American Vanguard Reports Full Year 2022 Results

Rhea-AI Summary

American Vanguard Corporation (NYSE: AVD) reported a robust financial performance for the year ending December 31, 2022, with net sales reaching $610 million, a 9% increase from 2021. Net income rose by 47% to $27.4 million, while earnings per diluted share surged 51% to $0.92. The company also achieved an adjusted EBITDA of $73.1 million, a 15% growth year-over-year. The U.S. Crop business benefited from high commodity prices, leading to increased sales in various agricultural sectors. Looking ahead, AVD aims for 2023 net sales between $655M and $685M and continues to focus on strategic growth initiatives.

Positive

• Net sales increased by 9% to $610 million.
• Net income rose by 47% to $27.4 million.
• Earnings per diluted share increased by 51% to $0.92.
• Adjusted EBITDA grew by 15% to $73.1 million.
• International sales rose by 13%, achieving $100 million in Central America.
• Share buyback of 1.7 million shares, approximately 5.5% of outstanding shares.

Negative

• Non-Crop business experienced flat overall sales, with a 30% drop in the domestic consumer product market.
• Higher expected interest rates leading to increased expenses.

FY Net Income Increased 47% - Strong Outlook for 2023

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- American Vanguard Corporation (NYSE: AVD) today announced financial results for the full year ended December 31, 2022.

Fiscal 2022 Full Year Financial Highlights – versus Fiscal 2021 Full Year:

• Net sales were $610 million in 2022, compared to $558 million in 2021 (up 9%)
• Net income was $ 27.4 million in 2022, compared to $18.6 million in 2021 (up 47%)
• Earnings per diluted share of $0.92 in 2022, compared to $0.61 in 2021 (up 51%)
• Adjusted EBITDA¹ of $73.1 million in 2022, compared to $63.5 million in 2021 (up 15%)

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our full-year performance in 2022 exceeded that of 2021 in virtually every financial metric with net sales up 9% and net income up 47%. With high commodity prices and a strong farm economy, our U.S. Crop business recorded increased sales of our products in corn, soybeans, cotton, potatoes, and many fruits and vegetables. Our Non-Crop business experienced flat overall sales, in spite of a 30% drop in the domestic consumer product market. Further, our international business grew by 13% year-over-year, with increased sales of soil fumigants in Mexico and Australia, a milestone $100 million net sales record in Central America and expansion of our Green Solutions business into key markets. With demand for many of the high margin products that we produce in-house, we experienced greater efficiency within our manufacturing operations. At the same time, we strengthened our balance sheet through prudent allocation of capital, generation of cash and reduction of debt.”

Mr. Wintemute continued: “Looking forward, we are well positioned in both domestic and international markets for 2023, during which we are targeting increased net sales, and consistent gross profit and operating expense performance when compared to sales. During 2023, we are forecasting higher interest rates (due to the FOMC’s regular increases in the interest rate) and consequently higher expense. At the bottom line, we expect to see a solid increase in both net income, earnings per share, and adjusted EBITDA. During 2023, we will continue to develop our key strategic growth initiatives in innovative Core products, Green Solutions and SIMPAS/Ultimus technologies.”

2023 Performance Targets

	Range	Growth v. 2022
Net Sales	$655M-$685M	8-12%
Gross Margin %	38-41%	Similar
OPEX as % Sales	31-33%	Similar
Adjusted EBITDA	$86M-$91M	18-25%
Net Income	$34M-$37M	22-34%

Mr. Wintemute concluded: "During 2022 we have repurchased 1.7 million shares of the Company’s stock, representing approximately 5.5% of the outstanding shares. Furthermore, the board has authorized management to repurchase additional shares up to a total of $15 million dollars during 2023. Additionally, during 2022 we increased dividends per share by 31% reflecting our very strong financial performance. We look forward to giving you a more detailed presentation during our upcoming earnings call.”

Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, COO, David T. Johnson, CFO, Scott Hendrix, U.S. Crop SVP and Jim Thompson, Leader of the Green Solutions Initiative, will conduct a conference call focusing on the financial results and strategic themes…at 4:30 pm ET on March 13, 2023. 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. 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 CONSOLIDATED BALANCE SHEETS December 31, 2022 and 2021 (In thousands, except share data) (Unaudited)
		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	20,328			$	16,285
Receivables:
Trade, net of allowance for doubtful accounts of $5,136 and $3,938, respectively			156,492				149,326
Other			9,816				9,595
Total receivables, net			166,308				158,921
Inventories, net			184,190				154,306
Prepaid expenses			15,850				12,488
Income taxes receivable			1,891				—
Total current assets			388,567				342,000
Property, plant and equipment, net			70,912				66,111
Operating lease right-of-use assets			24,250				25,386
Intangible assets, net of amortization			184,664				197,841
Goodwill			47,010				46,260
Other assets			10,769				16,292
Deferred income tax assets, net			141				270
Total assets		$	726,313			$	694,160
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of other liabilities		$	—			$	802
Accounts payable			69,000				67,140
Customer prepayments			110,597				63,064
Accrued program costs			60,743				63,245
Accrued expenses and other payables			20,982				20,745
Income taxes payable			—				3,006
Operating lease liabilities, current			5,279				5,059
Total current liabilities			266,601				223,061
Long-term debt, net of deferred loan fees			51,477				52,240
Other liabilities, excluding current installments			4,167				5,335
Operating lease liabilities, long-term			19,492				20,780
Deferred income tax liabilities, net			14,597				20,006
Total liabilities			356,334				321,422
Commitments and contingent liabilities (Notes 5 and 11)
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 34,446,194 shares in 2022 and 34,248,218 shares in 2021			3,444				3,426
Additional paid-in capital			105,634				101,450
Accumulated other comprehensive loss			(12,182	)			(13,784	)
Retained earnings			328,745				304,385
			425,641				395,477
Less treasury stock at cost, 5,029,892 shares in 2022 and 3,361,040 in 2021			(55,662	)			(22,739	)
Total stockholders’ equity			369,979				372,738
Total liabilities and stockholders’ equity		$	726,313			$	694,160

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2022, 2021 and 2020 (In thousands, except per share data) (Unaudited)
		2022				2021				2020
Net sales		$	609,615			$	557,676			$	458,704
Cost of sales			(368,263	)			(343,629	)			(286,114	)
Gross profit			241,352				214,047				172,590
Operating expenses			(200,701	)			(183,272	)			(154,339	)
Bargain purchase gain on business acquisition			—				171				4,657
Operating income			40,651				30,946				22,908
Change in fair value of equity investments, net			(732	)			(790	)			717
Other income			—				672				—
Interest expense, net			(3,954	)			(3,687	)			(5,178	)
Income before provision for income taxes and loss on equity method investment			35,965				27,141				18,447
Provision for income taxes			(8,561	)			(8,166	)			(3,080	)
Income before loss on equity method investment			27,404				18,975				15,367
Loss from equity method investment			—				(388	)			(125	)
Net income		$	27,404			$	18,587			$	15,242
Earnings per common share—basic		$	0.94			$	0.62			$	0.52
Earnings per common share—assuming dilution		$	0.92			$	0.61			$	0.51
Weighted average shares outstanding—basic			29,234				29,811				29,450
Weighted average shares outstanding—assuming dilution			29,872				30,410				29,993

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES For the years and quarters ended December 31, 2022 and 2021 (Unaudited)
	For the quarters ended December 31,							For the years ended December 31,
	2022			2021				2022				2021
Net sales:
U.S. crop	$	68,121		$	79,580			$	288,624			$	263,632
U.S. non-crop		23,061			18,042				76,709				78,605
Total U.S.		91,182			97,622				365,333				342,237
International		68,797			61,991				244,282				215,439
Total net sales	$	159,979		$	159,613			$	609,615			$	557,676
Gross profit:
U.S. crop	$	27,910		$	31,255			$	132,509			$	109,568
U.S. non-crop		10,431			9,396				35,257				37,443
Total U.S.		38,341			40,651				167,766				147,011
International		20,655			19,062				73,586				67,036
Total gross profit	$	58,996		$	59,713			$	241,352			$	214,047

