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American Vanguard Reports Third Quarter and Nine-Month 2022 Results

YTD Revenues and Adjusted EBITDA1 Exceed Guidance

Forecasting Continued Strategic Growth

American Vanguard Corporation (NYSE: AVD), today announced financial results for the third quarter and nine months ended September 30, 2022.

Financial Highlights Fiscal 2022 Third Quarter – versus Fiscal 2021 Third Quarter

  • Net sales of $152 million in 2022, a 3.4% increase, compared with $147 million in 2021
  • Net income of $6.7 million in 2022, a 21.8% increase, compared with $5.5 million in 2021
  • Earnings per diluted share of $0.23 in 2022, a 27.8% increase, compared with $0.18 in 2021
  • Adjusted EBITDA of $18.9 million in 2022, a 11.2% increase, compared with $17.0 million in 2021

Financial Highlights Fiscal 2022 Nine Months – versus Fiscal 2021 Nine Months

  • Net sales of $450 million in 2022, a 13.1% increase, compared with $398 million in 2021
  • Net income of $23.5 million in 2022, a 71.5% increase, compared with $13.7 million in 2021
  • Earnings per diluted share of $0.78 in 2022, a 73.3% increase, compared with $0.45 in 2021
  • Adjusted EBITDA of $61.4 million in 2022, a 29.8% increase, compared to $47.3 million in 2021

Eric Wintemute, Chairman and CEO of American Vanguard commented, “We achieved strong third quarter results and through the first nine months of 2022 and are on pace to meet or exceed our full year performance targets. High crop commodity prices, a strong farm economy and seasonal pest pressure (particularly in corn and cotton) fueled continued growth of our US Crop business. Similarly, our international business recorded strong sales, led by Brazil (particularly our Counter nematicide), Mexico (due largely to soil fumigant sales) and a range of products for use on bananas and pineapples in Central America. Partially offsetting these gains, we experienced a decrease in net sales of our domestic non-crop business, due largely to softening of consumer spending in the lawn and garden markets.”

Mr. Wintemute continued, “Our year-to-date revenue performance exceeds the full-year 2022 growth target for net sales that we had set last March (13% actual growth v. 8-11% target), as does net income (71% actual growth v. 60-70% target) and adjusted EBITDA (30% actual growth v. 24-28% target). Faced with inflationary cost increases, supply chain challenges and high demand, we were able to implement appropriate price increases while maximizing factory activity. These factors contributed to higher net income as a percent of net sales for both the quarter and the first nine months. Additionally, we expect significant year-end debt reduction and a full-year adjusted EBITDA of approximately $80 million or 13% of expected sales. Finally, through a combination of an Accelerated Share Repurchase Plan and a 10b5-1 purchase plan, we acquired 1.5 million shares of AVD common stock during the first nine months of the year. These repurchases demonstrate our belief in the company’s long-term value and serve to enhance shareholder investment.”

Mr. Wintemute concluded, “We continue to pursue strategic growth initiatives to expand our core business and develop new technologies, with particular emphasis on Green Solutions and Precision Application innovations. As we announced over the past few weeks, we have established an alliance with NewLeaf Symbiotics, which will complement our existing portfolio of patented biological plant nutrients and soil health enrichments. In addition, we secured registration approval for use of our Counter nematicide on soybeans in Brazil, which will improve market penetration with a proprietary product, while advancing the adoption of SIMPAS prescription application technology in the largest Agricultural market in the world. We look forward to providing details on current business trends and these growth initiatives in our upcoming quarterly conference 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 at 4:30 pm ET / 1:30 pm PT on Monday, November 8, 2022. Interested parties may participate in the call by dialing 201-493-6744 – please dial 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

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,808

 

 

$

16,285

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $4,535 and $3,938, respectively

 

 

194,515

 

 

 

149,326

 

Other

 

 

10,022

 

 

 

9,595

 

Total receivables, net

 

 

204,537

 

 

 

158,921

 

Inventories

 

 

192,309

 

 

 

154,306

 

Prepaid expenses

 

 

16,967

 

 

 

12,488

 

Income taxes receivable

 

 

2,180

 

 

 

 

Total current assets

 

 

436,801

 

 

 

342,000

 

Property, plant and equipment, net

 

 

68,598

 

 

 

66,111

 

Operating lease right-of-use assets

 

 

25,402

 

 

 

25,386

 

Intangible assets, net

 

 

187,207

 

 

 

197,841

 

Goodwill

 

 

46,215

 

 

 

46,260

 

Other assets

 

 

11,936

 

 

 

16,292

 

Deferred income tax assets, net

 

 

16

 

 

 

270

 

Total assets

 

$

776,175

 

 

$

694,160

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

 

 

 

 

 

Current installments of other liabilities

 

$

 

 

$

802

 

Accounts payable

 

 

81,919

 

 

 

67,140

 

Customer prepayments

 

 

222

 

 

 

63,064

 

Accrued program costs

 

 

108,016

 

 

 

63,245

 

Accrued expenses and other payables

 

 

