American Vanguard Reports Improved Financial Results With Third Quarter Net Sales up 25% and Net Income Up 88%

Rhea-AI Summary

American Vanguard Corporation (NYSE:AVD) reported strong financial results for Q3 and the first nine months of fiscal 2021. Net sales rose 25% to $147 million in Q3 and $398 million for nine months, compared to $117 million and $318 million in 2020, respectively. Net income surged 88% to $5.5 million in Q3 and 87% to $13.7 million year-to-date. Earnings per share increased to $0.18 from $0.10 in Q3 and to $0.45 from $0.25 for nine months. The CEO attributed growth to strong crop commodity prices, favorable weather, and strategic initiatives, with expectations of continued strong performance.

Positive

• Net sales up 25% to $147 million in Q3 2021.
• Net income increased by 88% to $5.5 million in Q3 2021.
• Earnings per diluted share rose to $0.18 from $0.10 in Q3 2020.
• EBITDA up 47% to $15.3 million in Q3 2021.
• Strong year-to-date performance with net sales up 25% to $398 million.

Negative

• None.

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- American Vanguard Corporation (NYSE:AVD) today announced financial results for the third quarter and nine months ended September 30, 2021.

Financial Highlights Fiscal 2021 Third Quarter – versus Fiscal 2020 Third Quarter

• Net sales up 25% to $147 million in 2021, as compared with $117 million in 2020
• Net income up 88% to $5.5 million in 2021, as compared with $2.9 million in 2020
• Earnings per diluted share of $0.18 in 2021, as compared with $0.10 in 2020
• EBITDA¹ up 47% to $15.3 million in 2021, as compared with $10.4 million in 2020

Financial Highlights Fiscal 2021 Nine Months – versus Fiscal 2020 Nine Months

• Net sales up 25% to $398 million in 2021, as compared with $318 million in 2020
• Net income up 87% to $13.7 million in 2021, as compared with $7.3 million in 2020
• Earnings per diluted share of $0.45 in 2021, as compared with $0.25 in 2020
• EBITDA up 37% to $42.0 million in 2021, as compared to $30.5 million in 2020

Eric Wintemute, Chairman and CEO of American Vanguard, commented: “We achieved strong third quarter results and continued performance improvement over the first three quarters of 2021. Strong crop commodity prices, favorable weather and pest pressure have fueled significant growth of our US crop sales, particularly in the Midwest and the South. Mosquito mitigation driven by tropical storm activity, commercial pest control, lawn and garden demand and our consumer pest collaboration with Proctor & Gamble’s Zevo® brand have grown this year’s US Non-Crop business. Internationally, our success in Central America, Brazil, Australia and elsewhere has resulted in expanded revenues and enhanced profitability.”

Mr. Wintemute continued, “Our year-to-date performance exceeds our prior guidance with net sales increasing at a 25% rate and a more significant gain of 87% in net income and earnings per share. We have achieved these results in spite of pandemic conditions and delays in the global supply chain. Through the balance of the year, we expect strong sales, efficient manufacturing performance and earnings in excess of those posted last year. From a balance sheet perspective, we are on track with both inventory management and debt reduction as we head towards the end of the year.”

