Significant Demand Continues, Gross Margins
Increase, Midyear Net Income Doubles, Full Year Performance
Targets Reiterated
American Vanguard Corporation (NYSE: AVD) today announced
financial results for the second quarter and six months ended June
30, 2022.
Fiscal 2022 Second Quarter Financial Highlights – versus
Fiscal 2021 Second Quarter:
- Net sales were $148 million in 2022, compared to $135 million
in 2021
- Net income was $6.8 million in 2022, compared to $5.1 million
in 2021
- Earnings per diluted share of $0.23 in 2022, compared to $0.17
in 2021
- Adjusted EBITDA1 of $19.7 million in 2022, compared to $16.5
million in 2021
Fiscal 2022 Mid-Year Financial Highlights – versus Fiscal
2021 Mid-Year:
- Net sales were $298 million in 2022, compared to $251 million
in 2021
- Net income was $16.8 million in 2022, compared to $8.2 million
in 2021
- Earnings per diluted share of $0.55 in 2022, compared to $0.27
in 2021
- Adjusted EBITDA1 of $42.5 million in 2022, compared to $30.3
million in 2021
Eric Wintemute, Chairman and CEO of American Vanguard stated:
“Conditions within our agricultural markets continue to be
favorable with consistently high commodity prices, a strong farm
economy and, for US-based companies, a strong US dollar. Having
built a portfolio of products that reaches across multiple crops –
including corn, soybeans, cotton, potatoes, and high-value fruits
and vegetables – we were better able to cross-sell to growers and
enjoyed strong demand for our products, both domestically and
abroad. Our focused efforts to increase prices and more fully
exploit our manufacturing assets enabled us to achieve higher
margins despite inflation and supply chain challenges. Within this
context, we recorded strong results for the second quarter and
first half of 2022, including higher sales and improved
profitability.”
Mr. Wintemute continued: “Our second quarter improvement was led
by our international business, which generated higher sales of soil
fumigants, foliar and soil insecticides, fungicides and
micronutrient products across multiple regions. Our domestic crop
business enjoyed strong demand for our expanding portfolio of
herbicides, partially offset by lower soil fumigant sales due to
drought conditions in the West and Southwest, where water
allocation has been implemented. During the second quarter of 2022,
our U.S. non-crop business experienced relatively steady demand in
mosquito control, commercial pest applications and
horticulture/ornamental products.”
Mr. Wintemute concluded: “Looking forward, we believe that our
Company is situated well in both domestic and international markets
and are consequently optimistic, even with weather- and
economy-related variables, about meeting or exceeding our
previously announced performance targets for FY 2022, including
revenue growth between 8% and 11%, gross profit margins of 38-40%
of net sales, operating expenses within the range of 31-33% of net
sales and a year-over-year net income increase of between 60% and
70%. We look forward to giving you a more detailed presentation
during our upcoming earnings 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 and strategic themes…at 4:30 pm
ET on August 9, 2022. 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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
(Unaudited)
ASSETS
June 30,
December 31,
2022
2021
Current assets:
Cash and cash equivalents
$
22,057
$
16,285
Receivables:
Trade, net of allowance for doubtful
accounts of $4,411 and $3,938, respectively
165,711
149,326
Other
13,208
9,595
Total receivables, net
178,919
158,921
Inventories
182,203
154,306
Prepaid expenses
16,368
12,488
Income taxes receivable
523
—
Total current assets
400,070
342,000
Property, plant and equipment, net
67,453
66,111
Operating lease right-of-use assets
24,449
25,386
Intangible assets, net
