Net Sales up 29% - - - Net Income up 224% vs. Q1 2021
American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2022.
Fiscal 2022 First Quarter Financial Highlights – versus Fiscal 2021 First Quarter:
- Net sales were $149.4 million in 2022, compared to $116.2 million in 2021.
- Net income was $9.9 million in 2022, compared to $3.1 million in 2021.
- Earnings per diluted share of $0.33 in 2022, compared to $0.10 in 2021.
- EBITDA1of $22.9 million in 2022, compared to $13.9 million in 2021.
Eric Wintemute, Chairman and CEO of American Vanguard stated: “We are pleased to report an extremely strong start to 2022 at both the top and bottom lines. We exceeded our first quarter financial targets, growing net sales by 29% and delivering gross profit margin of 41% resulting from a company-wide focus on profitability driven by pricing actions designed to offset inflationary cost escalations. Further, we reduced operating expense as a percentage of sales to 31% in the first quarter of 2022 from 36% in the first quarter of 2021. These efforts helped more than triple net income for the quarter compared to the prior year period. Additionally, we continue to focus on balance sheet priorities regarding inventory levels, working capital control and debt management.”
Mr. Wintemute continued: “After seven years of relatively stagnant crop prices, during the last year we have seen higher commodity prices, which have helped spur demand for our crop protection solutions. Midwest procurement of our corn soil insecticides and Impact herbicide has eclipsed expectations, while our expanding portfolio of soybean herbicides continued to diversify our market position in row crops. In addition, we experienced steady demand for products in mosquito control, horticulture, and commercial/consumer pest control markets. Internationally, we delivered strong performance in Mexico, Central America, while expanding our position in Australia, Brazil, China and India with Green Solutions products.”
Mr. Wintemute commented further: “Importantly, we reliably produced solidly profitable results while self-funding the SIMPAS prescription application system, the Ultimus tracing/verification software platform, and the biological alternative Green Solutions portfolio, all three of which are critical investments in the future of American Vanguard that we expect will create long-term value for our shareholders.”
Mr. Wintemute concluded, “As we have previously indicated, looking forward, we believe that our company is situated well in both domestic and international markets. Our performance targets for 2022 include 8-11% revenue growth, profit margins of 38-40% and operating expenses of between 31% and 33% of net sales. On a solid core business foundation, we will continue to develop our key strategic growth initiatives in Green Solutions and SIMPAS/Ultimus technologies. We look forward to providing additional detail on market conditions, profitability, working capital considerations and our innovation initiatives during our upcoming earnings call.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, COO and David T. Johnson, CFO, will conduct a conference call focusing on operating performance and financial results at 4:30 pm ET / 1:30 pm PT on Wednesday, May 4, 2022. Interested parties may participate in the call by dialing 862-298-0702 - please call in 10 minutes before the conference is scheduled to begin and ask for the American Vanguard conference.
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.
Forward-Looking Statements
