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 |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(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/
Contacts
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
