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