Business Wire | Nov 9, 2020 04:02PM EST

American Vanguard Reports Third Quarter and Nine-Month 2020 Results

Nov. 09, 2020

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Nov. 09, 2020--American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine months ended September 30, 2020.

Financial Highlights Fiscal 2020 Third Quarter - versus Fiscal 2019 Third Quarter

* Net sales of $117 million in 2020, compared with $125 million in 2019 * Net income of $2.9 million in 2020, compared with $3.1 million in 2019 * Earnings per diluted share of $0.10 in 2020, compared with $0.11 in 2019 * EBITDA1 of $10.4 million in 2020, compared with $12.4 million in 2019

Financial Highlights Fiscal 2020 Nine Months - versus Fiscal 2019 Nine Months

* Net sales of $318 million in 2020, compared with $338 million in 2019 * Net income of $7.3 million in 2020, compared with $10.2 million in 2019 * Earnings per diluted share of $0.25 in 2020, compared with $0.34 in 2019 * EBITDA of $30.8 million in 2020, compared to $36.9 million in 2019

Eric Wintemute, Chairman and CEO of American Vanguard commented, "Our net income for the third quarter was nearly even with that of the comparable period in 2019, despite a modest decline in our top line due largely to conservative procurement in the distribution channel, lower commodity prices and a strained farm economy. During the quarter we continued to maintain tight control over operating expenses, closely manage working capital and optimize our manufacturing assets. We also benefited from lower interest and tax expenses. While the first nine months of 2020 trended below those of 2019, we have recorded sequential top-line improvement since the start of the year in spite of a global pandemic."

Mr. Wintemute continued, "Looking forward into the fourth quarter, we are already seeing greater optimism in the Agriculture sector spurred, in part, by rising crop commodity prices for corn, soybeans, and cotton, which bodes well for improved grower profitability. In the Midwest, with less crop rotation and more continuous corn planting, we are also beginning to see a resurgence of soil insect pressure. In addition, demand for our industry-leading soil fumigation products continues to rise. Based upon these trends and current sales activity, barring unforeseen weather or pandemic factors, we are encouraged by our prospects for the fourth quarter and into the 2021 season."

Mr. Wintemute concluded, "While endeavoring to maximize our financial performance, we continue to pursue strategic initiatives in technology development, portfolio expansion and market access. Please listen in to our upcoming earnings call during which I will be devoting my time to our three-to-five-year outlook with a particular focus on new product development, our growing portfolio of green products and our SIMPAS prescription application technology."

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 Monday, November 9, 2020. Interested parties may participate in the call by dialing (800) 381 7839 or (212) 231-2900 - 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 Company's web site at www.american-vanguard.com. To listen to the live webcast, which this quarter will be accompanied by slides, go to the web site at least 15 minutes early to register, download and install any necessary audio software. Additionally, presentation slides will be available for download at http://www.american-vanguard.com. 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(r) and Russell 3000(r) 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

September December 30, 31, 2020 2019

Current assets:

Cash and cash equivalents $ 9,581 $ 6,581

Receivables:

Trade, net of allowance for doubtful accounts of 145,374 136,075$3,046 and $2,300, respectively

Other 9,064 16,949

Total receivables, net 154,438 153,024

Inventories, net 176,287 163,313

Prepaid expenses 10,738 10,457

Income taxes receivable 1,972 2,824

Total current assets 353,016 336,199

Property, plant and equipment, net 59,801 56,521

Operating lease right-of-use assets 12,128 11,258

Intangible assets, net of amortization 191,133 198,377

Goodwill 40,737 46,557

Other assets 18,926 21,186

Total assets $ 675,741 $ 670,098



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current installments of other liabilities $ 210 $ 1,513