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2022, 2021 and 2020 (In thousands) (Unaudited)
		2022				2021				2020
Cash flows from operating activities:
Net income		$	27,404			$	18,587			$	15,242
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets			22,138				22,229				19,902
Loss on disposal of property, plant and equipment			268				194				119
Amortization of other long-term assets			3,573				3,943				3,947
Amortization and accretion of deferred loan fees and discounted liabilities			289				359				309
Provision for bad debts			1,171				649				1,002
Provision for inventory obsolescence			340				1,034				738
Loan principal and interest forgiveness			—				(672	)			—
Fair value adjustment of contingent consideration			610				758				250
Decrease in environmental liability			—				(167	)			(1,155	)
Stock-based compensation			5,684				6,880				6,561
(Decrease) increase in deferred income taxes			(5,278	)			(2,090	)			969
Changes in liabilities for uncertain tax positions or unrecognized tax benefits			(1,441	)			(1,783	)			(2,092	)
Change in equity investment fair value			732				790				(717	)
Loss from equity method investment			—				388				125
Bargain purchase gain			—				(171	)			(4,657	)
Net foreign currency adjustment			(29	)			(225	)			126
Changes in assets and liabilities associated with operations, net of business combinations:
(Increase) decrease in net receivables			(6,447	)			(24,347	)			15,407
(Increase) decrease in inventories			(29,560	)			8,323				6,683
(Increase) decrease in income tax receivable, net			(4,910	)			6,051				(287	)
(Increase) decrease in prepaid expenses and other assets			(3,082	)			(4,581	)			140
Increase in net operating lease liability			68				286				18
Increase (decrease) in accounts payable			1,704				8,783				(8,199	)
Increase in deferred revenue			47,551				19,280				36,803
(Decrease) increase in accrued program costs			(2,449	)			17,877				(2,517	)
Increase in other payables and accrued expenses			90				3,986				1,607
Payment of contingent consideration			(1,321	)			—				—
Net cash provided by operating activities			57,105				86,361				90,324
Cash flows from investing activities:
Capital expenditures			(13,261	)			(9,518	)			(11,249	)
Proceeds from disposal of property, plant and equipment			84				—				—
Acquisitions of businesses and product lines			—				(10,000	)			(19,342	)
Intangible assets			(1,293	)			(524	)			(4,014	)
Investment			—				—				(1,190	)
Net cash used in investing activities			(14,470	)			(20,042	)			(35,795	)
Cash flows from financing activities:
Payments under line of credit agreement			(254,000	)			(186,569	)			(168,400	)
Borrowings under line of credit agreement			253,000				131,000				126,776
Payment of contingent consideration			(68	)			(1,301	)			(1,227	)
Net receipt from the issuance of common stock under ESPP			837				743				721
Net receipt from the exercise of stock options			827				172				1,603
Net payment from common stock purchased for tax withholding			(2,067	)			(2,955	)			(2,745	)
Repurchase of common stock			(34,002	)			(4,579	)			—
Payment of cash dividends			(2,787	)			(2,382	)			(1,168	)
Net cash used in financing activities			(38,260	)			(65,871	)			(44,440	)
Net increase in cash and cash equivalents			4,375				448				10,089
Effect of exchange rate changes on cash and cash equivalents			(332	)			(86	)			(747	)
Cash and cash equivalents at beginning of year			16,285				15,923				6,581
Cash and cash equivalents at end of year		$	20,328			$	16,285			$	15,923

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA For the years and quarters ended December 31, 2022 and 2021 (Unaudited)
	For the years ended December 31,
	2022				2021
Net income	$	27,404			$	18,587
Provision for income taxes		8,561				8,166
Interest expense, net		3,954				3,687
Proxy costs		1,785				—
Depreciation and amortization		25,711				26,172
Stock compensation expense		5,684				6,880
Adjusted EBITDA1	$	73,099			$	63,492

	For the quarters ended December 31,
	2022				2021
Net income	$	3,898			$	4,874
Provision for income taxes		(1,626	)			2,842
Interest expense, net		1,698				766
Depreciation and amortization		6,406				6,146
Stock compensation expense		1,288				1,571
Adjusted EBITDA1	$	11,664			$	16,199

_____________________________________
¹ 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 measures 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230313005774/en/

Company:

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 net sales for FY 2022?

American Vanguard reported net sales of $610 million for FY 2022.

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

Net income increased by 47% to $27.4 million in 2022.

What is the projected net sales range for American Vanguard in 2023?

American Vanguard projects net sales between $655 million and $685 million in 2023.

What was the earnings per share for American Vanguard in 2022?

Earnings per diluted share were $0.92 for the year 2022.

What strategic initiatives is American Vanguard focusing on for 2023?

The company will focus on growth initiatives in Core products, Green Solutions, and SIMPAS/Ultimus technologies.