Certain information set forth in this release may constitute “forward looking statements” within the meaning of federal and applicable state securities laws. All statements herein that are not statements of historical fact are forward looking statements. These statements include statements regarding management’s expectations for future performance, as well as descriptions of plans and strategies and the expected results thereof. These statements reflect the current expectations of American Vanguard’s management based on currently known facts and circumstances, and should not be construed as assurances of performance or as guaranties of the actual outcomes. Actual results may differ from those expressed in forward looking statements, and those differences may be material and adverse. Factors that could cause actual results to differ from expectations include the ongoing effects of the COVID-19 pandemic and government responses and economic conditions resulting therefrom; increasing costs and diversion of management attention associated with our pending activist campaign and the response thereto; the effect of international exchange rates and other local, national and foreign economic conditions; weather and climate conditions; changes in regulatory policy and in specific regulations and permitting processes that affect our products, and other risks as detailed from time-to-time in the Company’s SEC reports and filings. The Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022, filed with the SEC on May 4, 2022, contains a list of risk factors that may cause results to differ from expectations. These risk factors will be updated from time to time in accordance with the requirements of the Securities Exchange Act of 1934, as amended, and the regulations thereunder (“Exchange Act”), or otherwise in our Exchange Act filings. The statements in this release speak only as of the date hereof, and the Company undertakes no duty to update such statements to reflect future events or developments.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) |
||||||||
ASSETS |
||||||||
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
17,841 |
|
|
$ |
16,285 |
|
Receivables: |
|
|
|
|
|
|
|
|
Trade, net of allowance for doubtful accounts of $4,446 and $3,938, respectively |
|
|
183,505 |
|
|
|
149,326 |
|
Other |
|
|
11,073 |
|
|
|
9,595 |
|
Total receivables, net |
|
|
194,578 |
|
|
|
158,921 |
|
Inventories |
|
|
168,049 |
|
|
|
154,306 |
|
Prepaid expenses |
|
|
13,644 |
|
|
|
12,488 |
|
Total current assets |
|
|
394,112 |
|
|
|
342,000 |
|
Property, plant and equipment, net |
|
|
67,440 |
|
|
|
66,111 |
|
Operating lease right-of-use assets |
|
|
24,950 |
|
|
|
25,386 |
|
Intangible assets, net of applicable amortization |
|
|
196,365 |
|
|
|
197,841 |
|
Goodwill |
|
|
49,077 |
|
|
|
46,260 |
|
Other assets |
|
|
15,500 |
|
|
|
16,292 |
|
Deferred income tax assets, net |
|
|
17 |
|
|
|
270 |
|
Total assets |
|
$ |
747,461 |
|
|
$ |
694,160 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|||||||
Current liabilities: |
|
|
|
|
|
|
|
|
Current installments of other liabilities |
|
$ |
1,437 |
|
|
$ |
802 |
|
Accounts payable |
|
|
77,704 |
|
|
|
67,140 |
|
Customer prepayments |
|
|
18,542 |
|
|
|
63,064 |
|
Accrued program costs |
|
|
87,962 |
|
|
|
63,245 |
|
Accrued expenses and other payables |
|
|
23,412 |
|
|
|
20,745 |
|
Income taxes payable |
|
|
6,050 |
|
|
|
3,006 |
|
Operating lease liabilities, current |
|
|
5,035 |
|
|
|
5,059 |
|
Total current liabilities |
|
|
220,142 |
|
|
|
223,061 |
|
Long-term debt, net |
|
|
98,309 |
|
|
|
52,240 |
|
Operating lease liabilities, long term |
|
|
20,301 |
|
|
|
20,780 |
|
Other liabilities, net of current installments |
|
|
6,011 |
|
|
|
5,335 |
|
Deferred income tax liabilities, net |
|
|
20,075 |
|
|
|
20,006 |
|
Total liabilities |
|
|
364,838 |
|
|
|
321,422 |
|
Commitments and contingent liabilities |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.10 par value per share; authorized 400,000 shares; none issued |