Accounts payable 61,283 64,881

Deferred revenue 5,689 6,826

Accrued program costs 67,745 47,699

Accrued expenses and other payables 11,266 12,815

Operating lease liabilities, current 4,312 4,904

Total current liabilities 150,505 138,638

Long-term debt, net of deferred loan fees 149,362 148,766

Operating lease liabilities, long-term 7,979 6,503

Other liabilities, excluding current installments 9,087 12,890

Deferred income tax liabilities 14,014 19,145

Total liabilities 330,947 325,942

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; authorized40,000,000 shares; issued 33,337,075 shares at 3,335 3,324September 30, 2020 and 33,233,614 shares atDecember 31, 2019

Additional paid-in capital 93,273 90,572

Accumulated other comprehensive loss (14,520 ) (5,698 )

Retained earnings 280,866 274,118

362,954 362,316

Less treasury stock at cost, 3,061,040 shares at (18,160 ) (18,160 )September 30, 2020 and December 31, 2019

Total stockholders' equity 344,794 344,156

Total liabilities and stockholders' equity $ 675,741 $ 670,098

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

For the Three-MonthsEnded September 30,

For the Nine-MonthsEnded September 30,

2020

2019

2020

2019

Net sales

$

117,439

$

124,884

$

317,956

$

337,664

Cost of sales

74,174

77,421

196,004

206,846

Gross profit

43,265

47,463

121,952

130,818

Operating expenses

38,782

40,677

108,882

110,839

Operating income

4,483

6,786

13,070

19,979

Interest expense, net

1,022

2,070

3,804

5,606

Income before provision for income taxes and loss on equity method investment

3,461

4,716

9,266

14,373

Income tax expense

492

1,474

1,852

4,059

Income before loss on equity method investment

2,969

3,242

7,414

10,314

Loss from equity method investment

42

89

80

149

Net income attributable to American Vanguard

$

2,927

$

3,153

$

7,334

$

10,165

Earnings per common share-basic

$

.10

$

.11

$

.25

$

.35

Earnings per common share-assuming dilution

$

.10

$

.11

$

.25

$

.34

Weighted average shares outstanding-basic

29,501

29,057

29,401

29,013

Weighted average shares outstanding-assuming dilution

29,973

29,650

29,926

29,591

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

For the Three-Months For the Nine-Months Ended September 30, Ended September 30,

2020 2019 2020 2019

Net sales $ 117,439 $ 124,884 $ 317,956 $ 337,664

Cost of sales 74,174 77,421 196,004 206,846

Gross profit 43,265 47,463 121,952 130,818

Operating expenses 38,782 40,677 108,882 110,839

Operating income 4,483 6,786 13,070 19,979

Interest expense, net 1,022 2,070 3,804 5,606

Income before provisionfor income taxes and 3,461 4,716 9,266 14,373 loss on equity methodinvestment

Income tax expense 492 1,474 1,852 4,059

Income before loss onequity method 2,969 3,242 7,414 10,314 investment

Loss from equity method 42 89 80 149 investment

Net income attributable $ 2,927 $ 3,153 $ 7,334 $ 10,165 to American Vanguard

Earnings per common $ .10 $ .11 $ .25 $ .35 share-basic

Earnings per common $ .10 $ .11 $ .25 $ .34 share-assuming dilution

Weighted average shares 29,501 29,057 29,401 29,013 outstanding-basic

Weighted average sharesoutstanding-assuming 29,973 29,650 29,926 29,591 dilution

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three and nine months ended September 30, 2020 and 2019

(In thousands)

(Unaudited)

For the three-monthsended September 30,

2020

2019

Change

% Change

Net sales:

US crop

$

48,361

$

55,072

$

(6,711

)

-12

%

US non-crop

18,251

18,995

(744

)

-4

%

US total

66,612

74,067

(7,455

)

-10

%

International

50,827

50,817

10

0

%

Net sales

$

117,439

$

124,884

$

(7,445

)

-6

%

Gross profit:

US crop

$

20,146

$

23,710

$

(3,564

)

-15

%

US non-crop

8,758

9,860

(1,102

)

-11

%

US total

28,904

33,570

(4,666

)

-14

%

International

14,361

13,893

468

3

%

Total gross profit

$

43,265

$

47,463

$

(4,198

)

-9

%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three and nine months ended September 30, 2020 and 2019

(In thousands)

(Unaudited)