24,390

 

 

 

20,745

 

Income taxes payable

 

 

 

 

 

3,006

 

Current operating lease liabilities

 

 

5,329

 

 

 

5,059

 

Total current liabilities

 

 

219,876

 

 

 

223,061

 

Long-term debt, net

 

 

148,414

 

 

 

52,240

 

Long-term operating lease liabilities

 

 

20,536

 

 

 

20,780

 

Other liabilities, net of current installments

 

 

5,457

 

 

 

5,335

 

Deferred income tax liabilities, net

 

 

19,324

 

 

 

20,006

 

Total liabilities

 

 

413,607

 

 

 

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 34,463,947 shares at September 30, 2022 and 34,248,218 shares at December 31, 2021

 

 

3,446

 

 

 

3,426

 

Additional paid-in capital

 

 

101,426

 

 

 

101,450

 

Accumulated other comprehensive loss

 

 

(15,532

)

 

 

(13,784

)

Retained earnings

 

 

325,698

 

 

 

304,385

 

Less treasury stock at cost, 4,884,200 shares at September 30, 2022 and 3,361,040 shares at December 31, 2021

 

 

(52,470

)

 

 

(22,739

)

Total stockholders’ equity

 

 

362,568

 

 

 

372,738

 

Total liabilities and stockholders' equity

 

$

776,175

 

 

$

694,160

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

September 30,

 

 

For the Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

152,117

 

 

$

147,298

 

 

$

449,636

 

 

$

398,063

 

Cost of sales

 

 

(90,733

)

 

 

(90,234

)

 

 

(267,280

)

 

 

(243,729

)

Gross profit

 

 

61,384

 

 

 

57,064

 

 

 

182,356

 

 

 

154,334

 

Operating expenses

 

 

(50,140

)

 

 

(48,410

)

 

 

(145,550

)

 

 

(132,934

)

Adjustment to bargain purchase gain on business acquisition

 

 

 

 

 

292

 

 

 

 

 

 

171

 

Operating income

 

 

11,244

 

 

 

8,946

 

 

 

36,806

 

 

 

21,571

 

Change in fair value of equity investments

 

 

(454

)

 

 

(668

)

 

 

(857

)

 

 

103

 

Other income

 

 

 

 

 

 

 

 

 

 

 

672

 

Interest expense, net

 

 

(1,086

)

 

 

(962

)

 

 

(2,256

)

 

 

(2,921

)

Income before provision for income taxes and loss on equity method investment

 

 

9,704

 

 

 

7,316

 

 

 

33,693

 

 

 

19,425

 

Income tax expense

 

 

(2,963

)

 

 

(1,517

)

 

 

(10,187

)

 

 

(5,324

)

Income before loss on equity method investment

 

 

6,741

 

 

 

5,799

 

 

 

23,506

 

 

 

14,101

 

Loss on equity method investment

 

 

 

 

 

(301

)

 

 

 

 

 

(388

)

Net income

 

$

6,741

 

 

$

5,498

 

 

$

23,506

 

 

$

13,713

 

Earnings per common share—basic

 

$

.23

 

 

$

.18

 

 

$

.80

 

 

$

.46

 

Earnings per common share—assuming dilution

 

$

.23

 

 

$

.18

 

 

$

.78

 

 

$

.45

 

Weighted average shares outstanding—basic

 

 

29,214

 

 

 

29,892

 

 

 

29,496

 

 

 

29,854

 

Weighted average shares outstanding—assuming dilution

 

 

29,805

 

 

 

30,390

 

 

 

30,128

 

 

 

30,470

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands)

(Unaudited)

 

 

 

For the three months

ended September 30,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

69,115

 

 

$

66,722

 

 

$

2,393

 

 

 

4

%

U.S. non-crop

 

 

18,936

 

 

 

21,622

 

 

 

(2,686

)

 

 

-12

%

U.S. total

 

 

88,051

 

 

 

88,344

 

 

 

(293

)

 

 

0

%

International

 

 

64,066

 

 

 

58,954

 

 

 

5,112

 

 

 

9

%

Net sales:

 

$

152,117

 

 

$

147,298

 

 

$

4,819

 

 

 

3

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

34,502

 

 

$

30,237

 

 

$

4,265

 

 

 

14

%

U.S. non-crop

 

 

8,811

 

 

 

8,882

 

 

 

(71

)

 

 

-1

%

U.S. total

 

 

43,313

 

 

 

39,119

 

 

 

4,194

 

 

 

11

%

International

 

 

18,071

 

 

 

17,945

 

 

 

126

 

 

 

1

%

Total gross profit:

 

$

61,384

 

 

$

57,064

 

 

$

4,320

 

 

 

8

%

 

 

For the nine months

ended September 30,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

220,503

 

 

$

184,052

 

 

$

36,451

 

 

 

20

%

U.S. non-crop

 

 

53,648

 

 

 

60,563

 

 

 

(6,915

)

 

 

-11

%

U.S. total

 

 

274,151

 

 

 

244,615

 

 

 

29,536

 

 

