Business Wire | Nov 8, 2021 04:07PM EST

American Vanguard Reports Improved Financial Results With Third Quarter Net Sales up 25% and Net Income Up 88%

Nov. 08, 2021

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Nov. 08, 2021--American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine months ended September 30, 2021.

Financial Highlights Fiscal 2021 Third Quarter - versus Fiscal 2020 Third Quarter

* Net sales up 25% to $147 million in 2021, as compared with $117 million in 2020 * Net income up 88% to $5.5 million in 2021, as compared with $2.9 million in 2020 * Earnings per diluted share of $0.18 in 2021, as compared with $0.10 in 2020 * EBITDA1 up 47% to $15.3 million in 2021, as compared with $10.4 million in 2020

Financial Highlights Fiscal 2021 Nine Months - versus Fiscal 2020 Nine Months

* Net sales up 25% to $398 million in 2021, as compared with $318 million in 2020 * Net income up 87% to $13.7 million in 2021, as compared with $7.3 million in 2020 * Earnings per diluted share of $0.45 in 2021, as compared with $0.25 in 2020 * EBITDA up 37% to $42.0 million in 2021, as compared to $30.5 million in 2020

Eric Wintemute, Chairman and CEO of American Vanguard, commented: "We achieved strong third quarter results and continued performance improvement over the first three quarters of 2021. Strong crop commodity prices, favorable weather and pest pressure have fueled significant growth of our US crop sales, particularly in the Midwest and the South. Mosquito mitigation driven by tropical storm activity, commercial pest control, lawn and garden demand and our consumer pest collaboration with Proctor & Gamble's Zevo(r) brand have grown this year's US Non-Crop business. Internationally, our success in Central America, Brazil, Australia and elsewhere has resulted in expanded revenues and enhanced profitability."

Mr. Wintemute continued, "Our year-to-date performance exceeds our prior guidance with net sales increasing at a 25% rate and a more significant gain of 87% in net income and earnings per share. We have achieved these results in spite of pandemic conditions and delays in the global supply chain. Through the balance of the year, we expect strong sales, efficient manufacturing performance and earnings in excess of those posted last year. From a balance sheet perspective, we are on track with both inventory management and debt reduction as we head towards the end of the year."

Mr. Wintemute concluded, "We continue to pursue strategic growth initiatives in technology development, with particular emphasis on Green Solutions and Precision Application technologies. We look forward to providing details on our overall performance, industry outlook and innovation initiatives in our upcoming quarterly 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 Monday, November 8, 2021. 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(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)

September DecemberASSETS 30, 31,

2021 2020

Current assets:

Cash and cash equivalents $ 16,718 $ 15,923

Receivables:

Trade, net of allowance for doubtful accounts of 167,731 130,029 $4,381 and $3,297, respectively

Other 11,384 8,444

Total receivables, net 179,115 138,473

Inventories, net 166,973 163,784

Prepaid expenses 12,491 10,499

Income taxes receivable 1,036 3,046

Total current assets 376,333 331,725

Property, plant and equipment, net 66,501 65,382

Operating lease right-of-use assets 26,080 12,198

Intangible assets, net of amortization 201,078 197,514

Goodwill 46,616 52,108

Other assets 15,595 18,602

Deferred income tax assets, net 3,669 2,764

Total assets $ 735,872 $ 680,293



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current installments of other liabilities $ 1,633 $ 2,647

Accounts payable 66,082 59,253

Deferred revenue 5,510 43,611

Accrued program costs 79,355 45,441

Accrued expenses and other payables 20,726 16,184

Operating lease liabilities, current 5,015 4,188

Total current liabilities 178,321 171,324

Long-term debt, net of deferred loan fees 136,328 107,442

Operating lease liabilities, long-term 21,415 8,177

Other liabilities, excluding current installments 7,213 9,054

Deferred income tax liabilities, net 24,254 23,560

Total liabilities 367,531 319,557

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 34,272,665 shares at 3,428 3,394 September 30, 2021 and 33,922,433 shares atDecember 31, 2020

Additional paid-in capital 99,917 96,642

Accumulated other comprehensive loss (12,370 ) (9,322 )

