost reductions that we have implemented. We will continue tight control of our operating expenses while maintaining the organization’s capabilities to capitalize on promising product acquisition and development opportunities. While challenging conditions may continue in the agricultural market, American Vanguard has the ability to adapt and the strength to generate greater growth, strong profitability and solid shareholder returns.”
Conference Call
Eric Wintemute, Chairman & CEO and David Johnson, VP & CFO, will conduct a conference call focusing on the financial results at 4:30 pm ET / 1:30 pm PT on Thursday, October 30, 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 as well as the S&P Small Cap 600 Index. To learn more about American Vanguard, please reference the Company’s web site at www.amvac-chemical.com.
The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in the conference call referenced 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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share data) (Unaudited) | ||||||||||||||||||||||
| For the three months ended September 30 | For the nine months ended September 30 | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| Net sales | $ | 71,635 | $ | 97,201 | $ | 221,043 | $ | 305,499 | ||||||||||||||
| Cost of sales | 43,342 | 54,042 | 137,785 | 166,493 | ||||||||||||||||||
| Gross profit | 28,293 | 43,159 | 83,258 | 139,006 | ||||||||||||||||||
| Operating expenses | 26,669 | 28,025 | 76,949 | 84,823 | ||||||||||||||||||
| Operating income | 1,624 | 15,134 | 6,309 | 54,183 | ||||||||||||||||||
| Interest expense | 804 | 464 | 2,292 | 1,712 | ||||||||||||||||||
| Less interest capitalized | (25 | ) | (20 | ) | (56 | ) | (245 | ) | ||||||||||||||
| Income before income taxes and loss on equity investment | 845 | 14,690 | 4,073 | 52,716 | ||||||||||||||||||
| Income taxes expense | — | 5,559 | 856 | 18,500 | ||||||||||||||||||
| Income before loss on equity investment | 845 | 9,131 | 3,217 | 34,216 | ||||||||||||||||||
| Deduct net loss from equity method investment | (237 | ) | (386 | ) | (633 | ) | (386 | ) | ||||||||||||||
| Net income | 608 | 8,745 | 2,584 | 33,830 | ||||||||||||||||||
| Add back net loss attributable to non-controlling interest | 124 | 125 | 452 | 341 | ||||||||||||||||||
| Net income attributable to American Vanguard | 732 | 8,870 | 3,036 | 34,171 | ||||||||||||||||||
| Change in fair value of interest rate swaps | 145 | 133 | 426 | 485 | ||||||||||||||||||
| Foreign currency translation adjustment | (491 | ) | (126 | ) | (348 | ) | (195 | ) | ||||||||||||||
| Comprehensive income | $ | 386 | $ | 8,877 | $ | 3,114 | $ | 34,461 | ||||||||||||||
| Earnings per common share—basic | $ | 0.03 | $ | 0.31 | $ | 0.11 | $ | 1.21 | ||||||||||||||
| Earnings per common share—assuming dilution | $ | 0.03 | $ | 0.31 | $ | 0.11 | $ | 1.18 | ||||||||||||||
| Weighted average shares outstanding—basic | 28,466 | 28,322 | 28,422 | 28,295 | ||||||||||||||||||
| Weighted average shares outstanding—assuming dilution | 28,797 | 28,889 | 28,888 | 28,890 | ||||||||||||||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) | |||||||||||
ASSETS | |||||||||||
| Sept. 30, 2014 | Dec. 31, 2013 | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 5,045 | $ | 6,680 | |||||||
| Receivables: | |||||||||||
| Trade, net of allowance for doubtful accounts of $434 and $392, respectively | 89,287 | 74,060 | |||||||||
| Other | 2,660 | 892 | |||||||||
| Total receivables | 91,947 | 74,952 | |||||||||
| Inventories | 171,520 | 139,830 | |||||||||
| Prepaid expenses | 14,086 | 11,435 | |||||||||
| Income taxes receivable | 2,414 | 10,088 | |||||||||
| Deferred income tax assets | 6,521 | 6,521 | |||||||||
| Total current assets | 291,533 | 249,506 | |||||||||
| Property, plant and equipment, net | 51,214 | 52,468 | |||||||||
| Intangible assets, net of applicable amortization | 102,192 | 107,007 | |||||||||
| Other assets | 37,037 | 38,462 | |||||||||
| $ | 481,976 | $ | 447,443 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current installments of long-term debt | $ | 71 | $ | 69 | |||||||
| Current installments of other liabilities | 1,397 | 2,132 | |||||||||
| Accounts payable | 17,935 | 40,702 | |||||||||
| Deferred revenue | 1,019 | 3,788 | |||||||||