191,560
197,841
Goodwill
46,997
46,260
Other assets
13,099
16,292
Deferred income tax assets, net
16
270
Total assets
$
743,644
$
694,160
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Current installments of other
liabilities
$
1,367
$
802
Accounts payable
86,944
67,140
Customer prepayments
272
63,064
Accrued program costs
99,152
63,245
Accrued expenses and other payables
20,180
20,745
Income taxes payable
—
3,006
Current operating lease liabilities
5,029
5,059
Total current liabilities
212,944
223,061
Long-term debt, net
100,779
52,240
Long-term operating lease liabilities
19,852
20,780
Other liabilities, net of current
installments
5,584
5,335
Deferred income tax liabilities, net
19,651
20,006
Total liabilities
358,810
321,422
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 34,443,234 shares at June 30,
2022 and 34,248,218 shares at December 31, 2021
3,445
3,426
Additional paid-in capital
103,456
101,450
Accumulated other comprehensive loss
(12,768
)
(13,784
)
Retained earnings
319,672
304,385
Less treasury stock at cost, 3,694,050
shares at June 30, 2022
and 3,361,040 shares at
December 31, 2021
(28,971
)
(22,739
)
Total stockholders’ equity
384,834
372,738
Total liabilities and stockholders'
equity
$
743,644
$
694,160
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except
per share data)
(Unaudited)
For the Three Months
For the Six Months
Ended June 30,
Ended June 30,
2022
2021
2022
2021
Net sales
$
148,084
$
134,610
$
297,519
$
250,765
Cost of sales
(88,305
)
(82,471
)
(176,547
)
(153,495
)
Gross profit
59,779
52,139
120,972
97,270
Operating expenses
(48,966
)
(43,080
)
(95,410
)
(84,524
)
Adjustment to bargain purchase gain on
business acquisition
—
(88
)
—
(121
)
Operating income
10,813
8,971
25,562
12,625
Change in fair value of an equity
investment
(486
)
(295
)
(403
)
771
Other income
—
—
—
672
Interest expense, net
(772
)
(1,013
)
(1,170
)
(1,959
)
Income before provision for income taxes
and loss on equity method investment
9,555
7,663
23,989
12,109
Income tax expense
(2,725
)
(2,445
)
(7,224
)
(3,807
)
Income before loss on equity method
investment
6,830
5,218
16,765
8,302
Loss on equity method investment
—
(74
)
—
(87
)
Net income
$
6,830
$
5,144
$
16,765
$
8,215
Earnings per common share—basic
$
.23
$
.17
$
.57
$
.28
Earnings per common share—assuming
dilution
$
.23
$
.17
$
.55
$
.27
Weighted average shares
outstanding—basic
29,602
29,930
29,639
29,834
Weighted average shares
outstanding—assuming dilution
30,225
30,499
30,289
30,511
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
ANALYSIS OF SALES
(In thousands)
(Unaudited)
For the three months
ended June 30,
2022
2021
Change
% Change
Net sales:
U.S. crop
$
63,195
$
62,575
$
620
1
%
U.S. non-crop
21,316
21,488
(172
)
-1
%
U.S. total
84,511
84,063
448
1
%
International
63,573
50,547
13,026
26
%
Net sales:
$
148,084
$
134,610
$
13,474
10
%
Gross profit:
U.S. crop
$
29,753
$
26,805
$
2,948
11
%
U.S. non-crop
10,049
9,782
267
3
%
U.S. total
39,802
36,587
3,215
9
%
International
19,977
15,552
4,425
28
%
Total gross profit:
$
59,779
$
52,139
$
7,640
15
%
For the six months
ended June 30,
2022
2021
Change
% Change
Net sales:
U.S. crop
$
151,388
$
117,330
$
34,058
29
%
U.S. non-crop
34,712
38,941
(4,229
)
-11
%
U.S. total
186,100
156,271
29,829
19
%
International
111,419
94,494
16,925
18
%
Net sales:
$
297,519
$
250,765
$
46,754
19
%
Gross profit:
U.S. crop
$
70,098
$
48,076
$
22,022
46
%
U.S. non-crop
16,014
19,165
(3,151
)
-16
%
U.S. total
86,112
67,241
18,871
28
%
International
34,860
30,029
4,831
16
%
Total gross profit:
$
120,972
$
97,270
$
23,702
24
%
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Six Months
Ended
June 30,
2022
2021
Cash flows from operating activities:
Net income
$
16,765
$
8,215
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization of property,
