American Vanguard Reports First Quarter 2021 Results

Rhea-AI Summary

American Vanguard Corporation (NYSE: AVD) reported strong financial results for Q1 2021, with net sales rising to $116 million, up from $96 million in Q1 2020. Net income soared to $3.07 million, compared to $0.52 million a year prior, translating to earnings per diluted share of $0.10. EBITDA increased to $12.1 million, up from $7.6 million. The company highlighted improved demand for soybean and corn herbicide products, driven by higher commodity prices, and noted steady performance in mosquito control and horticulture. A low double-digit sales increase is projected for 2021.

Positive

• Net sales increased to $116 million, up 21% from Q1 2020.
• Net income rose to $3.07 million, a 493% increase year-over-year.
• Earnings per diluted share improved to $0.10 from $0.02.
• EBITDA grew to $12.1 million, representing a 59% increase.
• Strong demand for soybean and corn herbicides driven by rising commodity prices.
• International growth in markets like Mexico and Brazil.
• Controlled operating expenses, contributing to profitability.

Negative

• Gross profit margins decreased slightly compared to Q1 2020.

American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2021.

Fiscal 2021 First Quarter Financial Highlights – versus Fiscal 2020 First Quarter:

• Net sales were $116 million in 2021, compared to $96 million in 2020.
• Net income was $3.07 million in 2021, compared to $0.52 million in 2020.
• Earnings per diluted share of $0.10 in 2021, compared to $0.02 in 2020.
• EBITDA¹of $12.1 million in 2021, compared to $7.6 million in 2020.

Eric Wintemute, Chairman and CEO of American Vanguard stated: “We are pleased to report a much-improved start to 2021 both at the top and bottom lines, as compared to the prior year. Domestically, after several years of relatively stagnant crop prices, we are beginning to see higher commodity prices, which, in turn, has helped spur demand for both our soybean products and our corn herbicide portfolio. In non-crop uses, we experienced steady demand for mosquito control products, a recovery in the horticulture segment and higher royalties from our essential oil products for consumer use. Internationally, we enjoyed improved performance in Mexico and Brazil, while continuing to expand globally with the additions of Agrinos biological products and the integration of AgNova in Australia. Gross profit margins were just below those of the comparable quarter in 2020, while net income for the quarter was 6 times that of the prior year period.”

He continued: “During the quarter, we kept a focus on balance sheet integrity and controlled inventory levels. We also exercised discipline with respect to operating expense (which declined as a percent of net sales) and debt management within the usual seasonal cycle for our business. Further, we produced profitable results while self-funding strategic growth initiatives, including our SIMPAS prescription application system with the Ultimus tracing/verification platform, which we are positioning as a comprehensive solution for the carbon credit market.”

Mr. Wintemute concluded: “Over the course of 2021, we expect a low double-digit increase in net sales with stronger growth in net income. We look forward to giving you 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 Thursday, May 6, 2021. Interested parties may participate in the call by dialing 888-506-0062 or 973-528-0011 and enter code 481120 - 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.

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, 2021				December 31, 2020
Current assets:
Cash and cash equivalents		$	13,765			$	15,923
Receivables:
Trade, net of allowance for doubtful accounts of $3,979 and $3,297, respectively			156,010				130,029
Other			10,247				8,444
Total receivables, net			166,257				138,473
Inventories			172,234				163,784
Prepaid expenses			11,221				10,499
Income taxes receivable			2,409				3,046
Total current assets			365,886				331,725
Property, plant and equipment, net			65,945				65,382
Operating lease right-of-use assets			11,207				12,198
Intangible assets, net of applicable amortization			193,776				197,514
Goodwill			50,505				52,108
Other assets			18,492				18,602
Deferred income tax assets, net			4,213				2,764
Total assets		$	710,024			$	680,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	909			$	2,647
Accounts payable			60,946				59,253
Deferred revenue			32,316				43,611
Accrued program costs			53,196				45,441
Accrued expenses and other payables			15,865				16,184
Operating lease liabilities, current			3,664				4,188
Total current liabilities			166,896				171,324
Long-term debt, net			143,423				107,442
Operating lease liabilities, long term			7,692				8,177
Other liabilities, net of current installments			8,453				9,054
Deferred income tax liabilities, net			23,514				23,560
Total liabilities			349,978				319,557
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 33,874,322 shares at March 31, 2021 and 33,922,433 shares at December 31, 2020			3,389				3,394
Additional paid-in capital			95,985				96,642
Accumulated other comprehensive loss			(11,825	)			(9,322	)
Retained earnings			290,657				288,182
Less treasury stock at cost, 3,061,040 shares			(18,160	)			(18,160	)
Total stockholders’ equity			360,046				360,736
Total liabilities and stockholders' equity		$	710,024			$	680,293