|
|
— |
|
|
|
— |
|
Common stock, $0.10 par value per share; authorized 40,000,000 shares; issued 34,091,876 shares at March 31, 2022 and 34,248,218 shares at December 31, 2021 |
|
|
3,410 |
|
|
|
3,426 |
|
Additional paid-in capital |
|
|
101,291 |
|
|
|
101,450 |
|
Accumulated other comprehensive loss |
|
|
(6,704 |
) |
|
|
(13,784 |
) |
Retained earnings |
|
|
313,584 |
|
|
|
304,385 |
|
Less treasury stock at cost, 3,693,444 shares at March 31, 2022 and 3,361,040 shares at December 31, 2021 |
|
|
(28,958 |
) |
|
|
(22,739 |
) |
Total stockholders’ equity |
|
|
382,623 |
|
|
|
372,738 |
|
Total liabilities and stockholders' equity |
|
$ |
747,461 |
|
|
$ |
694,160 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||
|
|
For the three months ended March 31 |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net sales |
|
$ |
149,435 |
|
|
$ |
116,155 |
|
Cost of sales |
|
|
(88,242 |
) |
|
|
(71,024 |
) |
Gross profit |
|
|
61,193 |
|
|
|
45,131 |
|
Operating expenses |
|
|
(46,444 |
) |
|
|
(41,444 |
) |
Adjustment to bargain purchase gain on business acquisition |
|
|
— |
|
|
|
(33 |
) |
Operating income |
|
|
14,749 |
|
|
|
3,654 |
|
Change in fair value of an equity investment |
|
|
83 |
|
|
|
1,066 |
|
Other income |
|
|
— |
|
|
|
672 |
|
Interest expense, net |
|
|
(398 |
) |
|
|
(946 |
) |
Income before provision for income taxes and loss on equity method investment |
|
|
14,434 |
|
|
|
4,446 |
|
Income tax expense |
|
|
(4,499 |
) |
|
|
(1,362 |
) |
Income before loss from equity method investment |
|
|
9,935 |
|
|
|
3,084 |
|
Loss from equity method investment |
|
|
— |
|
|
|
(13 |
) |
Net income |
|
$ |
9,935 |
|
|
$ |
3,071 |
|
Earnings per common share—basic |
|
$ |
0.33 |
|
|
$ |
0.10 |
|
Earnings per common share—assuming dilution |
|
$ |
0.33 |
|
|
$ |
0.10 |
|
Weighted average shares outstanding—basic |
|
|
29,677 |
|
|
|
29,737 |
|
Weighted average shares outstanding—assuming dilution |
|
|
30,349 |
|
|
|
30,523 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES (In thousands) (Unaudited) |
||||||||||||||||
|
|
For the three Months Ended March 31 |
|
|||||||||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. crop |
|
$ |
88,193 |
|
|
$ |
54,755 |
|
|
$ |
33,438 |
|
|
|
61 |
% |
U.S. non-crop |
|
|
13,396 |
|
|
|
17,453 |
|
|
|
(4,057 |
) |
|
|
-23 |
% |
Total U.S. |
|
|
101,589 |
|
|
|
72,208 |
|
|
|
29,381 |
|
|
|
41 |
% |
International |
|
|
47,846 |
|
|
|
43,947 |
|
|
|
3,899 |
|
|
|
9 |
% |
Total net sales: |
|
$ |
149,435 |
|
|
$ |
116,155 |
|
|
$ |
33,280 |
|
|
|
29 |
% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. crop |
|
$ |
40,345 |
|
|
$ |
21,271 |
|
|
$ |
19,074 |
|
|
|
90 |
% |
U.S. non-crop |
|
|
5,965 |
|
|
|
9,383 |
|
|
|
(3,418 |
) |
|
|
-36 |
% |
Total U.S. |
|
|
46,310 |
|
|
|
30,654 |
|
|
|
15,656 |
|
|
|
51 |
% |
International |
|
|
14,883 |
|
|
|
14,477 |
|
|
|
406 |
|
|
|
3 |
% |
Total gross profit: |
|
$ |
61,193 |
|
|
$ |
45,131 |
|
|
$ |
16,062 |
|
|
|
36 |
% |
Gross margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. crop |
|
|
46 |
% |
|
|
39 |
% |
|
|
|
|
|
|
|
|
U.S. non-crop |
|
|
45 |
% |
|
|
54 |
% |
|
|
|
|
|
|
|
|
Total U.S. |
|
|
46 |
% |
|
|
42 |
% |
|
|
|
|
|
|
|
|
International |
|
|
31 |
% |
|
|
33 |
% |
|
|
|
|
|
|
|
|
Gross margin: |
|
|
41 |
% |
|
|
39 |
% |
|
|
|
|
|
|
|
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
For the three months ended March 31 |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,935 |
|
|
$ |
3,071 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization of fixed and intangible assets |
|
|
5,230 |
|
|
|
5,403 |
|
Amortization of other long-term assets |
|
|
1,173 |
|
|
|
1,200 |
|
Loss on disposal of property, plant and equipment |
|
|
77 |
|
|
|
— |
|
