MRO Magazine

American Vanguard Reports First Quarter 2015 Results


April 30, 2015
By Business Wire News

NEWPORT BEACH, Calif.

American Vanguard Corporation (NYSE:AVD), today announced financial results for the first quarter ended March 31, 2015.

Financial Highlights Fiscal 2015 First Quarter – versus Fiscal 2014 First Quarter

  • Net sales of $66.6 million, compared with $81.1 million.
  • Net income of $0.05 million, compared with $2.2 million.
  • Earnings per diluted share of $0.00, compared with $0.07.

Eric Wintemute, Chairman & CEO of American Vanguard commented: “While net sales declined during the period, largely due to soft conditions in the corn market and lower international sales, we achieved a breakeven earnings result in the quarter through assertive management of our costs. With reduced inventory levels in the distribution channel and a just-in-time procurement approach by growers and retailers, we stand ready to meet our customers’ needs as the 2015 corn season continues to unfold.”

Mr. Wintemute continued: “In the near and mid-term, however, we are looking to other crops and regions for the bulk of our business. As reported yesterday, we have just completed the second of two acquisitions that will help to expand our international business – the Nemacur® product line from Adama which we reported on April 6th and now the Bromacil® product line from DuPont. We believe that these acquisitions will expand our annual international sales by over 25% and give us an increased presence in Europe, Asia and LATAM. Also, in connection with the Bromacil acquisition, we entered into an amendment to our senior credit facility with our senior lenders, led by Bank of the West, with whom we have maintained an excellent relationship for over 30 years. Further details on the amendment will be in our public filings.

“During the balance of this year, our performance will be defined by sales into not only corn, but also potatoes, cotton, peanuts, vegetables, and non-crop markets, such as public health. There are many factors affecting the strength of these non-corn markets, including, for example, pest pressure in crops and storm activity in the Southeast. However, on the whole, these markets have been relatively stable. While addressing markets both at home and abroad, we will continue to work at improving manufacturing efficiency, and, during 2015 we expect that our unabsorbed factory overhead costs will be up to 25% below those of 2014.”

Mr. Wintemute concluded: “Looking forward, we are placing a renewed emphasis on innovative technology. We are presently collaborating on three separate fronts: to obtain new active ingredients; to expand market access of our natural oil product line; and to acquire license rights to biological and other crop protection products. These efforts should provide AMVAC with a pipeline of new products and enable us to diversify our portfolio further. We will be reporting on these initiatives over the next several quarters and look forward to giving you more detail regarding first quarter results in 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 Thursday, April 30, 2015. 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.

 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share data)

(Unaudited)

         
For the three months
ended March 31
20152014
Net sales $ 66,565 $ 81,095
Cost of sales   41,915     52,190  
Gross profit 24,650 28,905
Operating expenses   24,344     25,199  
Operating income 306 3,706
Interest expense 680 631
Interest capitalized   (39 )   (18 )
(Loss) income before provision for income taxes (benefit) and loss on equity investment (335 ) 3,093
Income taxes (benefit) expense   (292 )   1,016  
(Loss) income before loss on equity investment (43 ) 2,077
Less net loss from equity method investment       (72 )
Net (loss) income (43 ) 2,005
Add back net loss attributable to non-controlling interest   94     154  
Net income attributable to American Vanguard   51     2,159  
Change in fair value of interest rate swaps 136
Foreign currency translation adjustment   (248 )   51  
Comprehensive (loss) income $ (197 ) $ 2,346  
Earnings per common share—basic $ .00   $ .08  
Earnings per common share—assuming dilution $ .00   $ .07  
Weighted average shares outstanding—basic   28,527     28,401  
Weighted average shares outstanding—assuming dilution   28,839     28,888  
 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

ASSETS

(Unaudited)

         
Mar. 31,
2015
Dec. 31,
2014
Current assets:
Cash and cash equivalents $ 6,870 $ 4,885
Receivables:
Trade, net of allowance for doubtful accounts of $117 and $166, respectively 82,028 86,027
Other   2,784     2,396  
Total receivables 84,812 88,423
Inventories 166,981 165,631
Prepaid expenses 14,565 13,415
Income taxes receivable 6,343 5,964
Deferred income tax assets   8,731     8,731  
Total current assets 288,302 287,049
Property, plant and equipment, net 49,187 50,026
Intangible assets, net of applicable amortization 98,621 100,211
Other assets   34,606     35,885  
$ 470,716   $ 473,171  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Current installments of other notes payable $ 272 $ 71
Current installments of other liabilities 1,360 1,357
Accounts payable 23,981 20,411
Deferred revenue 4,558 898
Accrued program costs 57,996 52,546
Accrued expenses and other payables   5,729     5,962  
Total current liabilities 93,896 81,245
Long-term debt and other notes payable, excluding current installments 85,036 99,455
Other liabilities, excluding current installments 3,022 3,309
Deferred income tax liabilities   28,159     28,159  
Total liabilities   210,113     212,168  
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 31,562,678
  shares at March 31, 2015 and 31,550,477 shares at December 31, 2014

3,157 3,156
Additional paid-in capital 66,694 66,232
Accumulated other comprehensive loss (2,218 ) (1,970 )
Retained earnings   201,967     202,488  
269,600 269,906
Less treasury stock at cost, 2,450,634 shares at March 31, 2015 and December 31, 2014   (8,269 )   (8,269 )
American Vanguard Corporation stockholders’ equity 261,331 261,637
Non-controlling interest   (728 )   (634 )
Total stockholders’ equity   260,603     261,003  
$ 470,716   $ 473,171  
 
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The Three Months Ended March 31, 2015 and 2014

(Unaudited)

         

Increase (decrease) in cash

20152014
Cash flows from operating activities:
Net (loss) income $ (43 ) $ 2,005
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization of fixed and intangible assets 3,954 3,733
Amortization of other long term assets 1,430 1,454
Amortization of discounted liabilities 49 69
Stock-based compensation 1,427 768
Tax benefit from exercise of stock options (1 ) (235 )
Operating loss from equity method investment 328
Gain from dilution of equity method investment (256 )
Changes in assets and liabilities associated with operations:
Decrease (increase) in net receivables 3,611 (30,940 )
Increase in inventories (1,350 ) (18,629 )
Increase in prepaid expenses and other assets (1,301 ) (3,242 )
(Increase) decrease in income tax receivable/payable, net (378 ) 695
Increase (decrease) increase in accounts payable 3,570 (381 )
Increase (decrease) in deferred revenue 3,660 (2,309 )
Increase in other payables and accrued expenses   5,214     5,050  
Net cash provided by (used in) operating activities   19,842     (41,890 )
Cash flows from investing activities:
Capital expenditures   (1,522 )   (1,816 )
Net cash used in investing activities   (1,522 )   (1,816 )
Cash flows from financing activities:
Net (payments) borrowings under line of credit agreement (14,400 ) 47,450
Payments on other long-term liabilities (351 ) (356 )
Tax benefit from exercise of stock options 1 235
Increase in other notes payable 200
Repurchases of common stock (1,531 )

Net (payments) proceeds from the issuance of common stock (sale of stock under ESPP
  and exercise of stock options)

(965 ) 1,018
Payment of cash dividends   (569 )   (1,418 )
Net cash (used in) provided by financing activities   (16,084 )   45,398  
Net increase in cash and cash equivalents 2,236 1,692
Cash and cash equivalents at beginning of period 4,885 6,680
Effect of exchange rate changes on cash   (251 )   19  
Cash and cash equivalents at end of period $ 6,870   $ 8,391  

American Vanguard Corporation
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