For the three-months ended September 30,

2020 2019 Change % Change

Net sales:

US crop $ 48,361 $ 55,072 $ (6,711 ) -12 %

US non-crop 18,251 18,995 (744 ) -4 %

US total 66,612 74,067 (7,455 ) -10 %

International 50,827 50,817 10 0 %

Net sales $ 117,439 $ 124,884 $ (7,445 ) -6 %

Gross profit:

US crop $ 20,146 $ 23,710 $ (3,564 ) -15 %

US non-crop 8,758 9,860 (1,102 ) -11 %

US total 28,904 33,570 (4,666 ) -14 %

International 14,361 13,893 468 3 %

Total gross profit $ 43,265 $ 47,463 $ (4,198 ) -9 %

For the nine-monthsended September 30,

2020

2019

Change

% Change

Net sales:

US crop

$

148,630

$

158,068

$

(9,438

)

-6

%

US non-crop

37,881

42,068

(4,187

)

-10

%

US total

186,511

200,136

(13,625

)

-7

%

International

131,445

137,528

(6,083

)

-4

%

Net sales

$

317,956

$

337,664

$

(19,708

)

-6

%

Gross profit:

US crop

$

68,119

$

69,059

$

(940

)

-1

%

US non-crop

18,535

21,444

(2,909

)

-14

%

US total

86,654

90,503

(3,849

)

-4

%

International

35,298

40,315

(5,017

)

-12

%

Total gross profit

$

121,952

$

130,818

$

(8,866

)

-7

%

For the nine-months ended September 30,

2020 2019 Change % Change

Net sales:

US crop $ 148,630 $ 158,068 $ (9,438 ) -6 %

US non-crop 37,881 42,068 (4,187 ) -10 %

US total 186,511 200,136 (13,625 ) -7 %

International 131,445 137,528 (6,083 ) -4 %

Net sales $ 317,956 $ 337,664 $ (19,708 ) -6 %

Gross profit:

US crop $ 68,119 $ 69,059 $ (940 ) -1 %

US non-crop 18,535 21,444 (2,909 ) -14 %

US total 86,654 90,503 (3,849 ) -4 %

International 35,298 40,315 (5,017 ) -12 %

Total gross profit $ 121,952 $ 130,818 $ (8,866 ) -7 %

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

For the Nine-Months Ended September 30,

2020

2019

Cash flows from operating activities:

Net income

$

7,334

$

10,165

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

activities:

Depreciation and amortization of property, plant and equipment and intangible assets

14,584

13,892

Amortization of other long-term assets and deferred loan fees

3,185

3,174

Amortization of discounted liabilities

9

41

Provision for bad debts

777

728

Revision of deferred consideration

-

(3,539

)

Stock-based compensation

3,776

5,159

Change in deferred income taxes

(1,757

)

(459

)

Change in investment fair value

(281

)

-

Loss from equity method investment

80

149

Net foreign currency adjustment

(711

)

550

Changes in assets and liabilities associated with operations:

Increase in net receivables

(5,089

)

(15,839

)

Increase in inventories

(16,941

)

(19,713

)

Increase in prepaid expenses and other assets

(532

)

(849

)

Decrease (increase) in income tax receivable

873

(4,477

)

Increase in net operating lease liability

14

117

Decrease in accounts payable

(1,759

)

(5,548

)

Decrease in deferred revenue

(1,079

)

(19,800

)

Increase in accrued program costs

20,058

20,163

Decrease in other payables and accrued expenses

(3,344

)

(4,967

)

Net cash provided by (used in) operating activities

19,197

(21,053

)

Cash flows from investing activities:

Capital expenditures

(8,988

)

(10,546

)

Acquisition of business, product lines, and intangible assets

(3,942

)

(31,836

)

Investment

(1,190

)

-

Net cash used in investing activities

(14,120

)

(42,382

)

Cash flows from financing activities:

Net borrowings under line of credit agreement

377

68,200

Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)

(1,064

)

(30

)

Repurchase of common stock

-

(2,604

)

Payment of cash dividends

(1,168

)