| Accrued program costs | 72,790 | 53,630 | |||||||||
| Accrued expenses and other payables | 7,412 | 10,178 | |||||||||
| Total current liabilities | 100,624 | 110,499 | |||||||||
| Long-term debt, excluding current installments | 95,073 | 51,676 | |||||||||
| Other liabilities, excluding current installments | 3,380 | 4,143 | |||||||||
| Deferred income tax liabilities | 23,002 | 23,330 | |||||||||
| Total liabilities | 222,079 | 189,648 | |||||||||
| 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 31,554,063 | |||||||||||
| shares at September 30, 2014 and 31,092,782 shares at December 31, 2013 | 3,156 | 3,109 | |||||||||
| Additional paid-in capital | 65,038 | 60,160 | |||||||||
| Accumulated other comprehensive loss | (970 | ) | (1,048 | ) | |||||||
| Retained earnings | 201,252 | 202,470 | |||||||||
| 268,476 | 264,691 | ||||||||||
| Less treasury stock, at cost, 2,450,634 shares at September 30, 2014 and 2,380,634 shares | |||||||||||
| at December 31, 2013 | (8,269 | ) | (6,738 | ) | |||||||
| American Vanguard Corporation stockholders’ equity | 260,207 | 257,953 | |||||||||
| Non-controlling interest | (310 | ) | (158 | ) | |||||||
| Total stockholders’ equity | 259,897 | 257,795 | |||||||||
| $ | 481,976 | $ | 447,443 | ||||||||
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For The Nine Months Ended September 30, 2014 and 2013 (Unaudited) | |||||||||||
Increase (decrease) in cash | 2014 | 2013 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 2,584 | $ | 33,830 | |||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization of fixed and intangible assets | 11,996 | 11,183 | |||||||||
| Amortization of other long term assets | 4,332 | 2,976 | |||||||||
| Amortization of discounted liabilities | 249 | 130 | |||||||||
| Stock-based compensation | 3,046 | 2,895 | |||||||||
| Tax benefit from exercise of stock options | (263 | ) | (57 | ) | |||||||
| Loss from equity method investment | 633 | 386 | |||||||||
| Gain on dilution of equity method investment | (954 | ) | — | ||||||||
| Changes in assets and liabilities associated with operations: | |||||||||||
| Increase in net receivables | (16,995 | ) | (34,304 | ) | |||||||
| Increase in inventories | (31,690 | ) | (39,221 | ) | |||||||
| Increase in prepaid expenses and other assets | (5,237 | ) | (14,564 | ) | |||||||
| Decrease (increase) in income tax receivable | 7,937 | (520 | ) | ||||||||
| Decrease in deferred tax | (328 | ) | — | ||||||||
| (Decrease) increase in accounts payable | (22,341 | ) | 412 | ||||||||
| Decrease in deferred revenue | (2,769 | ) | (20,034 | ) | |||||||
| Increase in other payables and accrued expenses | 15,964 | 64,088 | |||||||||
| Net cash (used in) provided by operating activities | (33,836 | ) | 7,200 | ||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (5,947 | ) | (12,290 | ) | |||||||
| Investment | — | (3,687 | ) | ||||||||
| Net cash used in investing activities | (5,947 | ) | (15,977 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Net borrowings under line of credit agreement | 43,450 | 38,750 | |||||||||
| Payments on long-term debt | — | (46,000 | ) | ||||||||
| Payments on other long-term liabilities | (1,371 | ) | (1,415 | ) | |||||||
| Tax benefit from exercise of stock options | 263 | 57 | |||||||||
| Decrease in other notes payable | — | (6,154 | ) | ||||||||
| Repurchases of common stock | (1,531 | ) | — | ||||||||
| Non-controlling interest contribution | 300 | — | |||||||||
| Payment of cash dividends | (4,251 | ) | (3,390 | ) | |||||||
| Proceeds from the issuance of common stock (sale of stock under ESPP and exercise of | |||||||||||
| stock options) | 1,616 | 929 | |||||||||
| Net cash provided by (used in) financing activities | 38,476 | (17,223 | ) | ||||||||
| Net decrease in cash and cash equivalents | (1,307 | ) | (26,000 | ) | |||||||
| Cash and cash equivalents as of the beginning of the period | 6,680 | 38,476 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (328 | ) | (151 | ) | |||||||
| Cash and cash equivalents as of the end of the period | $ | 5,045 | $ | 12,325 | |||||||
Contacts:
American Vanguard Corporation
William A. Kuser,
949-260-1200
Director of Investor Relations
williamk@amvac-chemical.com
or
Investor
Representative
The Equity Group Inc.
Lena Cati, 212-836-9611
Lcati@equityny.com
www.theequitygroup.com
