Financial News

American Vanguard Reports Q1 2024 Results

Adjusted EBITDA up 35%, Operating Income up 87%

American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights – versus First Quarter 2023:

  • Net sales of $135 million vs. $125 million
  • Adjusted EBITDA1 of $15.5 million vs. $11.5 million
  • Operating Income of $6.1 million vs. $3.3 million
  • Net income of $1.6 million vs. $1.9 million
  • Earnings per diluted share of $0.06 vs. $0.07

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We attained improved operating leverage with a significant increase in adjusted EBITDA and operating income, during the first quarter as compared to last year. This is due in part to our cost control initiatives, on account of which our operating expenses reduced as a percent of net sales, even after including our transformation costs. We expect to gain greater efficiencies through our transformation program which we have begun in earnest and which we expect will generate an additional $15 million of adjusted EBITDA on an annualized basis by 2026.”

He continued, “Further, it is pleasing to note that we experienced growth in all three businesses, US Crop, US Non-crop and International. Within US Crop, we recorded strong sales of granular soil insecticides (in light of a stable farm economy), herbicides (in part due to seasonal demand and favorable weather conditions) and cotton and peanut products (driven by increased planted acres for those crops). The destocking initiatives from last year have begun to subside to a degree; however, the distribution channel is still exercising conservatism in their procurement approach.”

Mr. Wintemute continued, “Within US Non-crop, we experienced significantly higher sales, led by our mosquito adulticides (in anticipation of tropical storm activity), pest strips (with a resurgence in consumer and technical sales) and our OHP products for nursery and ornamental uses. Our International business recorded moderately higher sales, led by Mexico and APAC, despite continued overstocking of generic products in other regions. All in, we are encouraged by the resiliency of our markets during the quarter.”

Mr. Wintemute concluded, “Market conditions remain stable with a strong farm economy and a more relaxed procurement approach within the distribution channel compared to last year. That said, in light of concerns raised by USEPA, we have voluntarily suspended sales of our herbicide Dacthal pending potential approval of a label that we believe should answer the agency’s concerns. In light of these factors, we are adjusting our annual targets to achieve an increase in net sales of between 6% and 9% year over year and are setting our adjusted EBITDA target to $60 - $70 million. 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 4:15 pm ET on Thursday, May 9, 2024. Interested parties may participate in the call by dialing 201-493-6744. Please call in 10 minutes before the scheduled start time 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. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has over 1,000 product registrations in 56 nations worldwide. Its strategy rests on three growth initiatives – i) Core Business (through innovation of conventional products), ii) Green Solutions (with over 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products) and iii) Precision Agriculture innovation (including SIMPAS prescriptive application and Ultimus measure/record/verify technologies). American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. 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

 

March 31,

2024

 

 

December 31,

2023

 

Current assets:

 

 

 

 

 

 

Cash

 

$

13,709

 

 

$

11,416

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for credit losses of $7,798 and $7,107, respectively

 

 

187,197

 

 

 

182,613

 

Other

 

 

7,395

 

 

 

8,356

 

Total receivables, net

 

 

194,592

 

 

 

190,969

 

Inventories

 

 

228,309

 

 

 

219,551

 

Prepaid expenses

 

 

7,446

 

 

 

6,261

 

Income taxes receivable

 

 

2,889

 

 

 

3,824

 

Total current assets

 

 

446,945

 

 

 

432,021

 

Property, plant and equipment, net

 

 

75,909

 

 

 

74,560

 

Operating lease right-of-use assets, net

 

 

23,084

 

 

 

22,417

 

Intangible assets, net of amortization

 

 

168,723

 

 

 

172,508

 

Goodwill

 

 

50,469

 

 

 

51,199

 

Deferred income tax assets

 

 

3,307

 

 

 

2,849

 

Other assets

 

 

13,188

 

 

 

11,994

 

Total assets

 

$

781,625

 

 

$

767,548

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

64,642

 

 

$

68,833

 

Customer prepayments

 

 

28,520

 

 

 

65,560

 

Accrued program costs

 

 

74,343

 

 

 

68,076

 

Accrued expenses and other payables

 

 

15,927

 

 

 

16,354

 

Operating lease liabilities, current

 

 

6,358

 

 

 

6,081

 

Income taxes payable

 

 

5,633

 

 

 

5,591

 

Total current liabilities

 

 

195,423

 

 

 

230,495

 

Long-term debt, net

 

 

187,017

 

 

 

138,900

 

Operating lease liabilities, long term

 

 

17,407

 

 

 

17,113

 

Deferred income tax liabilities

 

 

7,157

 

 

 

7,892

 

Other liabilities

 

 

3,038

 

 

 

3,138

 

Total liabilities

 

 

410,042

 

 

 

397,538

 

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 34,754,634 shares at March 31, 2024 and 34,676,787 shares at December 31, 2023

 

 

3,475

 

 

 

3,467

 

Additional paid-in capital

 

 

113,223

 

 

 

110,810

 

Accumulated other comprehensive loss

 

 

(7,527

)

 

 

(5,963

)

Retained earnings

 

 

333,613

 

 

 

332,897

 

Less treasury stock at cost, 5,915,182 shares at March 31, 2024 and December 31, 2023

 

 

(71,201

)

 

 

(71,201

)

Total stockholders’ equity

 

 

371,583

 

 

 

370,010

 

Total liabilities and stockholders’ equity

 

$

781,625

 

 

$

767,548

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the three months

ended March 31

 

 

 

2024

 

 

2023

 

Net sales

 

$

135,143

 

 

$

124,885

 

Cost of sales

 

 

(92,725

)

 

 

(86,348

)

