Business Wire | Mar 11, 2021 04:05PM EST

American Vanguard Reports Fourth Quarter & Full Year 2020 Results

Mar. 11, 2021

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Mar. 11, 2021--American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2020.

Fiscal 2020 Fourth Quarter Financial Highlights-versus Fiscal 2019 Fourth Quarter:

* Net sales were $141 million in 2020, compared to $131 million in 2019 * Net income was $7.9 million in 2020, compared to $3.4 million in 2019 * Earnings per diluted share of $0.26 in 2020, compared to $0.12 in 2019 * EBITDA1of $17.1 million in 2020, compared to $12.0 million in 2019

Fiscal 2020 Full Year Financial Highlights- versus Fiscal 2019 Full Year:

* Net sales were $459 million in 2020, compared to $468 million in 2019 * Net income was $15.2 million in 2020, compared to $13.6 million in 2019 * Earnings per diluted share of $0.51 in 2020, compared to $0.46 in 2019 * EBITDA1 of $47.6 million in 2020, compared to $48.9 million in 2019

Eric Wintemute, Chairman and CEO of American Vanguard, stated: "2020 proved to be a very challenging year as the world coped with the COVID-19 pandemic. Global implementation of restrictive public health protocols resulted in conservative distribution channel procurement behavior, significant sales and marketing customer access limitations, and dramatic adaptation to remote work processes in many operational and administrative functions. Throughout the year, we maintained very strict health and safety regimens and thankfully have been able to keep AMVAC manufacturing facilities fully functioning and our workforce largely free of serious illness."

Mr. Wintemute continued: "Despite a difficult and somewhat depressed revenue global environment, our 2020 year-over-year bottom-line performance has increased significantly. This resulted from pandemic restrictions affecting travel activities, lower interest expenses primarily due to reduced federal base lending rate, the benefit of securing a biological technology acquisition at a favorable purchase price, and other non-operating income. Recent product acquisitions continue to broaden our traditional portfolio and company acquisitions have expanded the footprint of our international business. This diversification along with our financial discipline allowed us to achieve reasonable revenue, strong profitability and a de-levered balance sheet despite the difficult business circumstances of this past year."

Mr. Wintemute concluded: "Looking forward, we believe that our Company is situated well in both domestic and international markets and are consequently optimistic about the prospects for low double-digit revenue growth in 2021. This optimism is driven by the belief that global economies are poised to start re-opening, higher commodity prices will encourage crop protection procurement, the expectation of larger corn acreage in the U.S., continued steady supply availability of key raw and intermediate materials, greater AMVAC product participation in the soybean segment, and the continued expansion of our international business. Looking forward, we expect gross profit margins to remain strong and operating expenses will be tightly managed as we return to more normal operations during the middle to later part of 2021. Further, we will continue to develop our innovative Envance, biological and SIMPAS technologies which collectively represent an integrated Environmental, Social and Governance (ESG) platform. 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 March 11, 2020. 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(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.

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2020 and 2019

(In thousands, except share data)

(Unaudited)

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 15,923 $ 6,581

Receivables:

Trade, net of allowance for doubtful accounts of 119,071 136,075 $3,297 and $2,300, respectively

Other 8,444 16,949

Total receivables, net 127,515 153,024

Inventories, net 163,784 163,313

Prepaid expenses 11,112 10,457

Income taxes receivable 3,046 2,824

Total current assets 321,380 336,199

Property, plant and equipment, net 65,382 56,521

Operating lease right-of-use assets 12,198 11,258

Intangible assets, net of amortization 197,514 198,261

Goodwill 52,108 46,673

Other assets 18,602 21,186

Total assets $ 667,184 $ 670,098

Liabilities and Stockholders' Equity

Current liabilities:

Current installments of other liabilities $ 2,647 $ 1,513

Accounts payable 59,254 64,881

Deferred revenue 32,652 6,826

Accrued program costs 45,441 47,699

Accrued expenses and other payables 16,797 12,815

Operating lease liabilities, current 4,188 4,904

Total current liabilities 160,979 138,638

Long-term debt, net of deferred loan fees 107,442 148,766

Other liabilities, excluding current installments 9,054 12,890

Operating lease liabilities, long-term 8,177 6,503

Deferred income tax liabilities, net 20,796 19,145

Total liabilities 306,448 325,942

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 3,394 3,324 33,922,433 shares in 2020 and 33,233,614 shares in2019

Additional paid-in capital 96,642 90,572

Accumulated other comprehensive loss (9,322 ) (5,698 )

Retained earnings 288,182 274,118

378,896 362,316

Less treasury stock at cost, 3,061,040 shares in (18,160 ) (18,160 )2020 and 2019

Total stockholders' equity 360,736 344,156

Total liabilities and stockholders' equity $ 667,184 $ 670,098

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the years and quarters ended December 31, 2020 and 2019

(In thousands, except per share data)

(Unaudited)

For the quarters

ended December 31,

For the years ended

December 31,

2020

2019

2020

2019

Net sales

$

140,747

$

130,521

$

458,704

$

468,186

Cost of sales

90,109

83,985

286,114

290,832

Gross profit

50,638

46,536

172,590

177,354

Operating expenses

44,740

40,279

153,622

151,133

Bargain purchase gain on business acquisition

(4,657

)

