American Vanguard Corporation (NYSE:AVD) today announced financial results for the fourth quarter and full year ended December 31, 2016.
Fiscal 2016 Fourth Quarter Financial Highlights – versus Fiscal 2015 Fourth Quarter:
- Net sales were $87.5 million in Q4 2016 compared to $83.8 million in Q4 2015.
- Net income was $3.9 million in Q4 2016 compared to $3.0 million in Q4 2015.
- Earnings per diluted share were $0.13 in Q4 2016 compared to $0.10 in Q4 2015.
Fiscal 2016 Financial Highlights – versus Fiscal 2015:
- Net sales were $312.1 million in FY 2016 compared to $289.4 million in FY 2015.
- Net income was $12.8 million in FY 2016 compared to $6.6 million in FY 2015.
- Earnings per diluted share were $0.44 in FY 2016 compared to $0.23 in FY 2015.
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our improved performance in 2016 reflects a solid base business and disciplined management in spite of industry conditions, as low crop commodity prices continue to cause cautious purchasing of all crop inputs, including crop protection products. In 2016 our industry posted revenues that, on average, were about 7% below those of the prior year. In contrast, by following a practice of systematically reducing inventory to meet true demand, maintaining brand value, and optimizing our cost structures, this past year American Vanguard has been able to generate a sequential revenue increase of 8% and earnings growth of 94%.”
Mr. Wintemute continued: “We continue to see stable demand for many of our products both at home and abroad. Revenue growth in 2016 was driven mainly by our herbicide products and by our valuable non-crop portfolio. In addition, we have expanded domestic market access with our YES-Retail program and have promoted several new products in international regions and the US soybean market. Further, our operations team has continued to control manufacturing costs, and we have exceeded our inventory reduction target with a year-end level of $121 million. Improved sales, operating earnings and working capital management have enabled us to generate $125 million in cash over the last 2 years. Our improved cash flow has allowed us to reduce our debt to $41 million, increased our borrowing capacity and, as a result, positioned the Company for product acquisitions that we expect will likely emerge from the current round of industry consolidation.”
Mr. Wintemute concluded: “Our outlook for 2017 is positive. We anticipate a long planting season this Spring, following relatively temperate winter weather conditions, that often stimulate heavier pest pressure. We expect relative stability in the Midwest corn markets; this should drive sales of our corn soil insecticides and herbicides, given that channel inventory levels are now at close to historically normal levels. An expected 10% increase in U.S. cotton acreage favors our foliar insecticide and harvest aid products. Internationally, we are poised for modest growth driven by the market penetration of several newly acquired products. In our non-crop business, we also expect to experience continued expansion. We will, of course, continue to manage working capital and operational costs closely. However, given the shift to precision agriculture, it is important that we continue to invest in technology innovation, such as SIMPAS, as we did in 2016. Finally, we will continue to expand our international footprint through product acquisitions and strategic alliances such as our Hong Kong joint venture. In short, we will continue to do the things that have enabled us to improve our financial performance and balance sheet, while positioning ourselves for the future.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, EVP & COO and David T. Johnson, VP & CFO, will conduct a conference call from our manufacturing facility in Axis, Alabama…focusing on the financial results and strategic themes…at 9:00 am ET on Tuesday, March 7, 2017. 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.
