American Vanguard Reports First Quarter 2022 Results

Rhea-AI Summary

American Vanguard Corporation (NYSE: AVD) reported a strong start to fiscal 2022, with net sales increasing by 29% to $149.4 million and net income surging 224% to $9.9 million for Q1 2022 compared to Q1 2021. Earnings per diluted share rose to $0.33. The EBITDA also improved significantly to $22.9 million. The company achieved a 41% gross profit margin while reducing operating expenses to 31% of sales. Growth was driven by increased demand for crop protection solutions and successful international expansions.

Positive

• Net sales increased by 29% to $149.4 million.
• Net income rose by 224% to $9.9 million.
• Earnings per diluted share improved to $0.33.
• EBITDA increased to $22.9 million.
• Gross profit margin reached 41%.
• Operating expenses decreased to 31% of sales.

Negative

• None.

Net Sales up 29% - - - Net Income up 224% vs. Q1 2021

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220504006116/en/

Company Contact:

American Vanguard Corporation

William A. Kuser, Director of Investor Relations

(949) 260-1200

williamk@amvac-chemical.com



Investor Representative

The Equity Group Inc.

www.theequitygroup.com

Lena Cati

Lcati@equityny.com

Source: American Vanguard Corporation

FAQ

What were American Vanguard's financial results for Q1 2022?

For Q1 2022, American Vanguard reported net sales of $149.4 million and net income of $9.9 million.

How much did American Vanguard's net income increase in Q1 2022?

Net income increased by 224% in Q1 2022 compared to the same quarter in 2021.

What is the earnings per diluted share for American Vanguard in Q1 2022?

Earnings per diluted share for Q1 2022 was $0.33.

What is the gross profit margin for American Vanguard in Q1 2022?

The gross profit margin for Q1 2022 stood at 41%.

When will American Vanguard conduct their earnings call?

American Vanguard will conduct their earnings call on May 4, 2022, at 4:30 pm ET.