American Vanguard Reports Second Quarter & Mid-Year 2013 Results

  American Vanguard Reports Second Quarter & Mid-Year 2013 Results

   Strong First Half Performance - Despite Weather Dampened Spring Quarter

Business Wire

NEWPORT BEACH, Calif. -- August 5, 2013

American Vanguard Corporation (NYSE:AVD), today announced financial results
for the second quarter and six month period ended June 30, 2013.

Fiscal 2013 First Half Financial Highlights – versus Fiscal 2012 First Half

• Net sales improved from $172.1 million to $208.3 million, an increase of 21%

• Net income improved from $17.5 million to $25.3 million, an increase of 45%

• Earnings per diluted share improved from $0.61 to $0.88, an increase of 44%

Fiscal 2013 Second Quarter Financial Highlights – versus Fiscal 2012 Second
Quarter:

• Net sales improved from $84.8 million to $86.8 million, an increase of 2%

• Net income declined slightly from $8.7 million to $8.4 million, a decrease
of 4%

• Earnings per diluted share declined from $0.30 to $0.29, a decrease of 3%

Note: Further details are available in the financial schedules attached to
this press release

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We are pleased
to report strong first half performance despite unfavorable U.S. weather
conditions throughout the Midwest and South. During the 2013 corn planting
season, we continued to see strong demand for our corn soil insecticides and
post emergent herbicide. While adverse weather conditions kept us from
achieving stronger sales during the second quarter, nevertheless we recorded
slightly higher revenues overall as compared to second quarter of 2012, which
had set the previous Company record for second quarter sales. As we previously
reported, during the second quarter, persistent rainfall delayed and
compressed normal planting practices, causing some growers to make fewer crop
protection applications at the time of planting or to switch from corn and
cotton to plant soybeans, which require a shorter growing period. Strong sales
of our corn products were offset by a drop in sales of both our cotton and
peanut products, resulting primarily from a decline in planted acres of those
crops. Further, we did see more conservative purchasing patterns towards the
end of the second quarter, as distribution reacted to increasing inventory
levels.”

Mr. Wintemute continued: “Despite this late spring slowdown in grower demand,
we continued to demonstrate strong gross margin performance, achieving 46% in
the first half of 2013 compared to 44% in 2012. Our second quarter performance
was better with gross margin of 48% as compared to 45% last year. During the
second quarter, we extended our agreement with Monsanto to co-market our
Impact® herbicide with their market leading Roundup brands. We continued to
carefully manage our balance sheet including putting in place an expanded
credit facility with our lender group, providing the Company with the capacity
to pursue its domestic and international strategy. In keeping with our
dedication to strategic growth, we have strengthened our organization to
exploit promising opportunities in product development, international
expansion and non-agricultural pest control markets.”

Mr. Wintemute concluded: “In the second half of 2013, we continue to see solid
demand for our diversified product lines across the many crops and geographies
that they serve. Factors affecting both the third and fourth quarters
performance include the successful promotion and sales of our market leading
post-harvest Metam soil fumigants, the normal late-summer pest pressure to
support our Bidrin® foliar cotton insecticide, favorable autumn weather
conditions to support of our Folex® cotton harvest defoliant, and wet weather
in regions where our Dibrom® mosquito adulticide is used. At the end of the
fourth quarter we will look for early 2014 season demand for both our granular
corn soil insecticides and our Impact herbicide, which are both typically
placed into the distribution chain at the end of the calendar year in
readiness for the new season. Even with some working capital controls
influencing distribution channel purchasing patterns, we believe, as do our
customers, that our yield enhancing products are an essential part of
integrated pest management, and that American Vanguard’s important role in
modern agriculture will continue to serve as the foundation of our enduring
business model.”

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, August 5, 2013. 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
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)
                                                                       
                                                                       
                         For the three months          For the six months
                         ended June 30                 ended June 30
                         2013           2012           2013           2012
Net sales                $ 86,761       $ 84,837       $ 208,298       $ 172,092
Cost of sales             44,695       46,491       112,451       96,368  
                                                                       
Gross profit               42,066         38,346         95,847          75,724
Operating expenses        29,169       24,104       56,798        47,080  
                                                                       
Operating income           12,897         14,242         39,049          28,644
Interest expense           701            721            1,248           1,456
Interest capitalized      (31    )      (112   )      (225    )      (148    )
                                                                       
Income before
provision for income       12,227         13,633         38,026          27,336
taxes
Income tax expense        3,961        4,889        12,941        9,858   
                                                                       
Net income                 8,266          8,744          25,085          17,478
Net loss
attributable to           120          —            216           —       
non-controlling
interest
                                                                       
Net income
attributable to           8,386        8,744        25,301        17,478  
American Vanguard
                                                                       
Change in fair value
of interest rate           174            24             352             46
swap
Foreign currency
translation               (476   )      (420   )      (69     )      122     
adjustment
                                                                       
