American Vanguard Reports Second Quarter & Midyear 2022 Results

By: American Vanguard Corporation via Business Wire

August 09, 2022 at 08:00 AM EDT

Significant Demand Continues, Gross Margins Increase, Midyear Net Income Doubles, Full Year Performance Targets Reiterated

American Vanguard Corporation (NYSE: AVD) today announced financial results for the second quarter and six months ended June 30, 2022.

Fiscal 2022 Second Quarter Financial Highlights – versus Fiscal 2021 Second Quarter:

Net sales were $148 million in 2022, compared to $135 million in 2021
Net income was $6.8 million in 2022, compared to $5.1 million in 2021
Earnings per diluted share of $0.23 in 2022, compared to $0.17 in 2021
Adjusted EBITDA¹ of $19.7 million in 2022, compared to $16.5 million in 2021

Fiscal 2022 Mid-Year Financial Highlights – versus Fiscal 2021 Mid-Year:

Net sales were $298 million in 2022, compared to $251 million in 2021
Net income was $16.8 million in 2022, compared to $8.2 million in 2021
Earnings per diluted share of $0.55 in 2022, compared to $0.27 in 2021
Adjusted EBITDA¹ of $42.5 million in 2022, compared to $30.3 million in 2021

Eric Wintemute, Chairman and CEO of American Vanguard stated: “Conditions within our agricultural markets continue to be favorable with consistently high commodity prices, a strong farm economy and, for US-based companies, a strong US dollar. Having built a portfolio of products that reaches across multiple crops – including corn, soybeans, cotton, potatoes, and high-value fruits and vegetables – we were better able to cross-sell to growers and enjoyed strong demand for our products, both domestically and abroad. Our focused efforts to increase prices and more fully exploit our manufacturing assets enabled us to achieve higher margins despite inflation and supply chain challenges. Within this context, we recorded strong results for the second quarter and first half of 2022, including higher sales and improved profitability.”

Mr. Wintemute continued: “Our second quarter improvement was led by our international business, which generated higher sales of soil fumigants, foliar and soil insecticides, fungicides and micronutrient products across multiple regions. Our domestic crop business enjoyed strong demand for our expanding portfolio of herbicides, partially offset by lower soil fumigant sales due to drought conditions in the West and Southwest, where water allocation has been implemented. During the second quarter of 2022, our U.S. non-crop business experienced relatively steady demand in mosquito control, commercial pest applications and horticulture/ornamental products.”

Mr. Wintemute concluded: “Looking forward, we believe that our Company is situated well in both domestic and international markets and are consequently optimistic, even with weather- and economy-related variables, about meeting or exceeding our previously announced performance targets for FY 2022, including revenue growth between 8% and 11%, gross profit margins of 38-40% of net sales, operating expenses within the range of 31-33% of net sales and a year-over-year net income increase of between 60% and 70%. We look forward to giving you a more detailed presentation during our upcoming earnings call.”

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, EVP & COO and David T. Johnson, VP & CFO, will conduct a conference call focusing on the financial results and strategic themes…at 4:30 pm ET on August 9, 2022. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS

	June 30,			December 31,
	2022			2021
Current assets:
Cash and cash equivalents	$	22,057		$	16,285
Receivables:
Trade, net of allowance for doubtful accounts of $4,411 and $3,938, respectively		165,711			149,326
Other		13,208			9,595
Total receivables, net		178,919			158,921
Inventories		182,203			154,306
Prepaid expenses		16,368			12,488
Income taxes receivable		523			—
Total current assets		400,070			342,000
Property, plant and equipment, net		67,453			66,111
Operating lease right-of-use assets		24,449			25,386
Intangible assets, net		191,560			197,841
Goodwill		46,997			46,260
Other assets		13,099			16,292
Deferred income tax assets, net		16			270
Total assets	$	743,644		$	694,160

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities	$	1,367		$	802
Accounts payable		86,944			67,140
Customer prepayments		272			63,064
Accrued program costs		99,152			63,245
Accrued expenses and other payables		20,180			20,745
Income taxes payable		—			3,006
Current operating lease liabilities		5,029			5,059
Total current liabilities		212,944			223,061
Long-term debt, net		100,779			52,240
Long-term operating lease liabilities		19,852			20,780
Other liabilities, net of current installments		5,584			5,335
Deferred income tax liabilities, net		19,651			20,006
Total liabilities		358,810			321,422
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 34,443,234 shares at June 30, 2022 and 34,248,218 shares at December 31, 2021		3,445			3,426
Additional paid-in capital		103,456			101,450
Accumulated other comprehensive loss		(12,768	)		(13,784	)
Retained earnings		319,672			304,385
Less treasury stock at cost, 3,694,050 shares at June 30, 2022
and 3,361,040 shares at
December 31, 2021		(28,971	)		(22,739	)
Total stockholders’ equity		384,834			372,738
Total liabilities and stockholders' equity	$	743,644		$	694,160

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2022			2021			2022			2021
Net sales	$	148,084		$	134,610		$	297,519		$	250,765
Cost of sales		(88,305	)		(82,471	)		(176,547	)		(153,495	)
Gross profit		59,779			52,139			120,972			97,270
Operating expenses		(48,966	)		(43,080	)		(95,410	)		(84,524	)
Adjustment to bargain purchase gain on business acquisition		—			(88	)		—			(121	)
Operating income		10,813			8,971			25,562			12,625
Change in fair value of an equity investment		(486	)		(295	)		(403	)		771
Other income		—			—			—			672
Interest expense, net		(772	)		(1,013	)		(1,170	)		(1,959	)
Income before provision for income taxes and loss on equity method investment		9,555			7,663			23,989			12,109
Income tax expense		(2,725	)		(2,445	)		(7,224	)		(3,807	)
Income before loss on equity method investment		6,830			5,218			16,765			8,302
Loss on equity method investment		—			(74	)		—			(87	)
Net income	$	6,830		$	5,144		$	16,765		$	8,215
Earnings per common share—basic	$	.23		$	.17		$	.57		$	.28
Earnings per common share—assuming dilution	$	.23		$	.17		$	.55		$	.27
Weighted average shares outstanding—basic		29,602			29,930			29,639			29,834
Weighted average shares outstanding—assuming dilution		30,225			30,499			30,289			30,511

