MRO Magazine

American Vanguard Reports Third Quarter & Nine-Month 2015 Results


November 2, 2015
By Business Wire News

NEWPORT BEACH, Calif.

American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine-month period ended September 30, 2015.

Fiscal 2015 Third Quarter Financial Highlights – versus Fiscal 2014 Third Quarter Results

• Net sales increased from $71.6 million to $72.5 million

• Net income increased from $0.7 million to $2.8 million

• Earnings per diluted share improved from $0.03 to $0.09

Fiscal 2015 Nine Month Financial Highlights – versus Fiscal 2014 Nine Month

• Net sales declined from $221.0 million to $205.6 million

• Net income increased from $3.0 million to $3.6 million

• Earnings per diluted share improved from $0.11 to $0.12

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 reflect the financial benefits that have been achieved largely through management initiatives to improve profitability. While softened demand in the Ag sector continues to affect our entire industry, we have met these challenges by focusing our efforts on maintaining existing market share, growing our international business with new product acquisitions, reducing manufacturing costs and controlling operating expenses. As a result, we have succeeded in posting improved year-over-year earnings on a relatively flat revenue base.”

Mr. Wintemute concluded: “For the remainder of 2015, our top line performance will be driven largely by stable demand for our soil fumigants, market conditions in the Midwest Corn Belt, and continued integration of our 2015 international product line acquisitions. As we reduce our own inventory levels and perform annual plant maintenance, we do expect more limited manufacturing utilization during the fourth quarter. Looking forward to 2016, we should be well positioned for higher revenue and improved profitability through operational efficiency, market access and technology innovation.”

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 Monday, November 2, 2015. 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
2015201420152014
Net sales $ 72,486 $ 71,635 $ 205,574 $ 221,043
Cost of sales   41,053     43,342     124,370     137,785  
 
Gross profit 31,433 28,293 81,204 83,258
Operating expenses   26,059     27,367     74,325     77,903  
 
Operating income 5,374 926 6,879 5,355
Interest expense 700 804 2,090 2,292
Less interest capitalized   (62 )   (25 )   (149 )   (56 )
 
Income before provision for income taxes and (loss) gain on equity investment 4,736 147 4,938 3,119
Income tax expense   1,643         958     856  
 
Income before (loss) gain on equity investment 3,093 147 3,980 2,263
Net (loss) gain from equity investment   (389 )   461     (580 )   321  
 
Net income 2,704 608 3,400 2,584
Add back net loss attributable to non-controlling interest   68     124     204     452  
 
Net income attributable to American Vanguard 2,772 732 3,604 3,036
Change in fair value of interest rate swaps 145 426
Foreign currency translation adjustment   (897 )   (491 )   (1,468 )   (348 )
 
Comprehensive income $ 1,875   $ 386   $ 2,136   $ 3,114  
 
Earnings per common share—basic $ 0.10   $ 0.03   $ 0.13   $ 0.11  
 
Earnings per common share—assuming dilution $ 0.09   $ 0.03   $ 0.12   $ 0.11  
 
Weighted average shares outstanding—basic   28,753     28,466     28,653     28,422  
 
Weighted average shares outstanding—assuming dilution   29,289     28,797     29,208     28,888  
 
   
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 
 
Sept. 30,
2015
Dec. 31,
2014
ASSETS
Current assets:
Cash and cash equivalents $ 5,429 $ 4,885
Receivables:
Trade, net of allowance for doubtful accounts of $287 and $166, respectively 89,723 86,027
Other   4,872     2,396  
 
Total receivables 94,595 88,423
Inventories 161,496 165,631
Prepaid expenses 12,135 13,415
Income taxes receivable 1,233 5,964
Deferred income tax assets   8,731     8,731  
 
Total current assets 283,619 287,049
Property, plant and equipment, net 48,460 50,026
Intangible assets, net of applicable amortization 131,006 100,211
Other assets   30,828     35,035  
 
$ 493,913   $ 472,321  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt and other notes payable $ 10,073 $ 71
Current installments of other liabilities 1,050 1,357
Accounts payable 23,421 20,411
Deferred revenue 38 898
Accrued program costs 73,528 52,546
Accrued expenses and other payables   6,540     5,962  
 
Total current liabilities 114,650 81,245
Long-term debt and other notes payable, excluding current installments 82,658 98,605
Other liabilities, excluding current installments 3,003 3,309
Deferred income tax liabilities   28,159     28,159  
 
Total liabilities   228,470     211,318  
 
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 31,623,810 shares at September 30, 2015 and 31,550,477 shares at December 31, 2014

3,163 3,156
Additional paid-in capital 68,466 66,232
Accumulated other comprehensive loss (3,438 ) (1,970 )
Retained earnings   205,520     202,488  
 
273,711 269,906
Less treasury stock, at cost, 2,450,634 shares at September 30, 2015 and December 31, 2014   (8,269 )   (8,269 )
 
American Vanguard Corporation stockholders’ equity 265,442 261,637
Non-controlling interest   1     (634 )
 
Total stockholders’ equity   265,443     261,003  
 
$ 493,913   $ 472,321  
 
   
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For The Nine Months Ended September 30, 2015 and 2014
(Unaudited)
 
 

Increase (decrease) in cash

20152014
Cash flows from operating activities:
Net income $ 3,400 $ 2,584

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization of fixed and intangible assets 12,190 11,996
Amortization of other long term assets 3,992 4,332
Amortization of discounted liabilities 118 249
Stock-based compensation 2,943 3,046
Tax benefit from exercise of stock options (8 ) (263 )
Operating loss from equity method investment 580 633
Gain from dilution of equity method investment (954 )
Changes in assets and liabilities associated with operations:
Increase in net receivables (6,172 ) (16,995 )
Decrease (increase) in inventories 4,135 (31,690 )
Decrease (increase) in prepaid expenses and other assets 1,143 (5,237 )
Decrease in income tax receivable/payable, net 4,739 7,937
Decrease in deferred tax (328 )
Increase (decrease) in accounts payable 3,010 (22,341 )
Decrease in deferred revenue (860 ) (2,769 )
Increase in other payables and accrued expenses   22,597     15,964  
 
Net cash provided by (used in) operating activities   51,807     (33,836 )
 
Cash flows from investing activities:
Capital expenditures (5,196 ) (5,947 )
Investments (125 )
Acquisitions of product lines and other intangible assets   (36,435 )    
 
Net cash used in investing activities   (41,756 )   (5,947 )
 
Cash flows from financing activities:
Net (payments) borrowings under line of credit agreement (16,120 ) 43,450
Increase in other notes payable 10,000
Payments on other long-term liabilities (1,252 ) (1,371 )
Tax benefit from exercise of stock options 8 263
Repurchases of common stock (1,531 )
Non-controlling interest contribution 300
Payment of cash dividends (1,141 ) (4,251 )
Net proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock options)   254     1,616  
 
Net cash (used in) provided by financing activities   (8,251 )   38,476  
 
Net increase (decrease) in cash and cash equivalents 1,800 (1,307 )
Cash and cash equivalents at beginning of period 4,885 6,680
Effect of exchange rate changes on cash and cash equivalents   (1,256 )   (328 )
 
Cash and cash equivalents at end of period $ 5,429   $ 5,045  
 

Company Contact:
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