American Vanguard Reports Third Quarter & Nine-Month 2013 Results

American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine-month period ended September 30, 2013.

Fiscal 2013 Nine Month Financial Highlights – versus Fiscal 2012 Nine Month Results
  • Net sales improved from $261.9 million to $305.5 million, an increase of 17%
  • Net income improved from $25.6 million to $34.2 million, an increase of 34%
  • Earnings per diluted share improved from $0.89 to $1.18, an increase of 33%

Fiscal 2013 Third Quarter Financial Highlights – versus Fiscal 2012 Third Quarter Results
  • Net sales improved from $89.8 million to $97.2 million, an increase of 8%
  • Net income improved from $8.1 million to $8.9 million, an increase of 10%
  • Earnings per diluted share improved from $0.28 to $0.31, an increase of 11%

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 record third quarter and year-to-date revenue and earnings growth. Our quarterly results benefited from strong sales of Bidrin®, Thimet® and our Force® corn soil insecticide in Smartbox. In the face of challenging market dynamics, we have reported our best ever Company performance. Looking forward, as the industry ramps up for the 2014 planting season and prepares to cope with the reported intensification of weed and insect pressure, we are ready to supply growers with the best selection of proven crop protection tools available.”

Mr. Wintemute continued: “We continue to achieve strong gross margin levels, posting 46% in the first nine months of 2013 and 44% in the third quarter. Our 2013 sales have been enhanced by the extended agreement with Monsanto to co-market our Impact® herbicide with their market leading Roundup glyphosate brands. Demand for our wide range of granular soil insecticides continues to grow, as expanding insect resistance encourages the use of our products in conjunction with genetically modified trait seed. Further, we continue to manage our balance sheet for long-term growth and have strengthened our organization to capitalize on promising opportunities in product development, international expansion and non-agricultural pest control markets.”

Mr. Wintemute concluded: “Over the next several quarters, we expect to see strong demand for our diversified product lines across the many crops and geographies that we serve. Furthermore, for the 2014 planting season, we are planning to introduce a liquid, fertilizer-ready corn soil insecticide, which will complement our industry-leading portfolio of granular SmartBox products. AMVAC’s proven, yield-enhancing products are an essential part of integrated pest management, and solidify American Vanguard’s important role in the future of modern agriculture worldwide.”

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 Thursday, October 31, 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 nine months

ended September 30

ended September 30
2013   2012 2013   2012
Net sales $ 97,201 $ 89,836 $ 305,499 $ 261,928
Cost of sales   54,042     50,211     166,493     146,579  
Gross profit 43,159 39,625 139,006 115,349
Operating expenses   28,025     26,460     84,823     73,540  
Operating income 15,134 13,165 54,183 41,809
Interest expense 464 701 1,712 2,157
Interest capitalized   (20 )   (165 )   (245 )   (313 )
Income before provision for income tax 14,690 12,629 52,716 39,965
Income tax expense   5,559     4,553     18,500     14,411  
Income before loss on equity investment 9,131 8,076 34,216 25,554
Loss from equity method investment   386         386      
Net income 8,745 8,076 33,830 25,554
Net loss attributable to non-controlling interest   125         341      
Net income attributable to American Vanguard 8,870 8,076 34,171 25,554
Change in fair value of interest rate swaps 133 41 485 87
Foreign currency translation adjustment   (126 )   306     (195 )   428  
Comprehensive income $ 8,877   $ 8,423   $ 34,461   $ 26,069  
Earnings per common share—basic $ 0.31   $ 0.29   $ 1.21   $ 0.92  
Earnings per common share—assuming dilution $ 0.31   $ 0.28   $ 1.18   $ 0.89  
Weighted average shares outstanding—basic   28,322     27,970     28,295     27,818  
Weighted average shares outstanding—assuming dilution   28,889     28,878     28,890     28,673  
 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)
 

ASSETS
   

Sept. 30,

Dec. 31,

2013

2012
(Unaudited) (Note)
Current assets:
Cash $ 12,325 $ 38,476
Receivables:
Trade, net of allowance for doubtful accounts of $543 and $623, respectively 109,318 76,073
Other   2,489     1,230  
  111,807     77,303  
Inventories 127,172 87,951
Prepaid expenses and other short-term assets 12,381 13,710
Deferred income tax assets   4,877     4,877  
Total current assets 268,562 222,317
Property, plant and equipment, net 51,642 45,701
Intangible assets, net of applicable amortization 108,641 113,521
Other assets   34,569     18,351  
$ 463,414   $ 399,890  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt $ 71 $ 16,247
Current installments of other liabilities 1,635 1,839
Accounts payable 32,764 32,838
Deferred revenue 393 20,427
Accrued program costs 95,722 32,335
Accrued expenses and other payables 11,271 8,671
Income taxes payable   736     1,313  
Total current liabilities 142,592 113,670
Long-term debt, excluding current installments 38,894 36,196
Other liabilities, excluding current installments 3,932 5,425
Deferred income taxes   19,163     19,163  
Total liabilities   204,581     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 30,997,686 shares at September 30, 2013 and 30,766,730 shares at December 31, 2012 3,100 3,077
Additional paid-in capital 58,181 54,323
Accumulated other comprehensive loss (1,472 ) (1,762 )
Retained earnings   203,610     174,243  
263,419 229,881

Less treasury stock, at cost, 2,310,634 shares at September 30, 2013 and at December 31, 2012
  (4,804 )   (4,804 )
American Vanguard stockholders’ equity 258,615 225,077
Non-controlling interest   218     359  
Total stockholders’ equity   258,833     225,436  
$ 463,414   $ 399,890  
 

Note: The balance sheet at December 31, 2012 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 Nine Months Ended September 30, 2013 and 2012

(Unaudited)
 

Increase (decrease) in cash
  2013   2012
Cash flows from operating activities:
Net income $ 33,830 $ 25,554
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed and intangible assets 11,183 9,915
Amortization of other long term assets 2,976 2,061
Amortization of discounted liabilities 130 592
Stock-based compensation 2,895 1,856
Tax benefit from exercise of stock options (57 ) (493 )
Loss from equity method investment 386
Changes in assets and liabilities associated with operations:
Increase in net receivables (34,304 ) (36,515 )
Increase in inventories (39,221 ) (21,747 )
Increase in prepaid expenses and other assets (14,564 ) (8,862 )
(Increase) decrease in income tax receivable/payable, net (520 ) 644
Increase in accounts payable 412 8,743
Decrease in deferred revenue (20,034 ) (6,270 )
Increase in other liabilities   64,088     37,623  
Net cash provided by operating activities   7,200     13,101  
 
Cash flows from investing activities:
Capital expenditures (12,290 ) (14,908 )
Investment   (3,687 )    
Net cash used in investing activities   (15,977 )   (14,908 )
 
Cash flows from financing activities:
Net borrowings under line of credit agreement 38,750
Payments on long-term debt (46,000 ) (6,000 )
Payments on other long-term liabilities (1,415 )
Tax benefit from exercise of stock options 57 493
Decrease in other notes payable (6,154 ) (6,460 )
Payment of cash dividends (3,390 ) (1,380 )
Proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock options)   929     3,260  
Net cash used in financing activities   (17,223 )   (10,087 )
 
Net decrease in cash (26,000 ) (11,894 )
Cash and cash equivalents at beginning of year 38,476 35,085
Effect of exchange rate changes on cash   (151 )   433  
Cash and cash equivalents as of September 30 $ 12,325   $ 23,624  

Copyright Business Wire 2010

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