CONSOLIDATED BALANCE SHEETS December 31, 2016 and 2015 (In thousands, except share data) | ||||||||||
| 2016 | 2015 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 7,869 | $ | 5,524 | ||||||
| Receivables: | ||||||||||
| Trade, net of allowance for doubtful accounts of $42 and $423, respectively | 83,777 | 72,835 | ||||||||
| Other | 3,429 | 2,554 | ||||||||
| 87,206 | 75,389 | |||||||||
| Inventories | 120,576 | 136,477 | ||||||||
| Prepaid expenses | 11,424 | 11,172 | ||||||||
| Total current assets | 227,075 | 228,562 | ||||||||
| Property, plant and equipment, net | 50,295 | 47,972 | ||||||||
| Intangible assets, net of applicable amortization | 121,433 | 129,160 | ||||||||
| Other assets | 31,153 | 29,576 | ||||||||
| Total assets | $ | 429,956 | $ | 435,270 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Current installments of other notes payable | $ | — | $ | 55 | ||||||
| Current installments of other liabilities | 26 | 514 | ||||||||
| Accounts payable | 24,358 | 15,343 | ||||||||
| Deferred revenue | 3,848 | 8,888 | ||||||||
| Accrued program costs | 42,930 | 44,371 | ||||||||
| Accrued expenses and other payables | 12,072 | 7,111 | ||||||||
| Income taxes payable | 13,840 | 12,430 | ||||||||
| Total current liabilities | 97,074 | 88,712 | ||||||||
| Long-term debt and other notes payable, excluding current installments | 40,951 | 68,321 | ||||||||
| Other liabilities, excluding current installments | 2,868 | 3,054 | ||||||||
| Deferred income tax liabilities, net | 6,706 | 6,857 | ||||||||
| Total liabilities | 147,599 | 166,944 | ||||||||
| 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 31,819,695 shares in 2016 and 31,638,225 shares in 2015 | 3,183 | 3,164 | ||||||||
| Additional paid-in capital | 71,699 | 68,534 | ||||||||
| Accumulated other comprehensive loss | (4,851 | ) | (3,541 | ) | ||||||
| Retained earnings | 220,428 | 208,507 | ||||||||
| 290,459 | 276,664 | |||||||||
| Less treasury stock at cost, 2,450,634 shares in 2016 and in 2015 | (8,269 | ) | (8,269 | ) | ||||||
| American Vanguard Corporation stockholders’ equity | 282,190 | 268,395 | ||||||||
| Non-controlling interest | 167 | (69 | ) | |||||||
| Total stockholders’ equity | 282,357 | 268,326 | ||||||||
| Total liabilities and stockholders’ equity | $ | 429,956 | $ | 435,270 | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2016, 2015 and 2014 (In thousands, except per share data) | ||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||
| Net sales | $ | 312,113 | $ | 289,382 | $ | 298,634 | ||||||||
| Cost of sales | 183,825 | 177,480 | 184,138 | |||||||||||
| Gross profit | 128,288 | 111,902 | 114,496 | |||||||||||
| Operating expenses | 107,748 | 100,378 | 107,786 | |||||||||||
| Operating income | 20,540 | 11,524 | 6,710 | |||||||||||
| Interest expense, net | 1,623 | 2,562 | 3,066 | |||||||||||
| Income before provision for income taxes and loss on equity investment | 18,917 | 8,962 | 3,644 | |||||||||||
| Income taxes expense (benefit) | 5,540 | 2,009 | (451 | ) | ||||||||||
| Income before loss on equity investment | 13,377 | 6,953 | 4,095 | |||||||||||
| Less net loss from equity method investment | (353 | ) | (636 | ) | (29 | ) | ||||||||
| Net income | 13,024 | 6,317 | 4,066 | |||||||||||
| Net (income) loss attributable to non-controlling interest | (236 | ) | 274 | 775 | ||||||||||
| Net income attributable to American Vanguard | $ | 12,788 | $ | 6,591 | $ | 4,841 | ||||||||
| Earnings per common share—basic | $ | 0.44 | $ | 0.23 | $ | 0.17 | ||||||||
| Earnings per common share—assuming dilution | $ | 0.44 | $ | 0.23 | $ | 0.17 | ||||||||
| Weighted average shares outstanding—basic | 28,859 | 28,673 | 28,436 | |||||||||||
| Weighted average shares outstanding—assuming dilution | 29,394 | 29,237 | 28,912 | |||||||||||
ANALYSIS OF SALES Years ended December 31, 2016, 2015 and 2014 (In thousands) | ||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||
| Net sales: | ||||||||||||||||||
| Insecticides | $ | 119,226 | $ | 117,180 | $ | 135,705 | ||||||||||||
| Herbicides/soil fumigants/fungicides | 123,540 | 111,897 | 101,785 | |||||||||||||||
