American Vanguard Reports Fourth Quarter & Full Year 2013 Results

  American Vanguard Reports Fourth Quarter & Full Year 2013 Results

    Full-Year Revenue up 4% -- Despite Delayed Purchasing Trend Caused by
                             Unfavorable Weather

Business Wire

NEWPORT BEACH, Calif. -- February 27, 2014

American Vanguard Corporation (NYSE:AVD), today announced financial results
for the fourth quarter and full year ended December 31, 2013.

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

  *Net sales were $75.5 million compared to $104.3 million.
  *Net income was $0.3 million compared to $11.3 million.
  *Earnings per diluted share were $0.01 versus $0.39.

Fiscal 2013 Financial Highlights – versus Fiscal 2012 Results:

  *Net sales were $381.0 million compared to $366.2 million.
  *Net income was $34.4 million compared to $36.9 million.
  *Earnings per diluted share were $1.19 versus $1.28.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our
performance in 2013 has been significantly influenced by unfavorable,
early-season Midwest weather conditions and the resulting cautious purchasing
behavior of our customers. Compared to the prior full-year period, sales  grew
by 4%  and gross profit margins  improved to 45%. Our balance sheet  remains
strong; stockholders equity rose for the year by 14%; we were able to provide
shareholders with quarterly dividend payments totaling $0.22/share during the
year; and finally, we implemented a stock buyback program during the final
quarter of the year spending $1.9 million to purchase 70,000 shares.”

Mr. Wintemute continued: “2013 started out very strong for us, as corn growers
built inventory in anticipation of a healthy, normal planting season. However,
as we reported previously, widespread and prolonged rainfall last spring
caused nearly two million flooded acres to remain fallow and deferred spring
planting so extensively that some growers were forced to switch from intended
corn planting to short maturity soybean varieties. As a result, planted acres
of both corn and cotton decreased, and unapplied corn crop inputs from many
companies accumulated as excess channel inventory. Last December, the
distribution channel sharply curtailed procurement for the 2014 season in
order to work through residual 2013 product. At that time, unlike some
suppliers in our sector, we opted not to discount prices and extend credit
terms in order to garner limited sales from the channel.”

Mr. Wintemute explained further: “We reported last December that we were
expecting sales to pick-up during the 2014 first quarter. While we have seen
some pick-up, sales activity of our corn soil insecticides are lagging behind
what we would expect for this time of year. We are receiving mixed signals as
to the prospects for our corn soil insecticides over the course of the
quarter. Based upon input from our sales force, our channel partners and our
peers, and taking into account current inventory and weather conditions, we
believe that our net sales for the first quarter could be down as much as 20%
compared to our record sales performance of Q1 2013. We expect to recover a
portion of these lost sales in the second quarter, but that depends upon many
factors, including how quickly fields can recover from winter conditions,
length of planting season, and economic considerations such as corn and
soybean commodity prices.”

Mr. Wintemute concluded, “On the more positive side, we continue to see strong
demand for our Impact® corn herbicide and expect year-over-year improvements
in our cotton, peanut, potato and other crop businesses during 2014. Further,
corn market conditions can change quickly, and we stand ready to meet market
demand as the planting season unfolds.”

Conference Call

Eric Wintemute, Chairman & CEO 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 Thursday, February 27, 2014. 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



CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December31, 2013, 2012 and 2011

(In thousands, except per share data)
                                                            
                                     2013          2012          2011
Net sales                            $ 381,021     $ 366,190     $ 301,080
Cost of sales                         209,674     205,065     178,012 
                                                                             
Gross profit                           171,347       161,125       123,068
Operating expenses                    115,612     101,802     83,842  
                                                                             
Operating income                       55,735        59,323        39,226
Interest expense                       2,176         2,872         3,569
Interest income                        (1      )     (1      )     (3      )
Interest capitalized                   (274    )     (400    )     (109    )
Extinguishment of debt                —           —           546     
                                                                             
Income before provision for
income taxes and loss on equity        53,834        56,852        35,223
investment
Income taxes expense                  18,916      20,026      13,155  
                                                                             
Income before loss on equity           34,918        36,826        22,068
investment
Less loss from equity method          986         —           —       
investment
                                                                             
Net income                             33,932        36,826        22,068
Add back net loss attributable        517         41          —       
to non-controlling interest
                                                                             
Net income attributable to           $ 34,449     $ 36,867     $ 22,068  
American Vanguard
                                                                             
Change in fair value of interest       388           158           (869    )
rate swaps
Foreign currency translation          326         330         (933    )
adjustment
                                                                             
Comprehensive income                 $ 35,163     $ 37,355     $ 20,266  
                                                                             
Earnings per common share—basic      $ 1.22       $ 1.32       $ 0.80    
                                                                             
Earnings per common                  $ 1.19       $ 1.28       $ 0.79    
share—assuming dilution
                                                                             
Weighted average shares               28,301      27,914      27,559  
outstanding—basic
                                                                             
Weighted average shares               28,899      28,756      27,875  
outstanding—assuming dilution

                                                                             
                                                                             