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		For the three months ended March 31
		2021				2020
Net sales		$	116,155			$	95,962
Cost of sales			(71,024	)			(57,581	)
Gross profit			45,131				38,381
Operating expenses			(41,444	)			(36,545	)
Adjustment to bargain purchase gain on business acquisition			(33	)			—
Operating income			3,654				1,836
Change in fair value of an equity investment			1,066				—
Other income			672				—
Interest expense, net			(946	)			(1,508	)
Income before provision for income taxes (benefit) and loss on equity method investment			4,446				328
Income tax (expense) benefit			(1,362	)			205
Income before loss from equity method investment			3,084				533
Loss from equity method investment			(13	)			(13	)
Net income		$	3,071			$	520
Earnings per common share—basic		$	0.10			$	0.02
Earnings per common share—assuming dilution		$	0.10			$	0.02
Weighted average shares outstanding—basic			29,737				29,288
Weighted average shares outstanding—assuming dilution			30,523				29,948

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES (In thousands) (Unaudited)
		For the three Months Ended March 31
		2021				2020				Change				% Change
Net sales:
U.S. crop		$	54,755			$	50,362			$	4,393				9	%
U.S. non-crop			17,453				10,993				6,460				59	%
Total U.S.			72,208				61,355				10,853				18	%
International			43,947				34,607				9,340				27	%
Total net sales:		$	116,155			$	95,962			$	20,193				21	%
Gross profit:
U.S. crop		$	21,271			$	24,245			$	(2,974	)			-12	%
U.S. non-crop			9,383				4,719				4,664				99	%
Total U.S.			30,654				28,964				1,690				6	%
International			14,477				9,417				5,060				54	%
Total gross profit:		$	45,131			$	38,381			$	6,750				18	%
Gross margin:
U.S. crop			39	%			48	%
U.S. non-crop			54	%			43	%
Total U.S.			42	%			47	%
International			33	%			27	%
Gross margin:			39	%			40	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
		For the three months ended March 31
		2021				2020
Cash flows from operating activities:
Net income		$	3,071			$	520
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed and intangible assets			5,403				4,762
Amortization of other long-term assets			1,200				967
Accretion of discounted liabilities			18				4
Amortization of deferred loan fees			81				59
Provision for bad debts			682				359
Loan principal and interest forgiveness			(672	)			—
Stock-based compensation			1,792				1,357
Decrease in deferred income taxes			(269	)			(910	)
Change in fair value of an equity investment			(1,066	)			—
Loss from equity method investment			13				13
Adjustment to bargain purchase gain on business acquisition			33				—
Changes in assets and liabilities associated with operations:
Increase in net receivables			(30,422	)			(6,578	)
Increase in inventories			(9,615	)			(16,446	)
Increase in prepaid expenses and other assets			(1,052	)			(776	)
(Increase) decrease in income tax receivable/payable, net			638				(597	)
Decrease in net operating lease liability			(18	)			—
Increase in accounts payable			2,293				1,617
Decrease in deferred revenue			(11,293	)			(2,342	)
Increase in accrued program costs			7,770				6,016
Decrease in other payables and accrued expenses			(1,187	)			(2,094	)
Net cash used in operating activities			(32,600	)			(14,069	)
Cash flows from investing activities:
Capital expenditures			(2,904	)			(2,980	)
Intangible assets			(41	)			—
Net cash used in investing activities			(2,945	)			(2,980	)
Cash flows from financing activities:
Net borrowings under line of credit agreement			35,900				19,400
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholdings)			(2,454	)			(2,177	)
Payment of cash dividends			(593	)			(582	)
Net cash provided by financing activities			32,853				16,641
Net decrease in cash and cash equivalents			(2,692	)			(408	)
Effect of exchange rate changes on cash and cash equivalents			534				(629	)
Cash and cash equivalents at beginning of period			15,923				6,581
Cash and cash equivalents at end of period		$	13,765			$	5,544

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA For the three months March 31, 2021 and 2020 (Unaudited)
		March 31, 2021				March 31, 2020
Net income, as reported		$	3,071			$	520
Provision for income taxes			1,362				(205	)
Interest expense, net			946				1,508
Depreciation and amortization			6,684				5,788
EBITDA2		$	12,063			$	7,611

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¹ 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.

² 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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FAQ

What were American Vanguard's Q1 2021 net sales compared to Q1 2020?

American Vanguard's Q1 2021 net sales were $116 million, compared to $96 million in Q1 2020.

How much did American Vanguard's net income increase in Q1 2021?

Net income for Q1 2021 was $3.07 million, up from $0.52 million in Q1 2020.

What is American Vanguard's projected sales increase for 2021?

The company expects a low double-digit increase in net sales for 2021.

When is the next earnings call for American Vanguard?

The next earnings call is scheduled for May 6, 2021, at 4:30 pm ET.

What factors contributed to American Vanguard's revenue growth?

Revenue growth was driven by higher commodity prices and increased demand for soybean and corn herbicide products.