Mr. Wintemute concluded, “We continue to pursue strategic growth initiatives in technology development, with particular emphasis on Green Solutions and Precision Application technologies. We look forward to providing details on our overall performance, industry outlook and innovation initiatives in our upcoming quarterly conference 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 at 4:30 pm ET / 1:30 pm PT on Monday, November 8, 2021. Interested parties may participate in the call by dialing (201) 493-6744 – 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 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		September 30, 2021				December 31, 2020
Current assets:
Cash and cash equivalents		$	16,718			$	15,923
Receivables:
Trade, net of allowance for doubtful accounts of $4,381 and $3,297, respectively			167,731				130,029
Other			11,384				8,444
Total receivables, net			179,115				138,473
Inventories, net			166,973				163,784
Prepaid expenses			12,491				10,499
Income taxes receivable			1,036				3,046
Total current assets			376,333				331,725
Property, plant and equipment, net			66,501				65,382
Operating lease right-of-use assets			26,080				12,198
Intangible assets, net of amortization			201,078				197,514
Goodwill			46,616				52,108
Other assets			15,595				18,602
Deferred income tax assets, net			3,669				2,764
Total assets		$	735,872			$	680,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	1,633			$	2,647
Accounts payable			66,082				59,253
Deferred revenue			5,510				43,611
Accrued program costs			79,355				45,441
Accrued expenses and other payables			20,726				16,184
Operating lease liabilities, current			5,015				4,188
Total current liabilities			178,321				171,324
Long-term debt, net of deferred loan fees			136,328				107,442
Operating lease liabilities, long-term			21,415				8,177
Other liabilities, excluding current installments			7,213				9,054
Deferred income tax liabilities, net			24,254				23,560
Total liabilities			367,531				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 34,272,665 shares at September 30, 2021 and 33,922,433 shares at December 31, 2020			3,428				3,394
Additional paid-in capital			99,917				96,642
Accumulated other comprehensive loss			(12,370	)			(9,322	)
Retained earnings			300,105				288,182
			391,080				378,896
Less treasury stock at cost, 3,361,040 shares at September 30, 2021 and 3,061,040 shares at December 31, 2020			(22,739	)			(18,160	)
Total stockholders’ equity			368,341				360,736
Total liabilities and stockholders' equity		$	735,872			$	680,293

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,
		2021				2020				2021				2020
Net sales		$	147,298			$	117,439			$	398,063			$	317,956
Cost of sales			(90,234	)			(74,174	)			(243,729	)			(196,004	)
Gross profit			57,064				43,265				154,334				121,952
Operating expenses			(48,410	)			(39,039	)			(132,934	)			(109,163	)
Adjustment to bargain purchase gain on business acquisition			292				—				171				—
Operating income			8,946				4,226				21,571				12,789
Change in value of equity investments, net			(668	)			257				103				281
Other income			—				—				672				—
Interest expense, net			(962	)			(1,022	)			(2,921	)			(3,804	)
Income before provision for income taxes and loss on equity method investment			7,316				3,461				19,425				9,266
Income tax expense			(1,517	)			(492	)			(5,324	)			(1,852	)
Income before loss on equity method investment			5,799				2,969				14,101				7,414
Loss from equity method investment			(301	)			(42	)			(388	)			(80	)
Net income		$	5,498			$	2,927			$	13,713			$	7,334
Earnings per common share—basic		$	.18			$	.10			$	.46			$	.25
Earnings per common share—assuming dilution		$	.18			$	.10			$	.45			$	.25
Weighted average shares outstanding—basic			29,892				29,501				29,854				29,401
Weighted average shares outstanding—assuming dilution			30,390				29,973				30,470				29,926

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(In thousands)
(Unaudited)
		For the Three Months Ended September 30,
		2021				2020				Change				% Change
Net sales:
U.S. crop		$	66,722			$	48,361			$	18,361				38	%
U.S. non-crop			21,622				18,251				3,371				18	%
U.S. total			88,344				66,612				21,732				33	%
International			58,954				50,827				8,127				16	%
Net sales:		$	147,298			$	117,439			$	29,859				25	%
Gross profit:
U.S. crop		$	30,237			$	20,146			$	10,091				50	%
U.S. non-crop			8,882				8,758				124				1	%
U.S. total			39,119				28,904				10,215				35	%
International			17,945				14,361				3,584				25	%
Total gross profit:		$	57,064			$	43,265			$	13,799				32	%

