AMERICAN VANGUARD CORP - FORM 8-K - EX-99.1

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8-K - 8-K - AMERICAN VANGUARD CORP	d947319d8k.htm

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS THIRD QUARTER AND NINE-MONTH 2020 RESULTS

Conference Call and Audio & Slides Webcast Scheduled for Today at 4:30 pm ET

Newport Beach, CA – November 9, 2020 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine months ended September 30, 2020.

Financial Highlights Fiscal 2020 Third Quarter – versus Fiscal 2019 Third Quarter

•

Net sales of $117 million in 2020, compared with $125 million in 2019

•

Net income of $2.9 million in 2020, compared with $3.1 million in 2019

•

Earnings per diluted share of $0.10 in 2020, compared with $0.11 in 2019

•

EBITDA¹ of $10.4 million in 2020, compared with $12.4 million in 2019

Financial Highlights Fiscal 2020 Nine Months – versus Fiscal 2019 Nine Months

•

Net sales of $318 million in 2020, compared with $338 million in 2019

•

Net income of $7.3 million in 2020, compared with $10.2 million in 2019

•

Earnings per diluted share of $0.25 in 2020, compared with $0.34 in 2019

•

EBITDA of $30.8 million in 2020, compared to $36.9 million in 2019

Eric Wintemute, Chairman and CEO of American Vanguard commented, “Our net income for the third quarter was nearly even with that of the comparable period in 2019, despite a modest decline in our top line due largely to conservative procurement in the distribution channel, lower commodity prices and a strained farm economy. During the quarter we continued to maintain tight control over operating expenses, closely manage working capital and optimize our manufacturing assets. We also benefited from lower interest and tax expenses. While the first nine months of 2020 trended below those of 2019, we have recorded sequential top-line improvement since the start of the year in spite of a global pandemic.”

Mr. Wintemute continued, “Looking forward into the fourth quarter, we are already seeing greater optimism in the Agriculture sector spurred, in part, by rising crop commodity prices for corn, soybeans, and cotton, which bodes well for improved grower profitability. In the Midwest, with less crop rotation and more continuous corn planting, we are also beginning to see a resurgence of soil insect pressure. In addition, demand for our

Earnings before interest, taxes, depreciation and amortization. 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 EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s competitors) may define EBITDA differently.

industry-leading soil fumigation products continues to rise. Based upon these trends and current sales activity, barring unforeseen weather or pandemic factors, we are encouraged by our prospects for the fourth quarter and into the 2021 season.”

Mr. Wintemute concluded, “While endeavoring to maximize our financial performance, we continue to pursue strategic initiatives in technology development, portfolio expansion and market access. Please listen in to our upcoming earnings call during which I will be devoting my time to our three-to-five-year outlook with a particular focus on new product development, our growing portfolio of green products and our SIMPAS prescription application technology.”

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 9, 2020. Interested parties may participate in the call by dialing (800) 381 7839 or (212) 231-2900 – 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 Company’s web site at www.american-vanguard.com. To listen to the live webcast, which this quarter will be accompanied by slides, go to the web site at least 15 minutes early to register, download and install any necessary audio software. Additionally, presentation slides will be available for download at http://www.american-vanguard.com. 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.


Company Contact:		Investor Representative

American Vanguard Corporation		The Equity Group Inc.
William A. Kuser, Director of Investor Relations		www.theequitygroup.com
(949) 260-1200		Lena Cati (212) 836-9611
williamk@amvac-chemical.com		Lcati@equityny.com

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS


	September 30, 2020			December 31, 2019
Current assets:
Cash and cash equivalents	$	9,581		$	6,581
Receivables:
Trade, net of allowance for doubtful accounts of $3,046 and $2,300, respectively		145,374			136,075
Other		9,064			16,949

Total receivables, net		154,438			153,024
Inventories, net		176,287			163,313
Prepaid expenses		10,738			10,457
Income taxes receivable		1,972			2,824

Total current assets		353,016			336,199
Property, plant and equipment, net		59,801			56,521
Operating lease right-of-use assets		12,128			11,258
Intangible assets, net of amortization		191,133			198,377
Goodwill		40,737			46,557
Other assets		18,926			21,186

Total assets	$	675,741		$	670,098

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities	$	210		$	1,513
Accounts payable		61,283			64,881
Deferred revenue		5,689			6,826
Accrued program costs		67,745			47,699
Accrued expenses and other payables		11,266			12,815
Operating lease liabilities, current		4,312			4,904

Total current liabilities		150,505			138,638
Long-term debt, net of deferred loan fees		149,362			148,766
Operating lease liabilities, long-term		7,979			6,503
Other liabilities, excluding current installments		9,087			12,890
Deferred income tax liabilities		14,014			19,145

Total liabilities		330,947			325,942

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 33,337,075 shares at September 30, 2020 and 33,233,614 shares at December 31, 2019		3,335			3,324
Additional paid-in capital		93,273			90,572
Accumulated other comprehensive loss		(14,520	)		(5,698	)
Retained earnings		280,866			274,118

		362,954			362,316
Less treasury stock at cost, 3,061,040 shares at September 30, 2020 and December 31, 2019		(18,160	)		(18,160	)

Total stockholders’ equity		344,794			344,156

Total liabilities and stockholders’ equity	$	675,741		$	670,098

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,
	2020		2019		2020		2019
Net sales	$	117,439	$	124,884	$	317,956	$	337,664
Cost of sales		74,174		77,421		196,004		206,846