Retained earnings 300,105 288,182

391,080 378,896

Less treasury stock at cost, 3,361,040 shares atSeptember 30, 2021 and (22,739 ) (18,160 )

3,061,040 shares at December 31, 2020

Total stockholders' equity 368,341 360,736

Total liabilities and stockholders' equity $ 735,872 $ 680,293

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

2021

2020

2021

2020

Net sales

$

147,298

$

117,439

$

398,063

$

317,956

Cost of sales

(90,234

)

(74,174

)

(243,729

)

(196,004

)

Gross profit

57,064

43,265

154,334

121,952

Operating expenses

(48,410

)

(39,039

)

(132,934

)

(109,163

)

Adjustment to bargain purchase gain on business acquisition

292

-

171

-

Operating income

8,946

4,226

21,571

12,789

Change in value of equity investments, net

(668

)

257

103

281

Other income

-

-

672

-

Interest expense, net

(962

)

(1,022

)

(2,921

)

(3,804

)

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

7,316

3,461

19,425

9,266

Income tax expense

(1,517

)

(492

)

(5,324

)

(1,852

)

Income before loss on equity method investment

5,799

2,969

14,101

7,414

Loss from equity method investment

(301

)

(42

)

(388

)

(80

)

Net income

$

5,498

$

2,927

$

13,713

$

7,334

Earnings per common share-basic

$

.18

$

.10

$

.46

$

.25

Earnings per common share-assuming dilution

$

.18

$

.10

$

.45

$

.25

Weighted average shares outstanding-basic

29,892

29,501

29,854

29,401

Weighted average shares outstanding-assuming dilution

30,390

29,973

30,470

29,926

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,

2021 2020 2021 2020

Net sales $ 147,298 $ 117,439 $ 398,063 $ 317,956

Cost of sales (90,234 ) (74,174 ) (243,729 ) (196,004 )

Gross profit 57,064 43,265 154,334 121,952

Operating expenses (48,410 ) (39,039 ) (132,934 ) (109,163 )

Adjustment to bargainpurchase gain on 292 - 171 - business acquisition

Operating income 8,946 4,226 21,571 12,789

Change in value ofequity investments, (668 ) 257 103 281 net

Other income - - 672 -

Interest expense, net (962 ) (1,022 ) (2,921 ) (3,804 )

Income beforeprovision for incometaxes and loss on 7,316 3,461 19,425 9,266 equity methodinvestment

Income tax expense (1,517 ) (492 ) (5,324 ) (1,852 )

Income before loss onequity method 5,799 2,969 14,101 7,414 investment

Loss from equity (301 ) (42 ) (388 ) (80 )method investment

Net income $ 5,498 $ 2,927 $ 13,713 $ 7,334

Earnings per common $ .18 $ .10 $ .46 $ .25 share-basic

Earnings per commonshare-assuming $ .18 $ .10 $ .45 $ .25 dilution

Weighted averageshares 29,892 29,501 29,854 29,401 outstanding-basic

Weighted averageshares 30,390 29,973 30,470 29,926 outstanding-assumingdilution

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands)

(Unaudited)

For the Three Months Ended September 30,

2021

2020

Change

% Change

Net sales:

U.S. crop

$

66,722

$

48,361

$

18,361

38

%

U.S. non-crop

21,622

18,251

3,371

18

%

U.S. total

88,344

66,612

21,732

33

%

International

58,954

50,827

8,127

16

%

Net sales:

$

147,298

$

117,439

$

29,859

25

%

Gross profit:

U.S. crop

$

30,237

$

20,146

$

10,091

50

%

U.S. non-crop

8,882

8,758

124

1

%

U.S. total

39,119

28,904

10,215

35

%

International

17,945

14,361

3,584

25

%

Total gross profit:

$

57,064

$

43,265

$

13,799

32

%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands)

(Unaudited)

For the Three Months Ended September 30,

2021 2020 Change % Change

Net sales:

U.S. crop $ 66,722 $ 48,361 $ 18,361 38 %

U.S. non-crop 21,622 18,251 3,371 18 %

U.S. total 88,344 66,612 21,732 33 %

International 58,954 50,827 8,127 16 %

Net sales: $ 147,298 $ 117,439 $ 29,859 25 %

Gross profit:

U.S. crop $ 30,237 $ 20,146 $ 10,091 50 %

U.S. non-crop 8,882 8,758 124 1 %

U.S. total 39,119 28,904 10,215 35 %

International 17,945 14,361 3,584 25 %

Total gross $ 57,064 $ 43,265 $ 13,799 32 %profit:

For the Nine Months Ended September 30,

2021

2020

Change

% Change

Net sales:

U.S. crop

$

184,052

$

148,630

$

35,422

24

%

U.S. non-crop

60,563

37,881

22,682

60

%

U.S. total

244,615

186,511

58,104

31

%

International

153,448

131,445

22,003

17

%

Net sales:

$

398,063

$

317,956

$

80,107

25

%

Gross profit:

U.S. crop

$

78,313

$

68,119

$

10,194

15

%

U.S. non-crop

28,047

18,535

9,512

51

%

U.S. total

106,360

86,654

19,706

23

%

International

47,974

35,298

12,676

36

%

Total gross profit:

$

154,334

$

121,952

$

32,382

27

%

For the Nine Months Ended September 30,

2021 2020 Change % Change

Net sales:

U.S. crop $ 184,052 $ 148,630 $ 35,422 24 %

U.S. non-crop 60,563 37,881 22,682 60 %

U.S. total 244,615 186,511 58,104 31 %

International 153,448 131,445 22,003 17 %

Net sales: $ 398,063 $ 317,956 $ 80,107 25 %

Gross profit:

U.S. crop $ 78,313 $ 68,119 $ 10,194 15 %

U.S. non-crop 28,047 18,535 9,512 51 %

U.S. total 106,360 86,654 19,706 23 %

International 47,974 35,298 12,676 36 %

Total gross $ 154,334 $ 121,952 $ 32,382 27 %profit:

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

For the Nine Months Ended

September 30,

2021

2020

Cash flows from operating activities:

Net income

$

13,713

$

7,334

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

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

17,045

14,584

Amortization of other long-term assets

2,981

2,966

Accretion of discounted liabilities

(10

)

9

Amortization of deferred loan fees

294

219

Provision for bad debts

1,202

777

Loan principal and interest forgiveness

(672

)

-

Adjustment to contingent consideration

520

-

Stock-based compensation

5,309

3,776

Decrease in deferred income taxes

(560

)

(1,757

)

Change in value of equity investments, net

(103

)

(281

)

Net foreign currency adjustments

(330

)

(711

)

Loss from equity method investment

388

80

Adjustment to bargain purchase gain on business acquisition

(171

)

-

Changes in assets and liabilities associated with operations:

Increase in net receivables

(42,979

)

(5,089

)

Increase in inventories

(4,325

)

(16,941

)

Increase in prepaid expenses and other assets

(2,194

)

(532

)

Decrease in income tax receivable

2,031

873

Increase in net operating lease liability

183

14

Increase (decrease) in accounts payable

7,769

(1,759

)

Decrease in deferred revenue

(38,272

)

(1,079

)

Increase in accrued program costs

33,982

20,058

Increase (decrease) in other payables and accrued expenses

4,025

(2,117

)

Net cash (used in) provided by operating activities

(174

)

20,424

Cash flows from investing activities:

Capital expenditures

(7,963

)

(8,988

)

Acquisition of product line

(10,000

)

-

Intangible assets

(285

)

(3,942

)

Investments

(183

)

(1,190

)

Net cash used in investing activities

(18,431

)

(14,120

)

Cash flows from financing activities:

Net borrowings under line of credit agreement

28,592

377

Payment of contingent consideration

(250

)

(1,227

)

Net payments from the issuance of common stock (sale of stock under ESPP,

exercise of stock options, and shares purchased for tax withholding)

(2,000

)

(1,064

)

Repurchase of common stock

(4,579

)

-

Payment of cash dividends

(1,789

)

(1,168

)

Net cash provided by (used in) financing activities

19,974

(3,082

)

Net increase in cash and cash equivalents

1,369

3,222

Effect of exchange rate changes on cash and cash equivalents

(574

)

(222

)