Gross profit

 

 

42,418

 

 

 

38,537

 

Operating expenses

 

 

 

 

 

 

Selling, general and administrative

 

 

(30,621

)

 

 

(26,402

)

Research, product development and regulatory

 

 

(5,706

)

 

 

(8,870

)

Operating income

 

 

6,091

 

 

 

3,265

 

Change in fair value of an equity investment

 

 

638

 

 

 

(22

)

Interest expense, net

 

 

(3,693

)

 

 

(1,686

)

Income before provision for income taxes

 

 

3,036

 

 

 

1,557

 

Income tax (expense) benefit

 

 

(1,484

)

 

 

361

 

Net income

 

$

1,552

 

 

$

1,918

 

Earnings per common share—basic

 

$

0.06

 

 

$

0.07

 

Earnings per common share—assuming dilution

 

$

0.06

 

 

$

0.07

 

Weighted average shares outstanding—basic

 

 

27,844

 

 

 

28,367

 

Weighted average shares outstanding—assuming dilution

 

 

28,128

 

 

 

29,073

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(Unaudited)

 

 

 

For the three months ended

March 31,

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

67,257

 

 

$

61,876

 

 

$

5,381

 

 

 

9

%

U.S. non-crop

 

 

17,768

 

 

 

13,899

 

 

 

3,869

 

 

 

28

%

Total U.S.

 

 

85,025

 

 

 

75,775

 

 

 

9,250

 

 

 

12

%

International

 

 

50,118

 

 

 

49,110

 

 

 

1,008

 

 

 

2

%

Total net sales

 

$

135,143

 

 

$

124,885

 

 

$

10,258

 

 

 

8

%

Total cost of sales

 

$

(92,725

)

 

$

(86,348

)

 

$

(6,377

)

 

 

7

%

Total gross profit

 

$

42,418

 

 

$

38,537

 

 

$

3,881

 

 

 

10

%

Total gross margin

 

 

31

%

 

 

31

%

 

 

 

 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the three months

ended March 31

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,552

 

 

$

1,918

 

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

 

 

 

 

 

 

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

 

 

5,441

 

 

 

5,539

 

Amortization of other long-term assets

 

 

189

 

 

 

714

 

Provision for bad debts

 

 

700

 

 

 

581

 

Stock-based compensation

 

 

2,005

 

 

 

1,474

 

Change in deferred income taxes

 

 

(1,025

)

 

 

122

 

Change in liabilities for uncertain tax positions or unrecognized tax benefits

 

 

35

 

 

 

371

 

Change in equity investment fair value

 

 

(638

)

 

 

22

 

Other

 

 

(5

)

 

 

72

 

Foreign currency transaction gains

 

 

(373

)

 

 

(446

)

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

Increase in net receivables

 

 

(5,579

)

 

 

(8,779

)

Increase in inventories

 

 

(9,353

)

 

 

(33,731

)

Increase (decrease) in prepaid expenses and other assets

 

 

(1,466

)

 

 

600

 

Change in income tax receivable/payable, net

 

 

1,014

 

 

 

(2,965

)

(Decrease) increase in accounts payable

 

 

(3,951

)

 

 

5,655

 

Decrease in customer prepayments

 

 

(37,037

)

 

 

(22,759

)

Increase in accrued program costs

 

 

6,399

 

 

 

10,660

 

Decrease in other payables and accrued expenses

 

 

(332

)

 

 

(500

)

Net cash used in operating activities

 

 

(42,424

)

 

 

(41,452

)

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(3,565

)

 

 

(2,590

)

Proceeds from disposal of property, plant and equipment

 

 

23

 

 

 

 

Acquisition of a product line

 

 

 

 

 

(703

)

Intangible assets

 

 

(25

)

 

 

(15

)

Net cash used in investing activities

 

 

(3,567

)

 

 

(3,308

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(35,346

)

 

 

(27,300

)

Borrowings under line of credit agreement

 

 

83,463

 

 

 

72,000

 

Net receipt from the issuance of common stock under ESPP

 

 

430

 

 

 

480

 

Net (payment) receipt from the exercise of stock options

 

 

 

 

 

18

 

Net payment from common stock purchased for tax withholding

 

 

(14

)

 

 

(13

)

Repurchase of common stock

 

 

 

 

 

(557

)

Payment of cash dividends

 

 

(834

)

 

 

(851

)

Net cash provided by financing activities

 

 

47,699

 

 

 

43,777

 

Net increase (decrease) in cash

 

 

1,708

 

 

 

(983

)

Effect of exchange rate changes on cash and cash equivalents

 

 

585

 

 

 

223

 

Cash at beginning of period

 

 

11,416

 

 

 

20,328

 

Cash at end of period

 

$

13,709

 

 

$

19,568

 

 

 

 

 

 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO EBITDA

(In thousands)

(Unaudited)

 

Reconciliation of Net Income to EBITDA

 

March 31, 2024

 

 

March 31, 2023

 

Net income, as reported

 

$

1,552

 

 

$

1,918

 

Provision for income taxes

 

 

1,484

 

 

 

(361

)

Interest expense, net

 

 

3,693

 

 

 

1,686

 

Proxy costs

 

 

 

 

 

541

 

Depreciation and amortization

 

 

5,630

 

 

 

6,253

 

Stock compensation

 

 

2,005

 

 

 

1,474

 

Transformation costs

 

 

1,152

 

 

 

 

Adjusted EBITDA2

 

$

15,516

 

 

$

11,511

 

______________________________

1 Adjusted earnings before interest, taxes, depreciation, and amortization. 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, operating income 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, and amortization. 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, operating income 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.

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