(1,741

)

Net cash (used in) provided by financing activities

(1,855

)

63,825

Net increase (decrease) in cash and cash equivalents

3,222

390

Effect of exchange rate changes on cash and cash equivalents

(222

)

(671

)

Cash and cash equivalents at beginning of period

6,581

6,168

Cash and cash equivalents at end of period

$

9,581

$

5,887

Supplemental cash flow information:

Cash paid during the period for:

Interest

$

3,960

$

5,524

Income taxes, net

$

2,868

$

8,066

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

For the Nine-Months Ended September 30,

2020 2019

Cash flows from operating activities:

Net income $ 7,334 $ 10,165

Adjustments to reconcile net income to net cashprovided by (used in) operating

activities:

Depreciation and amortization of property, plant 14,584 13,892 and equipment and intangible assets

Amortization of other long-term assets and deferred 3,185 3,174 loan fees

Amortization of discounted liabilities 9 41

Provision for bad debts 777 728

Revision of deferred consideration - (3,539 )

Stock-based compensation 3,776 5,159

Change in deferred income taxes (1,757 ) (459 )

Change in investment fair value (281 ) -

Loss from equity method investment 80 149

Net foreign currency adjustment (711 ) 550

Changes in assets and liabilities associated with operations:

Increase in net receivables (5,089 ) (15,839 )

Increase in inventories (16,941 ) (19,713 )

Increase in prepaid expenses and other assets (532 ) (849 )

Decrease (increase) in income tax receivable 873 (4,477 )

Increase in net operating lease liability 14 117

Decrease in accounts payable (1,759 ) (5,548 )

Decrease in deferred revenue (1,079 ) (19,800 )

Increase in accrued program costs 20,058 20,163

Decrease in other payables and accrued expenses (3,344 ) (4,967 )

Net cash provided by (used in) operating activities 19,197 (21,053 )

Cash flows from investing activities:

Capital expenditures (8,988 ) (10,546 )

Acquisition of business, product lines, and (3,942 ) (31,836 )intangible assets

Investment (1,190 ) -

Net cash used in investing activities (14,120 ) (42,382 )

Cash flows from financing activities:

Net borrowings under line of credit agreement 377 68,200

Net payments from the issuance of common stock(sale of stock under ESPP, exercise of stock (1,064 ) (30 )options, and shares purchased for tax withholding)

Repurchase of common stock - (2,604 )

Payment of cash dividends (1,168 ) (1,741 )

Net cash (used in) provided by financing activities (1,855 ) 63,825

Net increase (decrease) in cash and cash 3,222 390 equivalents

Effect of exchange rate changes on cash and cash (222 ) (671 )equivalents

Cash and cash equivalents at beginning of period 6,581 6,168

Cash and cash equivalents at end of period $ 9,581 $ 5,887

Supplemental cash flow information:

Cash paid during the period for:

Interest $ 3,960 $ 5,524

Income taxes, net $ 2,868 $ 8,066

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three and nine months September 30, 2020 and 2019

(Unaudited)

Three-Months Ended September 30,

Nine-Months Ended September 30,

2020

2019

2020

2019

Net income attributable to American Vanguard, as reported

$

2,927

$

3,153

$

7,334

$

10,165

Provision for income taxes

492

1,474

1,852

4,059

Interest expense, net

1,022

2,070

3,804

5,606

Depreciation and amortization

6,000

5,688

17,769

17,066

EBITDA2

$

10,441

$

12,385

$

30,759

$

36,896

1 Earnings before interest, taxes, depreciation and amortization. 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 EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company's competitors) may define EBITDA differently.

2 Earnings before interest, taxes, depreciation and amortization. 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. The items excluded from EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company's competitors) may define EBITDA differently.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201109006096/en/

CONTACT: Company Contact: American Vanguard Corporation William A. Kuser, Director of Investor Relations (949) 260-1200 williamk@amvac-chemical.com

CONTACT: Investor Representative The Equity Group Inc. www.theequitygroup.com Lena Cati (212) 836-9611 Lcati@equityny.com