		For the Nine Months Ended September 30,
		2021				2020				Change				% Change
Net sales:
U.S. crop		$	184,052			$	148,630			$	35,422				24	%
U.S. non-crop			60,563				37,881				22,682				60	%
U.S. total			244,615				186,511				58,104				31	%
International			153,448				131,445				22,003				17	%
Net sales:		$	398,063			$	317,956			$	80,107				25	%
Gross profit:
U.S. crop		$	78,313			$	68,119			$	10,194				15	%
U.S. non-crop			28,047				18,535				9,512				51	%
U.S. total			106,360				86,654				19,706				23	%
International			47,974				35,298				12,676				36	%
Total gross profit:		$	154,334			$	121,952			$	32,382				27	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
		For the Nine Months Ended September 30,
		2021				2020
Cash flows from operating activities:
Net income		$	13,713			$	7,334
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets			17,045				14,584
Amortization of other long-term assets			2,981				2,966
Accretion of discounted liabilities			(10	)			9
Amortization of deferred loan fees			294				219
Provision for bad debts			1,202				777
Loan principal and interest forgiveness			(672	)			—
Adjustment to contingent consideration			520				—
Stock-based compensation			5,309				3,776
Decrease in deferred income taxes			(560	)			(1,757	)
Change in value of equity investments, net			(103	)			(281	)
Net foreign currency adjustments			(330	)			(711	)
Loss from equity method investment			388				80
Adjustment to bargain purchase gain on business acquisition			(171	)			—
Changes in assets and liabilities associated with operations:
Increase in net receivables			(42,979	)			(5,089	)
Increase in inventories			(4,325	)			(16,941	)
Increase in prepaid expenses and other assets			(2,194	)			(532	)
Decrease in income tax receivable			2,031				873
Increase in net operating lease liability			183				14
Increase (decrease) in accounts payable			7,769				(1,759	)
Decrease in deferred revenue			(38,272	)			(1,079	)
Increase in accrued program costs			33,982				20,058
Increase (decrease) in other payables and accrued expenses			4,025				(2,117	)
Net cash (used in) provided by operating activities			(174	)			20,424
Cash flows from investing activities:
Capital expenditures			(7,963	)			(8,988	)
Acquisition of product line			(10,000	)			—
Intangible assets			(285	)			(3,942	)
Investments			(183	)			(1,190	)
Net cash used in investing activities			(18,431	)			(14,120	)
Cash flows from financing activities:
Net borrowings under line of credit agreement			28,592				377
Payment of contingent consideration			(250	)			(1,227	)
Net payments from the issuance of common stock (sale of stock under ESPP, exercise of stock options, and shares purchased for tax withholding)			(2,000	)			(1,064	)
Repurchase of common stock			(4,579	)			—
Payment of cash dividends			(1,789	)			(1,168	)
Net cash provided by (used in) financing activities			19,974				(3,082	)
Net increase in cash and cash equivalents			1,369				3,222
Effect of exchange rate changes on cash and cash equivalents			(574	)			(222	)
Cash and cash equivalents at beginning of period			15,923				6,581
Cash and cash equivalents at end of period		$	16,718			$	9,581
Supplemental cash flow information:
Cash paid during the period for:
Interest		$	2,839			$	3,960
Income taxes, net		$	3,836			$	2,868
Non-cash transactions:
ROU assets exchanged for lease liabilities		$	17,872			$	4,895
Cash dividends declared and included in accrued expenses		$	594			$	—

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
For the three- and nine-months September 30, 2021 and 2020
(Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Net income attributable to American Vanguard, as reported		$	5,498			$	2,927			$	13,713			$	7,334
Provision for income taxes			1,517				492				5,324				1,852
Interest expense, net			962				1,022				2,921				3,804
Depreciation and amortization			7,285				5,920				20,026				17,550
EBITDA2		$	15,262			$	10,361			$	41,984			$	30,540

__________________________

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, 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 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, 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 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/20211108006047/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 (212) 836-9611

Lcati@equityny.com

Source: American Vanguard Corporation

FAQ

What were American Vanguard's Q3 2021 earnings results for AVD?

American Vanguard reported Q3 2021 net sales of $147 million, net income of $5.5 million, and earnings per share of $0.18.

How did American Vanguard perform in the first nine months of 2021?

In the first nine months of 2021, American Vanguard's net sales increased to $398 million, net income rose to $13.7 million, and earnings per share were $0.45.

What were the main factors driving growth for AVD in 2021?

Growth was driven by strong crop commodity prices, favorable weather, and increased demand in both the US crop and Non-Crop segments.

What guidance did American Vanguard provide after Q3 2021?

American Vanguard expects strong sales and earnings performance to continue, surpassing last year's results.