| Other, including plant growth regulators | 29,438 | 29,013 | 30,220 | |||||||||||||||
| Total crop | 272,204 | 258,090 | 267,710 | |||||||||||||||
| Non-crop | 39,909 | 31,292 | 30,924 | |||||||||||||||
| $ | 312,113 | $ | 289,382 | $ | 298,634 | |||||||||||||
| Net sales: | ||||||||||||||||||
| U.S. | $ | 228,854 | $ | 212,087 | $ | 224,928 | ||||||||||||
| International | 83,259 | 77,295 | 73,706 | |||||||||||||||
| Net sales: | $ | 312,113 | $ | 289,382 | $ | 289,634 | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2016, 2015 and 2014 (In thousands) | ||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||
| Increase cash | ||||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | 13,024 | $ | 6,317 | $ | 4,066 | ||||||||
|
Adjustments to reconcile net income to net cash provided by (used in)
operating activities: | ||||||||||||||
| Depreciation and amortization of fixed and intangible assets | 16,327 | 16,474 | 16,332 | |||||||||||
| Amortization of other long term assets | 5,203 | 5,275 | 5,811 | |||||||||||
| Amortization of discounted liabilities | 16 | 140 | 324 | |||||||||||
| Stock-based compensation | 3,167 | 3,881 | 4,153 | |||||||||||
| Excess tax benefit from share based compensation | (96 | ) | (23 | ) | (300 | ) | ||||||||
| Increase in deferred income taxes | (151 | ) | 27 | 2,619 | ||||||||||
| Operating loss from equity method investment | 353 | 629 | 983 | |||||||||||
| Loss (gain) from dilution of equity method investment | — | 7 | (954 | ) | ||||||||||
| Changes in assets and liabilities associated with operations: | ||||||||||||||
| (Increase) decrease in net receivables | (11,817 | ) | 13,034 | (13,471 | ) | |||||||||
| Decrease (increase) in inventories | 12,373 | 29,154 | (25,801 | ) | ||||||||||
| Increase in income tax receivable/payable, net | 1,186 | 4,872 | 4,424 | |||||||||||
| (Increase) decrease in prepaid expenses and other assets | (344 | ) | 2,082 | (4,743 | ) | |||||||||
| Increase (decrease) in accounts payable | 9,015 | (5,068 | ) | (19,951 | ) | |||||||||
| (Decrease) increase in deferred revenue | (5,040 | ) | 7,990 | (2,890 | ) | |||||||||
|
Increase (decrease) in other payables, accrued program costs and
expenses | 3,190 | (6,223 | ) | (4,697 | ) | |||||||||
| Net cash provided by (used in) operating activities | 46,406 | 78,568 | (34,095 | ) | ||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | (10,630 | ) | (6,899 | ) | (7,180 | ) | ||||||||
| Investment | (3,283 | ) | (125 | ) | (500 | ) | ||||||||
| Acquisitions of intangible assets | (224 | ) | (36,667 | ) | — | |||||||||
| Net cash used in investing activities | (14,137 | ) | (43,691 | ) | (7,680 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||
| Payments under line of credit agreement | (107,600 | ) | (121,400 | ) | (44,600 | ) | ||||||||
| Borrowings under line of credit agreement | 80,000 | 90,880 | 92,450 | |||||||||||
| Payment on other long-term liabilities | (704 | ) | (1,543 | ) | (1,756 | ) | ||||||||
| Excess tax benefit from share based compensation | 96 | 23 | 300 | |||||||||||
| Repurchases of common stock | — | — | (1,531 | ) | ||||||||||
|
Proceeds from the issuance of common stock (sale of stock under ESPP
and exercise of stock options) | 241 | 317 | 1,666 | |||||||||||
| Non-controlling interest contribution | — | — | 299 | |||||||||||
| Payment of cash dividends | (578 | ) | (1,141 | ) | (5,672 | ) | ||||||||
| Net cash (used in) provided by financing activities | (28,545 | ) | (32,864 | ) | 41,156 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 3,724 | 2,013 | (619 | ) | ||||||||||
| Effect of exchange rate changes on cash | (1,379 | ) | (1,374 | ) | (1,176 | ) | ||||||||
| Cash and cash equivalents at beginning of year | 5,524 | 4,885 | 6,680 | |||||||||||
| Cash and cash equivalents at end of year | $ | 7,869 | $ | 5,524 | $ | 4,885 | ||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash paid (received) during the year for: | ||||||||||||||
| Interest | $ | 1,748 | $ | 2,750 | $ | 2,298 | ||||||||
| Income taxes, net | $ | 4,947 | $ | (3,697 | ) | $ | (8,206 | ) | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170306006174/en/
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
