American Vanguard Reports First Quarter 2014 Results

  American Vanguard Reports First Quarter 2014 Results

Business Wire

NEWPORT BEACH, Calif. -- May 1, 2014

American Vanguard Corporation (NYSE:AVD), today announced financial results
for the first quarter ended March 31, 2014.

Financial Highlights Fiscal 2014 First Quarter – versus Fiscal 2013 First
Quarter

• Net sales of $81.1 million, compared with $121.5 million.
• Net income of $2.2 million, compared with $16.9 million.
• Earnings per diluted share of $0.07, compared with $0.59.

As reported previously, prolonged wet weather in the Midwest United States
during the spring of 2013 limited the application of many crop protection
products that are used at the time of planting. As a result, higher than
normal levels of these products, including AMVAC’s corn soil insecticides,
remained in the distribution channel at the end of the 2013 growing season.
The Company’s first quarter performance decline is attributable to reduced
demand for corn inputs, as the channel of distribution first works down 2013
inventory carryover to satisfy 2014 demand. This process has been further
slowed in the first quarter of 2014 by severe winter weather in our core
markets and by lower corn commodity pricing, which is tending to delay grower
planting decisions for the 2014 season.

Mr. Eric Wintemute, Chairman and CEO of American Vanguard stated: “Despite the
abnormal purchasing pattern that we are seeing this season, U.S. corn growers
continue to demonstrate support for our proven crop protection products by
investing in our proprietary delivery systems. American Vanguard has the
largest offering of these yield enhancing insecticides sold exclusively in our
closed delivery equipment, which provides for safe and efficient dispensing of
these products. Our corn franchise also continues to benefit from the
multi-year co-marketing program with Monsanto, which rewards corn growers for
using AMVAC’s Impact® post-emergent herbicide with Monsanto’s widely used
Roundup® glyphosate herbicide brands.”

Mr. Wintemute continued: “We are placing a great deal of focus on reducing our
own elevated inventory levels and setting the appropriate level of factory
activity. Accordingly, we are compelled to reduce manufacturing output and to
accept higher levels of under-absorbed overhead. This has reduced gross
margins for the quarter and is likely to impact our performance for the
balance of the year. At the same time we are working to control operating
expenses throughout the organization.”

Mr. Wintemute concluded: “We believe that inventories in the channel of
distribution will return to normal levels during the 2014 growing season and
that our soil insecticide business will get back on track for the 2015 season.
Our non-corn product lines and international expansion initiatives continue to
meet planned expectations. We look forward to giving additional details during
our first quarter earnings call.”

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, May 1, 2014. 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® 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
(In thousands, except per share data)
(Unaudited)
                                                                              
                                                                              
                                     For the three months
                                     ended March 31
                                        2014                2013
                                                         
Net sales                            $   81,095           $   121,537
Cost of sales                          52,190            67,756  
Gross profit                             28,905               53,781
Operating expenses                     24,943            27,628  
Operating income                         3,962                26,153
Interest expense                         631                  547
Less interest                          (18    )           (194    )
capitalized
Income before
provision for income                     3,349                25,800
taxes and loss on
equity investment
Income taxes expense                   1,016             8,981   
Income before loss                       2,333                16,819
on equity investment
Deduct net loss from
equity method                          (328   )           —       
investment
Net income                               2,005                16,819
Add back net loss
attributable to                        154               96      
non-controlling
interest
Net income
attributable to                        2,159             16,915  
American Vanguard
Change in fair value
of interest rate                         136                  178
swaps
Foreign currency
translation                            51                407     
adjustment
Comprehensive income                 $  2,346           $  17,500  
Earnings per common                  $  .08             $  .60     
share—basic
                                                                              
Earnings per common
share—assuming                       $  .07             $  .59     
dilution
                                                                              
Weighted average
shares                                 28,401            28,269  
outstanding—basic
                                                                              
Weighted average
shares                                 28,888            28,879  
outstanding—assuming
dilution
                                                                              

                                                             
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
ASSETS
(Unaudited)
                                                                             
                                                                             
                                   Mar. 31,              Dec. 31,
                                   2014                  2013
                                                        
Current assets:
Cash and cash                      $  8,391             $  6,680
equivalents
Receivables:
Trade, net of
allowance for
doubtful accounts                      103,391               74,060
of $429 and $392,
respectively
Other                                2,501              892     
                                                                             