-

(4,657

)

-

Operating income

10,555

6,257

23,625

26,221

Interest expense, net

1,374

1,605

5,178

7,209

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

9,181

4,652

18,447

19,012

Provision for income taxes

1,228

1,155

3,080

5,202

Income before loss on equity method investment

7,953

3,497

15,367

13,810

Less net loss from equity method investment

45

61

125

209

Net income

$

7,908

$

3,436

$

15,242

$

13,601

Earnings per common share-basic

$

0.27

$

0.12

$

0.52

$

0.47

Earnings per common share-assuming dilution

$

0.26

$

0.12

$

0.51

$

0.46

Weighted average shares outstanding-basic

29,598

29,081

29,450

29,030

Weighted average shares outstanding-assuming dilution

30,194

29,853

29,993

29,656

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the years and quarters ended December 31, 2020 and 2019

(In thousands, except per share data)

(Unaudited)

For the quarters For the years ended ended December 31, December 31,

2020 2019 2020 2019

Net sales $ 140,747 $ 130,521 $ 458,704 $ 468,186

Cost of sales 90,109 83,985 286,114 290,832

Gross profit 50,638 46,536 172,590 177,354

Operating expenses 44,740 40,279 153,622 151,133

Bargain purchase gain on (4,657 ) - (4,657 ) - business acquisition

Operating income 10,555 6,257 23,625 26,221

Interest expense, net 1,374 1,605 5,178 7,209

Income before provision forincome taxes and loss on 9,181 4,652 18,447 19,012 equity method investment

Provision for income taxes 1,228 1,155 3,080 5,202

Income before loss on equity 7,953 3,497 15,367 13,810 method investment

Less net loss from equity 45 61 125 209 method investment

Net income $ 7,908 $ 3,436 $ 15,242 $ 13,601

Earnings per common $ 0.27 $ 0.12 $ 0.52 $ 0.47 share-basic

Earnings per common $ 0.26 $ 0.12 $ 0.51 $ 0.46 share-assuming dilution

Weighted average shares 29,598 29,081 29,450 29,030 outstanding-basic

Weighted average shares 30,194 29,853 29,993 29,656 outstanding-assuming dilution

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the years and quarters ended December 31, 2020 and 2019

(Unaudited)

For the quarters ended

December 31,

For the years ended

December 31,

2020

2019

2020

2019

Net sales:

U.S. crop

$

74,537

$

62,567

$

223,167

$

220,635

U.S. non-crop

10,675

19,521

48,557

61,590

Total U.S.

85,212

82,088

271,724

282,225

International

55,535

48,433

186,980

185,961

Total net sales

$

140,747

$

130,521

$

458,704

$

468,186

Gross profit:

U.S. crop

$

30,221

$

26,370

$

98,340

$

95,429

U.S. non-crop

3,690

8,269

22,225

29,713

Total U.S.

33,911

34,639

120,565

125,142

International

16,727

11,897

52,025

52,212

Total gross profit

$

50,638

$

46,536

$

172,590

$

177,354

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the years and quarters ended December 31, 2020 and 2019

(Unaudited)

For the quarters ended For the years ended December 31, December 31,

2020 2019 2020 2019

Net sales:

U.S. crop $ 74,537 $ 62,567 $ 223,167 $ 220,635

U.S. non-crop 10,675 19,521 48,557 61,590

Total U.S. 85,212 82,088 271,724 282,225

International 55,535 48,433 186,980 185,961

Total net sales $ 140,747 $ 130,521 $ 458,704 $ 468,186

Gross profit:

U.S. crop $ 30,221 $ 26,370 $ 98,340 $ 95,429

U.S. non-crop 3,690 8,269 22,225 29,713

Total U.S. 33,911 34,639 120,565 125,142

International 16,727 11,897 52,025 52,212

Total gross profit $ 50,638 $ 46,536 $ 172,590 $ 177,354

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2020 and 2019

(In thousands)

(Unaudited)

2020

2019

Increase cash

Cash flows from operating activities:

Net income

$

15,242

$

13,601

Adjustments to reconcile net income to net cash provided by operating activities:

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

19,902

18,643

Loss on disposal of property, plant and equipment

119

-

Amortization of other long-term assets

4,246

4,207

Amortization of discounted liabilities

9

72

Provision for bad debts

1,002

1,035

Revision of contingent consideration

-

(4,120

)

Stock-based compensation

6,561

7,160

Increase (decrease) in deferred income taxes

969

2,616

Changes in liabilities for uncertain tax positions

(2,092

)

263

Change in investment fair value

(717

)

-

Loss from equity method investment

125

209

Bargain purchase gain

(4,657

)

-

Changes in assets and liabilities associated with operations, net of business combinations:

(Increase) decrease in net receivables

26,517

(11,383

)

(Increase) decrease in inventories

7,421

3,817

(Increase) decrease in income tax receivable, net

(287

)

(6,855

)

(Increase) decrease in prepaid expenses and other assets

(474

)