Cash and cash equivalents at beginning of period

15,923

6,581

Cash and cash equivalents at end of period

$

16,718

$

9,581

Supplemental cash flow information:

Cash paid during the period for:

Interest

$

2,839

$

3,960

Income taxes, net

$

3,836

$

2,868

Non-cash transactions:

ROU assets exchanged for lease liabilities

$

17,872

$

4,895

Cash dividends declared and included in accrued expenses

$

594

$

-

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

For the Nine Months Ended

September 30,

2021 2020

Cash flows from operating activities:

Net income $ 13,713 $ 7,334

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

Depreciation and amortization of property, plant 17,045 14,584 and equipment and intangible assets

Amortization of other long-term assets 2,981 2,966

Accretion of discounted liabilities (10 ) 9

Amortization of deferred loan fees 294 219

Provision for bad debts 1,202 777

Loan principal and interest forgiveness (672 ) -

Adjustment to contingent consideration 520 -

Stock-based compensation 5,309 3,776

Decrease in deferred income taxes (560 ) (1,757 )

Change in value of equity investments, net (103 ) (281 )

Net foreign currency adjustments (330 ) (711 )

Loss from equity method investment 388 80

Adjustment to bargain purchase gain on business (171 ) - acquisition

Changes in assets and liabilities associated with operations:

Increase in net receivables (42,979 ) (5,089 )

Increase in inventories (4,325 ) (16,941 )

Increase in prepaid expenses and other assets (2,194 ) (532 )

Decrease in income tax receivable 2,031 873

Increase in net operating lease liability 183 14

Increase (decrease) in accounts payable 7,769 (1,759 )

Decrease in deferred revenue (38,272 ) (1,079 )

Increase in accrued program costs 33,982 20,058

Increase (decrease) in other payables and accrued 4,025 (2,117 )expenses

Net cash (used in) provided by operating activities (174 ) 20,424

Cash flows from investing activities:

Capital expenditures (7,963 ) (8,988 )

Acquisition of product line (10,000 ) -

Intangible assets (285 ) (3,942 )

Investments (183 ) (1,190 )

Net cash used in investing activities (18,431 ) (14,120 )

Cash flows from financing activities:

Net borrowings under line of credit agreement 28,592 377

Payment of contingent consideration (250 ) (1,227 )

Net payments from the issuance of common stock(sale of stock under ESPP, (2,000 ) (1,064 )exercise of stock options, and shares purchased fortax withholding)

Repurchase of common stock (4,579 ) -

Payment of cash dividends (1,789 ) (1,168 )

Net cash provided by (used in) financing activities 19,974 (3,082 )

Net increase in cash and cash equivalents 1,369 3,222

Effect of exchange rate changes on cash and cash (574 ) (222 )equivalents

Cash and cash equivalents at beginning of period 15,923 6,581

Cash and cash equivalents at end of period $ 16,718 $ 9,581

Supplemental cash flow information:

Cash paid during the period for:

Interest $ 2,839 $ 3,960

Income taxes, net $ 3,836 $ 2,868

Non-cash transactions:

ROU assets exchanged for lease liabilities $ 17,872 $ 4,895

Cash dividends declared and included in accrued $ 594 $ - expenses

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three- and nine-months September 30, 2021 and 2020

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Net income attributable to American Vanguard, as reported

$

5,498

$

2,927

$

13,713

$

7,334

Provision for income taxes

1,517

492

5,324

1,852

Interest expense, net

962

1,022

2,921

3,804

Depreciation and amortization

7,285

5,920

20,026

17,550

EBITDA2

$

15,262

$

10,361

$

41,984

$

30,540

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three- and nine-months September 30, 2021 and 2020

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Net income attributable to $ 5,498 $ 2,927 $ 13,713 $ 7,334 American Vanguard, as reported

Provision for income taxes 1,517 492 5,324 1,852

Interest expense, net 962 1,022 2,921 3,804

Depreciation and amortization 7,285 5,920 20,026 17,550

EBITDA^2 $ 15,262 $ 10,361 $ 41,984 $ 30,540

__________________________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, operating income 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, operating income 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/20211108006047/en/

CONTACT: Company: 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