Total receivables                      105,892               74,952
Inventories                            158,459               139,830
Prepaid expenses                       12,543                11,435
Income taxes                           9,628                 10,088
receivable
Deferred income                      6,521              6,521   
tax assets
                                                                             
Total current                          301,434               249,506
assets
Property, plant                        52,148                52,468
and equipment, net
Intangible assets,
net of applicable                      105,442               107,007
amortization
Other assets                         39,070             38,462  
                                                                             
                                   $  498,094          $  447,443 
                                                                             
LIABILITIES AND
STOCKHOLDERS’
EQUITY
Current
liabilities:
Current
installments of                    $   70                $   69
long-term debt
Current
installments of                        1,388                 2,132
other liabilities
Accounts payable                       40,185                40,702
Deferred revenue                       1,479                 3,788
Accrued program                        61,956                53,630
costs
Accrued expenses                     7,036              10,178  
and other payables
                                                                             
Total current                          112,114               110,499
liabilities
Long-term debt,
excluding current                      99,108                51,676
installments
Other liabilities,
excluding current                      4,482                 4,143
installments
Deferred income                      23,330             23,330  
tax liabilities
                                                                             
Total liabilities                    239,034            189,648 
                                                                             
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
31,190,906 shares
at March 31, 2014
and 31,092,782                         3,119                 3,109
shares at December
31, 2013
Additional paid-in                     62,171                60,160
capital
Accumulated other                      (861    )             (1,048  )
comprehensive loss
Retained earnings                    203,212            202,470 
                                       267,641               264,691
Less treasury
stock at cost,
2,450,634 shares
at March 31, 2014
and 2,380,634
shares at
December 31, 2013                    (8,269  )           (6,738  )
American Vanguard
Corporation                            259,372               257,953
stockholders’
equity
Non-controlling                      (312    )           (158    )
interest
                                                                             
Total
stockholders’                        259,060            257,795 
equity
                                                                             
                                   $  498,094          $  447,443 
                                                                             

                                                                  
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For The Three Months Ended March 31, 2014 and 2013
(Unaudited)
                                                                                
                                                                                
Increase (decrease) in cash               2014                2013
_____________________________                                
Cash flows from operating
activities:
Net income                                $ 2,005             $ 16,819
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization
of fixed and intangible                     3,733               3,699
assets
Amortization of other long                  1,454               836
term assets
Amortization of discounted                  69                  42
liabilities
Stock-based compensation                    768                 688
Tax benefit from exercise of                (235    )           (57     )
stock options
Loss from equity method                     328                 —
investment
Gain on dilution of equity                  (256    )           —
method investment
Changes in assets and
liabilities associated with
operations:
Increase in net receivables                 (30,940 )           (70,908 )
Increase in inventories                     (18,629 )           (21,538 )
Increase in prepaid expenses                (3,242  )           (7,027  )
and other assets
Decrease in income tax                      695                 6,108
receivable/payable, net
(Decrease) increase in                      (381    )           31,250
accounts payable
Decrease in deferred revenue                (2,309  )           (18,148 )
Increase in other payables                 5,050             40,100  
and accrued expenses
                                                                                
Net cash used in operating                 (41,890 )          (18,136 )
activities
                                                                                
Cash flows from investing
activities:
Capital expenditures                        (1,816  )           (4,396  )
Investment                                 —                 (3,687  )
                                                                                
Net cash used in investing                 (1,816  )          (8,083  )
activities
                                                                                
Cash flows from financing
activities:
Net borrowings under line of                47,450              6,200
credit agreement
Payments on long-term debt                  —                   (2,500  )
Payments on other long-term                 (356    )           (682    )
liabilities
Tax benefit from exercise of                235                 57
stock options
Decrease in other notes                     —                   (6,154  )
payable
Repurchases of common stock                 (1,531  )           —
Proceeds from the issuance of
common stock (sale of stock                 1,018               427
under ESPP and exercise of
stock options)
Payment of cash dividends                  (1,418  )          —       
                                                                                
Net cash provided (used) by                45,398            (2,652  )
financing activities
                                                                                
Net increase (decrease) in                  1,692               (28,871 )
cash and cash equivalents
Cash and cash equivalents at                6,680               38,476
beginning of period
Effect of exchange rate                    19                390     
changes on cash
                                                                                
Cash and cash equivalents as              $ 8,391            $ 9,995   
of the end of the period
                                                                                

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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