(876

)

Increase in net operating lease liability

18

149

Increase (decrease) in accounts payable

(8,124

)

(7,977

)

Increase (decrease) in deferred revenue

25,845

(13,355

)

Increase (decrease) in accrued program costs

(2,517

)

5,797

Increase (decrease) in other payables and accrued expenses

89

(3,434

)

Net cash provided by operating activities

89,197

9,569

Cash flows from investing activities:

Capital expenditures

(11,249

)

(12,985

)

Investments

(1,190

)

-

Acquisitions of businesses and product lines, and intangible assets additions

(23,356

)

(41,852

)

Net cash used in investing activities

(35,795

)

(54,837

)

Cash flows from financing activities:

Net (payments) borrowings under line of credit agreement

(41,623

)

51,900

Cash paid to acquire non-controlling interest

-

-

Payment on deferred consideration

-

(850

)

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

(421

)

283

Repurchase of common stock

-

(2,604

)

Payment of cash dividends

(1,168

)

(2,323

)

Net cash provided by (used in) financing activities

(43,212

)

46,406

Net increase (decrease) in cash and cash equivalents

10,190

1,138

Effect of exchange rate changes on cash and cash equivalents

(848

)

(725

)

Cash and cash equivalents at beginning of year

6,581

6,168

Cash and cash equivalents at end of year

$

15,923

$

6,581

Supplemental cash flow information:

Cash paid during the year for:

Interest

$

5,313

$

7,121

Income taxes, net

$

3,881

$

9,276

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2020 and 2019

(In thousands)

(Unaudited)

2020 2019

Increase cash

Cash flows from operating activities:

Net income $ 15,242 $ 13,601

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of property, plant 19,902 18,643 and equipment and intangible assets

Loss on disposal of property, plant and equipment 119 -

Amortization of other long-term assets 4,246 4,207

Amortization of discounted liabilities 9 72

Provision for bad debts 1,002 1,035

Revision of contingent consideration - (4,120 )

Stock-based compensation 6,561 7,160

Increase (decrease) in deferred income taxes 969 2,616

Changes in liabilities for uncertain tax positions (2,092 ) 263

Change in investment fair value (717 ) -

Loss from equity method investment 125 209

Bargain purchase gain (4,657 ) -

Changes in assets and liabilities associated with operations, net of business combinations:

(Increase) decrease in net receivables 26,517 (11,383 )

(Increase) decrease in inventories 7,421 3,817

(Increase) decrease in income tax receivable, net (287 ) (6,855 )

(Increase) decrease in prepaid expenses and other (474 ) (876 )assets

Increase in net operating lease liability 18 149

Increase (decrease) in accounts payable (8,124 ) (7,977 )

Increase (decrease) in deferred revenue 25,845 (13,355 )

Increase (decrease) in accrued program costs (2,517 ) 5,797

Increase (decrease) in other payables and accrued 89 (3,434 )expenses

Net cash provided by operating activities 89,197 9,569

Cash flows from investing activities:

Capital expenditures (11,249 ) (12,985 )

Investments (1,190 ) -

Acquisitions of businesses and product lines, and (23,356 ) (41,852 )intangible assets additions

Net cash used in investing activities (35,795 ) (54,837 )

Cash flows from financing activities:

Net (payments) borrowings under line of credit (41,623 ) 51,900 agreement

Cash paid to acquire non-controlling interest - -

Payment on deferred consideration - (850 )

Net receipt (payment) from the issuance of commonstock (sale of stock under ESPP, exercise of stock (421 ) 283 options and shares purchased for tax withholding)

Repurchase of common stock - (2,604 )

Payment of cash dividends (1,168 ) (2,323 )

Net cash provided by (used in) financing activities (43,212 ) 46,406

Net increase (decrease) in cash and cash 10,190 1,138 equivalents

Effect of exchange rate changes on cash and cash (848 ) (725 )equivalents

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

Cash and cash equivalents at end of year $ 15,923 $ 6,581

Supplemental cash flow information:

Cash paid during the year for:

Interest $ 5,313 $ 7,121

Income taxes, net $ 3,881 $ 9,276

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

Quarters ended December 31, 2020 and 2019

2020

2019

Net income attributable to American Vanguard

$

7,908

$

3,436

Provision for income taxes

1,396

1,143

Interest expense, net

1,374

1,603

Depreciation and amortization

6,418

5,726

EBITDA2

$

17,096

$

11,908

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

Quarters ended December 31, 2020 and 2019

2020 2019

Net income attributable to American Vanguard $ 7,908 $ 3,436

Provision for income taxes 1,396 1,143

Interest expense, net 1,374 1,603

Depreciation and amortization 6,418 5,726

EBITDA^2 $ 17,096 $ 11,908

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

Years ended December 31, 2020 and 2019

2020

2019

Net income attributable to American Vanguard

$

15,242

$

13,601

Provision for income taxes

3,080

5,202

Interest expense, net

5,178

7,209

Depreciation and amortization

23,968

22,626

EBITDA2

$

47,468

$

48,638

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 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.

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CONTACT: Company Contact: 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