American Vanguard Reports First Quarter 2012 Results

American Vanguard Corporation (NYSE:AVD), today announced financial results for the first quarter ended March 31, 2012.

Fiscal 2012 First Quarter Financial Highlights – versus Fiscal 2011 First Quarter
  • Net sales of $87.3 million, compared with $66.0 million, an increase of 32%.
  • Net income of $8.7 million, compared with $5.0 million, an increase of 74%.
  • Earnings per diluted share were $0.31, compared with $0.18, an increase of 72%.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our first quarter 2012 business performance reflects positive conditions in the U.S. agricultural sector and was driven largely by the growing demand for our portfolio of granular soil insecticides. Gross profit margins rose to 43% as we achieved improved overall factory utilization rates. Operating expenses as a percentage of sales were held to 26%, despite higher regulatory expenses and freight costs that kept pace with our expanding export business. Stronger sales, improved gross margins and operating expense management enabled us to improve our bottom line significantly.”

Mr. Wintemute continued, “We are seeing renewed demand for the use of granular soil insecticides in the U.S. corn market, as growers combat strong pest pressure from both primary and secondary insects. The use of our corn soil insecticides in conjunction with genetically modified seeds as part of an integrated pest management program provides the most comprehensive defense against the full range of soil insects and can enhance harvest yields. American Vanguard has the largest offering of corn soil insecticides along with the most advanced, closed delivery equipment for safely and efficiently dispensing these products.”

Mr. Wintemute concluded, “Our performance during the quarter serves to validate our long-standing belief that conventional chemistry is an essential part of integrated pest management. We are, of course, pleased with these results and look forward to giving additional color during our earnings call on the period.”

Conference Call

Eric Wintemute, Chairman & CEO and David Johnson, CFO, will conduct a conference call focusing on the financial results at 12:00 pm ET / 9:00 am PT on Thursday, May 3, 2012. 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 the control of public and animal health pests. American Vanguard is included in the Russell 2000® & 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 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 ended March 31
  2012       2011  
Net sales $ 87,255 $ 66,033
Cost of sales   49,877     39,123  
Gross profit 37,378 26,910
Operating expenses   22,976     17,723  
Operating income 14,402 9,187
Interest expense 735 806
Interest capitalized (36 ) (58 )
Extinguishment of debt  

    546  
Income before income tax 13,703 7,893
Income tax expense   4,969     2,881  
Net income 8,734 5,012
Change in fair value of interest rate swaps 22 (246 )
Foreign currency translation adjustment   542     237  
Comprehensive income $ 9,298   $ 5,003  
Earnings per common share—basic $ .32   $ .18  
Earnings per common share—assuming dilution $ .31   $ .18  
Weighted average shares outstanding—basic   27,624     27,596  
Weighted average shares outstanding—assuming dilution   28,299     27,851  
 

As reported at the earnings call and set forth in the financial statements in the Company’s form 10-K for the period ended December 31, 2011, the company has reclassified immaterial program costs from operating expenses to net sales for all reporting periods. The figures in the prior year statement, presented here, reflect this reclassification.
 

           

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ASSETS (note 7)
 

Mar. 31, 2012
Dec. 31, 2011
(Unaudited) (Note)
Current assets:
Cash $ 14,732 $ 35,085
Receivables:
Trade, net of allowance for doubtful accounts of $397 and $340, respectively 98,625 68,611
Other   1,473     1,187  
  100,098     69,798  
Inventories 74,667 71,068
Prepaid expenses 3,399 2,311
Income taxes receivable       203  
Total current assets 192,896 178,465
Property, plant and equipment, net 43,039 39,273
Intangible assets 114,703 116,189
Other assets   5,012     5,214  
$ 355,650   $ 339,141  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt $ 14,896 $ 14,460
Current installments of other liabilities 1,134 1,038
Accounts payable 24,381 23,214
Deferred revenue 7,571
Accrued program costs 45,383 25,910
Accrued expenses and other payables 6,032 6,832
Income taxes payable   3,479      
Total current liabilities 95,305 79,025
Long-term debt, excluding current installments 43,527 51,917
Other liabilities, excluding current installments 5,774 5,955
Deferred income taxes   15,172     15,172  
Total liabilities   159,778     152,069  
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 30,083,066 shares at March 31, 2012 and 29,845,047 shares at December 31, 2011 3,009 2,985
Additional paid-in capital 46,824 45,966
Accumulated other comprehensive loss (1,686 ) (2,250 )
Retained earnings   150,878     143,524  
199,025 190,225
Less treasury stock, at cost, 2,260,996 shares at March 31, 2012 andat December 31, 2011   (3,153 )   (3,153 )
Total stockholders’ equity   195,872     187,072  
$ 355,650   $ 339,141  
 

Note: The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date.
 
       

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For The Three Months Ended March 31, 2012 and 2011 (Unaudited)
 

Increase (decrease) in cash
  2012     2011  
Cash flows from operating activities:
Net income $ 8,734 $ 5,012
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed and intangible assets 3,469 3,251
Amortization of other long term assets 682 1,253
Amortization of discounted liabilities 198 388
Stock-based compensation 422 523
Tax benefit from exercise of stock options (43 )
Changes in assets and liabilities associated with operations:
Increase in net receivables (30,300 ) (29,900 )
Increase in inventories (3,599 ) (3,243 )
Increase in prepaid expenses and other assets (1,568 ) (1,988 )
Decrease in income tax receivable/payable, net 3,725 8,133
Increase in accounts payable 1,188 7,703
Decrease in deferred revenue (7,571 ) (5,533 )
Increase in other liabilities   17,065     3,896  
Net cash used in operating activities   (7,598 )   (10,505 )
Cash flows from investing activities:
Capital expenditures   (5,718 )   (910 )
Net cash used in investing activities   (5,718 )   (910 )
Cash flows from financing activities:
Net (repayments) borrowings under line of credit agreement (7,300 )
Principal payments on long-term debt (2,000 ) (2,004 )
Tax benefit from exercise of stock options 43
Borrowings on long-term debt 20,063
Decrease in other notes payable (6,035 )
Proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock option)   417     550  
Net cash (used in) provided by financing activities   (7,575 )   11,309  
Net (decrease) in cash (20,891 ) (106 )
Cash and cash equivalents at beginning of period 35,085 1,158
Effect of exchange rate changes on cash   538     222  
Cash and cash equivalents as of March 31 $ 14,732   $ 1,274  

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