Gross profit		43,265		47,463		121,952		130,818
Operating expenses		38,782		40,677		108,882		110,839

Operating income		4,483		6,786		13,070		19,979
Interest expense, net		1,022		2,070		3,804		5,606

Income before provision for income taxes and loss on equity method investment		3,461		4,716		9,266		14,373
Income tax expense		492		1,474		1,852		4,059

Income before loss on equity method investment		2,969		3,242		7,414		10,314
Loss from equity method investment		42		89		80		149

Net income attributable to American Vanguard	$	2,927	$	3,153	$	7,334	$	10,165

Earnings per common share—basic	$	.10	$	.11	$	.25	$	.35

Earnings per common share—assuming dilution	$	.10	$	.11	$	.25	$	.34

Weighted average shares outstanding—basic		29,501		29,057		29,401		29,013

Weighted average shares outstanding—assuming dilution		29,973		29,650		29,926		29,591

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the three and nine months ended September 30, 2020 and 2019

(In thousands)

(Unaudited)


	For the three-months ended September 30,
	2020		2019		Change			% Change
Net sales:
US crop	$	48,361	$	55,072	$	(6,711	)		-12	%
US non-crop		18,251		18,995		(744	)		-4	%

US total		66,612		74,067		(7,455	)		-10	%
International		50,827		50,817		10			0	%

Net sales	$	117,439	$	124,884	$	(7,445	)		-6	%

Gross profit:
US crop	$	20,146	$	23,710	$	(3,564	)		-15	%
US non-crop		8,758		9,860		(1,102	)		-11	%

US total		28,904		33,570		(4,666	)		-14	%
International		14,361		13,893		468			3	%

Total gross profit	$	43,265	$	47,463	$	(4,198	)		-9	%


	For the nine-months ended September 30,
	2020		2019		Change			% Change
Net sales:
US crop	$	148,630	$	158,068	$	(9,438	)		-6	%
US non-crop		37,881		42,068		(4,187	)		-10	%

US total		186,511		200,136		(13,625	)		-7	%
International		131,445		137,528		(6,083	)		-4	%

Net sales	$	317,956	$	337,664	$	(19,708	)		-6	%

Gross profit:
US crop	$	68,119	$	69,059	$	(940	)		-1	%
US non-crop		18,535		21,444		(2,909	)		-14	%

US total		86,654		90,503		(3,849	)		-4	%
International		35,298		40,315		(5,017	)		-12	%

Total gross profit	$	121,952	$	130,818	$	(8,866	)		-7	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Nine-Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net income	$	7,334		$	10,165
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		14,584			13,892
Amortization of other long-term assets and deferred loan fees		3,185			3,174
Amortization of discounted liabilities		9			41
Provision for bad debts		777			728
Revision of deferred consideration		—			(3,539	)
Stock-based compensation		3,776			5,159
Change in deferred income taxes		(1,757	)		(459	)
Change in investment fair value		(281	)		—
Loss from equity method investment		80			149
Net foreign currency adjustment		(711	)		550
Changes in assets and liabilities associated with operations:
Increase in net receivables		(5,089	)		(15,839	)
Increase in inventories		(16,941	)		(19,713	)
Increase in prepaid expenses and other assets		(532	)		(849	)
Decrease (increase) in income tax receivable		873			(4,477	)
Increase in net operating lease liability		14			117
Decrease in accounts payable		(1,759	)		(5,548	)
Decrease in deferred revenue		(1,079	)		(19,800	)
Increase in accrued program costs		20,058			20,163
Decrease in other payables and accrued expenses		(3,344	)		(4,967	)

Net cash provided by (used in) operating activities		19,197			(21,053	)

Cash flows from investing activities:
Capital expenditures		(8,988	)		(10,546	)
Acquisition of business, product lines, and intangible assets		(3,942	)		(31,836	)
Investment		(1,190	)		—

Net cash used in investing activities		(14,120	)		(42,382	)

Cash flows from financing activities:
Net borrowings under line of credit agreement		377			68,200
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)		(1,064	)		(30	)
Repurchase of common stock		—			(2,604	)
Payment of cash dividends		(1,168	)		(1,741	)

Net cash (used in) provided by financing activities		(1,855	)		63,825

Net increase (decrease) in cash and cash equivalents		3,222			390
Effect of exchange rate changes on cash and cash equivalents		(222	)		(671	)
Cash and cash equivalents at beginning of period		6,581			6,168

Cash and cash equivalents at end of period	$	9,581		$	5,887

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	3,960		$	5,524

Income taxes, net	$	2,868		$	8,066

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA

For the three and nine months September 30, 2020 and 2019

(Unaudited)


	Three-Months Ended September 30,				Nine-Months Ended September 30,
	2020		2019		2020		2019
Net income attributable to American Vanguard, as reported	$	2,927	$	3,153	$	7,334	$	10,165
Provision for income taxes		492		1,474		1,852		4,059
Interest expense, net		1,022		2,070		3,804		5,606
Depreciation and amortization		6,000		5,688		17,769		17,066

EBITDA²	$	10,441	$	12,385	$	30,759	$	36,896

Earnings before interest, taxes, depreciation and amortization. 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. The items excluded from 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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