 

12

%

International

 

 

175,485

 

 

 

153,448

 

 

 

22,037

 

 

 

14

%

Net sales:

 

$

449,636

 

 

$

398,063

 

 

$

51,573

 

 

 

13

%

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

104,599

 

 

$

78,313

 

 

$

26,286

 

 

 

34

%

U.S. non-crop

 

 

24,826

 

 

 

28,047

 

 

 

(3,221

)

 

 

-11

%

U.S. total

 

 

129,425

 

 

 

106,360

 

 

 

23,065

 

 

 

22

%

International

 

 

52,931

 

 

 

47,974

 

 

 

4,957

 

 

 

10

%

Total gross profit:

 

$

182,356

 

 

$

154,334

 

 

$

28,022

 

 

 

18

%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

23,506

 

 

$

13,713

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization of property, plant and equipment and intangible assets

 

 

16,649

 

 

 

17,045

 

Amortization of other long-term assets

 

 

2,656

 

 

 

2,981

 

Loss on disposal of property, plant and equipment

 

 

265

 

 

 

 

Accretion of discounted liabilities

 

 

28

 

 

 

(10

)

Amortization of deferred loan fees

 

 

174

 

 

 

294

 

Provision for bad debts

 

 

597

 

 

 

1,202

 

Loan principal and interest forgiveness

 

 

 

 

 

(672

)

Fair value adjustment to contingent consideration

 

 

621

 

 

 

520

 

Stock-based compensation

 

 

4,396

 

 

 

5,309

 

Change in deferred income taxes

 

 

(64

)

 

 

(560

)

Change in fair value of equity investments

 

 

857

 

 

 

(103

)

Loss on equity method investment

 

 

 

 

 

388

 

Adjustment to bargain purchase gain on business acquisition

 

 

 

 

 

(171

)

Net foreign currency adjustments

 

 

218

 

 

 

(330

)

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

Increase in net receivables

 

 

(46,289

)

 

 

(42,979

)

Increase in inventories

 

 

(38,987

)

 

 

(4,325

)

Increase in prepaid expenses and other assets

 

 

(4,272

)

 

 

(2,194

)

(Increase) decrease in income tax receivable/payable, net

 

 

(5,201

)

 

 

2,031

 

Increase in net operating lease liability

 

 

10

 

 

 

183

 

Increase in accounts payable

 

 

14,418

 

 

 

7,769

 

Decrease in customer prepayments

 

 

(62,831

)

 

 

(38,272

)

Increase in accrued program costs

 

 

45,016

 

 

 

33,982

 

Increase in other payables and accrued expenses

 

 

2,555

 

 

 

4,025

 

Net cash used in operating activities

 

 

(45,678

)

 

 

(174

)

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(8,946

)

 

 

(7,963

)

Proceeds from disposal of property, plant and equipment

 

 

46

 

 

 

 

Acquisition of product line

 

 

 

 

 

(10,000

)

Intangible assets

 

 

(1,078

)

 

 

(285

)

Investments

 

 

 

 

 

(183

)

Net cash used in investing activities

 

 

(9,978

)

 

 

(18,431

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(64,000

)

 

 

(57,408

)

Borrowings under line of credit agreement

 

 

160,000

 

 

 

86,000

 

Payment of contingent consideration

 

 

 

 

 

(250

)

Net receipt from the issuance of common stock under ESPP

 

 

837

 

 

 

743

 

Net receipt from the exercise of stock options

 

 

783

 

 

 

172

 

Payment for tax withholding on stock-based compensation awards

 

 

(2,020

)

 

 

(2,915

)

Repurchase of common stock

 

 

(33,731

)

 

 

(4,579

)

Payment of cash dividends

 

 

(2,072

)

 

 

(1,789

)

Net cash provided by financing activities

 

 

59,797

 

 

 

19,974

 

Net increase in cash and cash equivalents

 

 

4,141

 

 

 

1,369

 

Effect of exchange rate changes on cash and cash equivalents

 

 

382

 

 

 

(574

)

Cash and cash equivalents at beginning of period

 

 

16,285

 

 

 

15,923

 

Cash and cash equivalents at end of period

 

$

20,808

 

 

$

16,718

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income, as reported

 

$

6,741

 

 

$

5,498

 

 

$

23,506

 

 

$

13,713

 

Provision for income taxes

 

 

2,963

 

 

 

1,517

 

 

 

10,187

 

 

 

5,324

 

Interest expense, net

 

 

1,086

 

 

 

962

 

 

 

2,256

 

 

 

2,921

 

Depreciation and amortization

 

 

6,562

 

 

 

7,285

 

 

 

19,305

 

 

 

20,026

 

Stock compensation

 

 

1,560

 

 

 

1,711

 

 

 

4,396

 

 

 

5,309

 

Proxy contest activities

 

 

 

 

 

 

 

 

1,785

 

 

 

 

Adjusted EBITDA2

 

$

18,912

 

 

$

16,973

 

 

$

61,435

 

 

$

47,293

 

_____________________________

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.

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