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(In thousands)
(Unaudited)

	For the three months
	ended June 30,
	2022		2021		Change			% Change
Net sales:
U.S. crop	$	63,195	$	62,575	$	620			1	%
U.S. non-crop		21,316		21,488		(172	)		-1	%
U.S. total		84,511		84,063		448			1	%
International		63,573		50,547		13,026			26	%
Net sales:	$	148,084	$	134,610	$	13,474			10	%
Gross profit:
U.S. crop	$	29,753	$	26,805	$	2,948			11	%
U.S. non-crop		10,049		9,782		267			3	%
U.S. total		39,802		36,587		3,215			9	%
International		19,977		15,552		4,425			28	%
Total gross profit:	$	59,779	$	52,139	$	7,640			15	%

	For the six months
	ended June 30,
	2022		2021		Change			% Change
Net sales:
U.S. crop	$	151,388	$	117,330	$	34,058			29	%
U.S. non-crop		34,712		38,941		(4,229	)		-11	%
U.S. total		186,100		156,271		29,829			19	%
International		111,419		94,494		16,925			18	%
Net sales:	$	297,519	$	250,765	$	46,754			19	%
Gross profit:
U.S. crop	$	70,098	$	48,076	$	22,022			46	%
U.S. non-crop		16,014		19,165		(3,151	)		-16	%
U.S. total		86,112		67,241		18,871			28	%
International		34,860		30,029		4,831			16	%
Total gross profit:	$	120,972	$	97,270	$	23,702			24	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	For the Six Months Ended
	June 30,
	2022			2021
Cash flows from operating activities:
Net income	$	16,765		$	8,215
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		11,004			10,697
Amortization of other long-term assets		1,739			2,044
Loss on disposal of property, plant and equipment		256			—
Accretion of discounted liabilities		17			(11	)
Amortization of deferred loan fees		139			162
Provision for bad debts		470			945
Loan principal and interest forgiveness		—			(672	)
Fair value adjustment to contingent consideration		635			1,013
Stock-based compensation		2,836			3,598
Change in deferred income taxes		109			(353	)
Change in fair value of an equity investment		403			(771	)
Loss on equity method investment		—			87
Adjustment to bargain purchase gain on business acquisition		—			121
Net foreign currency adjustments		(20	)		(145	)
Changes in assets and liabilities associated with operations:
Increase in net receivables		(18,645	)		(25,317	)
Increase in inventories		(27,774	)		(11,464	)
Increase in prepaid expenses and other assets		(3,652	)		(3,696	)
(Increase) decrease in income tax receivable/payable, net		(3,526	)		1,374
(Decrease) in net operating lease liability		(21	)		(120	)
Increase in accounts payable		19,439			6,190
Decrease in customer prepayments		(62,789	)		(30,407	)
Increase in accrued program costs		35,987			19,098
(Decrease) increase in other payables and accrued expenses		(602	)		507
Net cash used in operating activities		(27,230	)		(18,905	)
Cash flows from investing activities:
Capital expenditures		(5,654	)		(5,075	)
Proceeds from disposal of property, plant and equipment		27			—
Acquisition of product line		—			(10,000	)
Intangible assets		(1,044	)		(241	)
Investments		—			(184	)
Net cash used in investing activities		(6,671	)		(15,500	)
Cash flows from financing activities:
Payments under line of credit agreement		(56,600	)		(24,226	)
Borrowings under line of credit agreement		105,000			66,000
Payment of contingent consideration		—			(250	)
Net receipt from the issuance of common stock under ESPP		436			340
Net receipt from the exercise of stock options		765			167
Payment for tax withholding on stock-based compensation awards		(2,012	)		(2,900	)
Repurchase of common stock		(6,232	)		—
Payment of cash dividends		(1,330	)		(1,188	)
Net cash provided by financing activities		40,027			37,943
Net increase in cash and cash equivalents		6,126			3,538
Effect of exchange rate changes on cash and cash equivalents		(354	)		98
Cash and cash equivalents at beginning of period		16,285			15,923
Cash and cash equivalents at end of period	$	22,057		$	19,559

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income, as reported	$	6,830	$	5,144	$	16,765	$	8,215
Provision for income taxes		2,725		2,445		7,224		3,807
Interest expense, net		772		1,013		1,170		1,959
Depreciation and amortization		6,271		6,138		12,743		12,741
Stock compensation		1,273		1,806		2,836		3,598
Proxy contest activities		1,785		—		1,785		—
Adjusted EBITDA²	$	19,656	$	16,546	$	42,523	$	30,320

¹ Adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock compensation, and proxy contest activities. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measure so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define Adjusted EBITDA differently.

² Adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock compensation, and proxy contest activities. Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We provide these measures because we believe that they provide helpful comparisons to other companies in our industry and peer group. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define Adjusted EBITDA differently.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005464/en/

Contacts

Company

American Vanguard Corporation

William A. Kuser, Director of Investor Relations

(949) 260-1200

williamk@amvac-chemical.com

Investor Representative

the Equity Group Inc.

www.theequitygroup.com

Lena Cati

Lcati@equityny.com