Comprehensive income     $ 8,084       $ 8,348       $ 25,584       $ 17,646  
                                                                       
Earnings per common      $ .29         $ .31         $ .89          $ .63     
share—basic
                                                                       
Earnings per common
share—assuming           $ .29         $ .30         $ .88          $ .61     
dilution
                                                                       
Weighted average
shares                    28,295       27,858       28,280        27,740  
outstanding—basic
                                                                       
Weighted average
shares                    28,886       28,737       28,884        28,544  
outstanding—assuming
dilution
                                                                         

                                                              
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
                                                                   
                                                                   
                                                   June, 30,       Dec. 31,
                                                   2013            2012
ASSETS                                             (Unaudited)     (Note)
Current assets:
Cash                                               $ 32,414        $ 38,476
Receivables:
Trade, net of allowance for doubtful accounts        67,376          76,073
of $557 and $623, respectively
Income taxes receivable                              148             —
Other                                               1,414         1,230   
                                                                   
                                                    68,938        77,303  
                                                                   
Inventories                                          127,150         87,951
Prepaid expenses                                     13,411          13,710
Deferred income tax assets                          4,877         4,877   
                                                                   
Total current assets                                 246,790         222,317
Property, plant and equipment, net                   49,828          45,701
Intangible assets                                    110,247         113,521
Other assets                                        30,372        18,351  
                                                                   
                                                   $ 437,237      $ 399,890 
                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt             $ 70            $ 16,247
Current installments of other liabilities            1,524           1,839
Accounts payable                                     23,953          32,838
Deferred revenue                                     278             20,427
Accrued program costs                                88,508          32,335
Accrued expenses and other payables                  8,793           8,671
Income taxes payable                                —             1,313   
                                                                   
Total current liabilities                            123,126         113,670
Long-term debt, excluding current installments       40,911          36,196
Other liabilities, excluding current                 4,291           5,425
installments
Deferred income taxes                               19,163        19,163  
                                                                   
Total liabilities                                   187,491       174,454 
                                                                   
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 30,972,048 shares at June 30, 2013 and        3,099           3,077
30,766,730 shares at December 31, 2012
Additional paid-in capital                           56,632          54,323
Accumulated other comprehensive loss                 (1,479  )       (1,762  )
Retained earnings                                   196,155       174,243 
                                                                   
                                                     254,407         229,881
Less treasury stock, at cost, 2,310,634 shares      (4,804  )      (4,804  )
at both June 30, 2013 and December 31, 2012
                                                                   
American Vanguard stockholders’ equity               249,603         225,077
Non-controlling interest                            143           359     
                                                                   
Total stockholders’ equity                          249,746       225,436 
                                                                   
                                                   $ 437,237      $ 399,890 
                                                                     

                                                              
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For The Six Months Ended June 30, 2013 and 2012
(Unaudited)
                                                                   
Increase (decrease) in cash                        2013            2012
Cash flows from operating activities:
Net income                                         $ 25,085        $ 17,478
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of fixed and           7,461           7,046
intangible assets
Amortization of other long term assets               1,802           1,574
Amortization of discounted liabilities               86              396
Stock-based compensation                             1,747           1,031
Tax benefit from exercise of stock options           (57     )       (160    )
Changes in assets and liabilities associated
with operations:
Decrease (increase) in net receivables               8,513           (3,862  )
Increase in inventories                              (39,199 )       (8,854  )
Increase in prepaid expenses and other assets        (9,837  )       (2,555  )
(Decrease) increase in income tax                    (1,404  )       393
receivable/payable, net
(Decrease) increase in accounts payable              (8,532  )       668
Decrease in deferred revenue                         (20,149 )       (7,370  )
Increase in other payables and accrued              54,529        30,883  
expenses
                                                                   
Net cash provided by operating activities           20,045        36,668  
                                                                   
Cash flows from investing activities:
Capital expenditures                                 (8,360  )       (13,061 )
Investment                                          (3,687  )      —       
                                                                   
Net cash used in investing activities               (12,047 )      (13,061 )
                                                                   
Cash flows from financing activities:
Net borrowings under line of credit agreement        40,750          —
Payments on long-term debt                           (46,000 )       (4,000  )
Payments on other long-term liabilities              (1,238  )       —
Tax benefit from exercise of stock options           57              160
Decrease in other notes payable                      (6,154  )       (6,827  )
Payment of cash dividends                            (1,976  )       (1,380  )
Proceeds from the issuance of common stock
(sale of stock under ESPP and exercise of           527           1,285   
stock option)
                                                                   
Net cash used in by financing activities            (14,034 )      (10,762 )
                                                                   
Net (decrease) increase in cash                      (6,036  )       12,845
Cash and cash equivalents at beginning of year       38,476          35,085
Effect of exchange rate changes on cash             (26     )      118     
                                                                   
Cash and cash equivalents as of June 30            $ 32,414       $ 48,048  
                                                                   

Contact:

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
 
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