plant and equipment and intangible assets
11,004
10,697
Amortization of other long-term assets
1,739
2,044
Loss on disposal of property, plant and
equipment
256
—
Accretion of discounted liabilities
17
(11
)
Amortization of deferred loan fees
139
162
Provision for bad debts
470
945
Loan principal and interest
forgiveness
—
(672
)
Fair value adjustment to contingent
consideration
635
1,013
Stock-based compensation
2,836
3,598
Change in deferred income taxes
109
(353
)
Change in fair value of an equity
investment
403
(771
)
Loss on equity method investment
—
87
Adjustment to bargain purchase gain on
business acquisition
—
121
Net foreign currency adjustments
(20
)
(145
)
Changes in assets and liabilities
associated with operations:
Increase in net receivables
(18,645
)
(25,317
)
Increase in inventories
(27,774
)
(11,464
)
Increase in prepaid expenses and other
assets
(3,652
)
(3,696
)
(Increase) decrease in income tax
receivable/payable, net
(3,526
)
1,374
(Decrease) in net operating lease
liability
(21
)
(120
)
Increase in accounts payable
19,439
6,190
Decrease in customer prepayments
(62,789
)
(30,407
)
Increase in accrued program costs
35,987
19,098
(Decrease) increase in other payables and
accrued expenses
(602
)
507
Net cash used in operating activities
(27,230
)
(18,905
)
Cash flows from investing activities:
Capital expenditures
(5,654
)
(5,075
)
Proceeds from disposal of property, plant
and equipment
27
—
Acquisition of product line
—
(10,000
)
Intangible assets
(1,044
)
(241
)
Investments
—
(184
)
Net cash used in investing activities
(6,671
)
(15,500
)
Cash flows from financing activities:
Payments under line of credit
agreement
(56,600
)
(24,226
)
Borrowings under line of credit
agreement
105,000
66,000
Payment of contingent consideration
—
(250
)
Net receipt from the issuance of common
stock under ESPP
436
340
Net receipt from the exercise of stock
options
765
167
Payment for tax withholding on stock-based
compensation awards
(2,012
)
(2,900
)
Repurchase of common stock
(6,232
)
—
Payment of cash dividends
(1,330
)
(1,188
)
Net cash provided by financing
activities
40,027
37,943
Net increase in cash and cash
equivalents
6,126
3,538
Effect of exchange rate changes on cash
and cash equivalents
(354
)
98
Cash and cash equivalents at beginning of
period
16,285
15,923
Cash and cash equivalents at end of
period
$
22,057
$
19,559
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net income, as reported
$
6,830
$
5,144
$
16,765
$
8,215
Provision for income taxes
2,725
2,445
7,224
3,807
Interest expense, net
772
1,013
1,170
1,959
Depreciation and amortization
6,271
6,138
12,743
12,741
Stock compensation
1,273
1,806
2,836
3,598
Proxy contest activities
1,785
—
1,785
—
Adjusted EBITDA2
$
19,656
$
16,546
$
42,523
$
30,320
1 Adjusted earnings before interest, taxes, depreciation,
amortization, non-cash stock compensation, and proxy contest
activities. Adjusted 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 Adjusted EBITDA are detailed in the reconciliation
attached to this news release. Other companies (including the
Company’s competitors) may define Adjusted EBITDA differently.
2 Adjusted earnings before interest, taxes, depreciation,
amortization, non-cash stock compensation, and proxy contest
activities. Adjusted 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. We
provide these measures because we believe that they provide helpful
comparisons to other companies in our industry and peer group. The
items excluded from Adjusted EBITDA are detailed in the
reconciliation attached to this news release. Other companies
(including the Company’s competitors) may define Adjusted EBITDA
differently.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005464/en/
Company 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 Lcati@equityny.com
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