Accretion of discounted liabilities and deferred loan fees |
|
|
75 |
|
|
|
99 |
|
Provision for bad debts |
|
|
494 |
|
|
|
682 |
|
Loan principal and interest forgiveness |
|
|
— |
|
|
|
(672 |
) |
Fair value adjustment of contingent consideration |
|
|
599 |
|
|
|
— |
|
Stock-based compensation |
|
|
1,563 |
|
|
|
1,792 |
|
Decrease in deferred income taxes |
|
|
207 |
|
|
|
(269 |
) |
Change in fair value of an equity investment |
|
|
(83 |
) |
|
|
(1,066 |
) |
Other |
|
|
— |
|
|
|
46 |
|
Net foreign currency adjustment |
|
|
(261 |
) |
|
|
194 |
|
Changes in assets and liabilities associated with operations: |
|
|
|
|
|
|
|
|
Increase in net receivables |
|
|
(33,660 |
) |
|
|
(30,482 |
) |
Increase in inventories |
|
|
(11,738 |
) |
|
|
(9,615 |
) |
Increase in prepaid expenses and other assets |
|
|
(800 |
) |
|
|
(1,052 |
) |
Decrease in income tax receivable/payable, net |
|
|
3,046 |
|
|
|
638 |
|
Decrease in net operating lease liability |
|
|
(67 |
) |
|
|
(18 |
) |
Increase in accounts payable |
|
|
9,677 |
|
|
|
2,223 |
|
Decrease in customer prepayments |
|
|
(44,528 |
) |
|
|
(11,293 |
) |
Increase in accrued program costs |
|
|
24,601 |
|
|
|
7,770 |
|
Increase (decrease) in other payables and accrued expenses |
|
|
2,145 |
|
|
|
(1,187 |
) |
Net cash used in operating activities |
|
|
(32,315 |
) |
|
|
(32,536 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(3,294 |
) |
|
|
(2,904 |
) |
Proceeds from disposal of property, plant and equipment |
|
|
54 |
|
|
|
— |
|
Intangible assets |
|
|
(1,010 |
) |
|
|
(41 |
) |
Net cash used in investing activities |
|
|
(4,250 |
) |
|
|
(2,945 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net borrowings under line of credit agreement |
|
|
46,000 |
|
|
|
35,900 |
|
Net receipt from the issuance of common stock under ESPP |
|
|
436 |
|
|
|
340 |
|
Net receipt from the exercise of stock options |
|
|
— |
|
|
|
67 |
|
Payment for tax withholding on stock-based compensation awards |
|
|
(2,174 |
) |
|
|
(2,861 |
) |
Repurchase of common stock |
|
|
(6,219 |
) |
|
|
— |
|
Payment of cash dividends |
|
|
(594 |
) |
|
|
(592 |
) |
Net cash provided by financing activities |
|
|
37,449 |
|
|
|
32,854 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
884 |
|
|
|
(2,627 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
672 |
|
|
|
469 |
|
Cash and cash equivalents at beginning of period |
|
|
16,285 |
|
|
|
15,923 |
|
Cash and cash equivalents at end of period |
|
$ |
17,841 |
|
|
$ |
13,765 |
|
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA For the three months March 31, 2022 and 2021 (Unaudited) |
||||||||
Unaudited Reconciliation of Net Income to EBITDA (in thousands of dollars) |
|
March 31, 2022 |
|
|
March 31, 2021 |
|
||
Net income, as reported |
|
$ |
9,935 |
|
|
$ |
3,071 |
|
Provision for income taxes |
|
|
4,499 |
|
|
|
1,362 |
|
Interest expense, net |
|
|
398 |
|
|
|
946 |
|
Depreciation and amortization |
|
|
6,472 |
|
|
|
6,684 |
|
Stock compensation |
|
|
1,563 |
|
|
|
1,792 |
|
Adjusted EBITDA2 |
|
$ |
22,867 |
|
|
$ |
13,855 |
|
1 Earnings before interest, taxes, depreciation, amortization and non-cash stock compensation. 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. 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, and reflect an elimination of taxes, interest, depreciation, amortization and the effects of equity compensation. Other companies (including the Company’s competitors) may define EBITDA differently.
2 Earnings before interest, taxes, depreciation, amortization and non-cash stock compensation. 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 EBITDA differently.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220504006116/en/
Contacts
Company Contact:
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
