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American Vanguard Reports First Quarter 2022 Results

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.

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