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

December31, 2013 and 2012

(In thousands, except per share data)
                                                            
                                                 2013            2012
Assets
Current assets:
Cash                                             $ 6,680         $ 38,476
Receivables:
Trade, net of allowance for doubtful               74,060          76,073
accounts of $392 and $623, respectively
Other                                             892           1,230   
                                                  74,952        77,303  
Inventories                                        139,830         87,951
Prepaid expenses                                   11,435          13,710
Income taxes receivable                            10,088          —
Deferred income tax assets                        6,521         4,877   
Total current assets                               249,506         222,317
Property, plant and equipment, net                 52,468          45,701
Intangible assets, net of applicable               107,007         113,521
amortization
Other assets                                      38,462        18,351  
                                                 $ 447,443      $ 399,890 
                                                                             
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of long-term debt           $ 69            $ 16,247
Current installments of other liabilities          2,132           1,839
Accounts payable                                   40,702          32,838
Deferred revenue                                   3,788           20,427
Accrued program costs                              53,630          32,335
Tax payable                                        —               1,313
Accrued expenses and other payables               10,178        8,671   
Total current liabilities                          110,499         113,670
Long-term debt, excluding current                  51,676          36,196
installments
Other liabilities, excluding current               4,143           5,425
installments
Deferred income tax liabilities                   23,330        19,163  
Total liabilities                                 189,648       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               3,109           3,077
31,092,782 shares in 2013 and 30,766,730
shares in 2012
Additional paid-in capital                         60,160          54,323
Accumulated other comprehensive loss               (1,048  )       (1,762  )
Retained earnings                                 202,470       174,243 
                                                   264,691         229,881
Less treasury stock at cost, 2,380,634            (6,738  )      (4,804  )
shares in 2013 and 2,310,634 shares in 2012
American Vanguard Corporation stockholders’        257,953         225,077
equity
Non-controlling interest                          (158    )      359     
Total stockholders’ equity                        257,795       225,436 
                                                 $ 447,443      $ 399,890 

                                                                             
                                                                             
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December31, 2013, 2012 and 2011

(In thousands)
                                                             
                                     2013          2012          2011
Increase cash
Cash flows from operating
activities:
Net income                           $ 33,932      $ 36,826      $ 22,068
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities:
Depreciation and amortization of       14,845        13,487        13,546
fixed and intangible assets
Amortization of other long term        4,598         2,925         1,983
assets
Amortization of discounted             174           818           1,371
liabilities
Stock-based compensation               3,819         2,950         1,994
Tax benefit from exercise of stock     (440    )     (621    )     —
options
Increase (decrease) in deferred        2,523         (886    )     4,711
income taxes
Loss from equity method investment     986           —             —
Changes in assets and liabilities
associated with operations:
Decrease (increase) in net             2,351         (7,505  )     (35,021 )
receivables
(Increase) decrease in inventories     (51,879 )     (16,883 )     2,986
(Increase) decrease in income tax      (10,961 )     2,137         6,512
receivable/payable, net
Increase in prepaid expenses and       (19,733 )     (23,725 )     (1,823  )
other assets
Increase in accounts payable           8,252         9,781         8,384
(Decrease) increase in deferred        (16,639 )     12,856        2,003
revenue
Increase in other payables and        21,958      8,264       10,552  
accrued expenses
Net cash (used in) provided by        (6,214  )    40,424      39,266  
operating activities
                                                                             
Cash flows from investing
activities:
Capital expenditures                   (15,260 )     (17,628 )     (6,261  )
Investment                             (3,687  )     —             —
Acquisitions of intangible assets     —           (3,473  )    (316    )
Net cash used in investing            (18,947 )    (21,101 )    (6,577  )
activities
                                                                             
Cash flows from financing
activities:
Net borrowings (repayments) under      51,550        —             (7,300  )
line of credit agreement
Payments on long-term debt             (46,000 )     (8,443  )     (8,429  )
Payment on other long-term             (1,831  )     (6,035  )     (401    )
liabilities
Tax benefit from exercise of stock     440           621           —
options
(Increase) decrease in other notes     (6,154  )     (51     )     20,063
payable
Repurchases of common stock            (1,934  )     —             —
Proceeds from the issuance of
common stock (sale of stock under      1,610         3,227         580
ESPP and exercise of stock
options)
Non-controlling interest               —             400           —
contribution
Payment of cash dividends             (4,804  )    (6,148  )    (2,205  )
Net cash (used in) provided by        (7,123  )    (16,429 )    2,308   
financing activities
Net (decrease) increase in cash        (32,284 )     2,894         34,997
Effect of exchange rate changes on     488           497           (1,070  )
cash
Cash at beginning of year             38,476      35,085      1,158   
Cash at end of year                  $ 6,680      $ 38,476     $ 35,085  
                                                                             
Supplemental cash flow
information:
Cash paid during the year for:
Interest                             $ 1,777      $ 1,891      $ 2,055   
Income taxes                         $ 25,271     $ 18,048     $ 6,359   

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.
www.theequitygroup.com
Lena Cati, 212-836-9611
Lcati@equityny.com
 
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