American Vanguard Reports Second Quarter & First Half 2021 Results and Enters Into New Credit Agreement

Rhea-AI Summary

American Vanguard Corporation (NYSE:AVD) reported significant financial growth for the second quarter and first half of 2021 compared to 2020. Net sales surged by 29% to $135 million in Q2 2021, and 25% to $251 million for mid-year. Net income climbed 32% to $5.1 million in Q2 and 86% to $8.2 million for the first half. The company successfully integrated its non-crop business and acquired AgNova, boosting Australian sales. A new $275 million Credit Facility was established to support growth. The company expects low double-digit revenue growth for 2021.

Positive

• Net sales increased 29% to $135 million in Q2 2021.
• Net income rose 32% to $5.1 million in Q2 2021.
• Earnings per share grew 31% to $0.17 in Q2 2021.
• EBITDA up 17% to $14.7 million in Q2 2021.
• Organizational integration of non-crop business completed.
• Acquisition of AgNova tripled sales in Australia.
• New $275 million Credit Facility established for growth.

Negative

• None.

American Vanguard Corporation (NYSE:AVD) today announced financial results for the second quarter and six months ended June 30, 2021.

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

• Net sales were up 29% to $135 million in 2021, compared to $105 million in 2020
• Net income was up 32% to $5.1 million in 2021, compared to $3.9 million in 2020
• Earnings per diluted share were up 31% to $0.17 in 2021, compared to $0.13 in 2020
• EBITDA¹ was up 17% to $14.7 million in 2021, compared to $12.6 million in 2020
• On August 5^th, 2021, the Company executed a new $275 million Credit Facility agreement

Fiscal 2021 Mid-Year Financial Highlights – versus Fiscal 2020 Mid-year:

• Net sales were up 25% to $251 million in 2021, compared to $201 million in 2020
• Net income was up 86% to $8.2 million in 2021, compared to $4.4 million in 2020
• Earnings per diluted share were up 80% to $0.27 in 2021, compared to $0.15 in 2020
• EBITDA was up 32% to $26.7 million in 2021, compared to $20.2 million in 2020

Eric Wintemute, Chairman and CEO of American Vanguard stated: “At the midpoint of 2021, we continue to see stronger market demand which has translated into improved growth and financial performance both domestically and abroad. Compared to our 2020 results, US Crop posted a 40% gain in net sales during the second quarter and 24% for the first half; US Non-Crop rose 54% in the quarter and 56% year-to-date; and International gained 10% quarterly and 17% through mid-year. Gross profit margins during the second quarter remained solid, at 44% for the US and a much improved 31% for our international business. The 29% improvement in overall net sales performance during the quarter was surpassed by a 32% increase in net income during that period.”

Mr. Wintemute continued: “In addition to recording improved financial performance during the second quarter, we accomplished three important milestones. Organizationally, we successfully integrated our non-crop business into a single management entity branded AMGUARD. Further, we completed the integration of our newly acquired entity, AgNova, into our Australian business, which has tripled our sales in that country. In addition, we negotiated a new credit facility with our bank consortium (to replace our existing facility) that provides expanded funding (up to $275 million plus a $150 million accordion) and flexibility for continued growth through acquisition, expansion of our green solutions portfolio, and investment in precision application technology.”

Mr. Wintemute concluded: “Looking forward, we believe that our Company is well positioned in both domestic and international markets. Assuming favorable market and pandemic trends, we maintain our previous outlook for 2021 with low double-digit revenue growth and comparatively stronger growth in both net income and EBITDA. These factors, coupled with well-managed operating expenses, should further strengthen our balance sheet. 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 4:30 pm ET on August 9, 2021. Interested parties may participate in the call by dialing (201) 493-6744. Please call 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, the coronavirus pandemic, 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
		June 30, 2021				December 31, 2020
Current assets:
Cash and cash equivalents		$	19,559			$	15,923
Receivables:
Trade, net of allowance for doubtful accounts of $4,138 and $3,297, respectively			152,031				130,029
Other			10,766				8,444
Total receivables, net			162,797				138,473
Inventories, net			175,151				163,784
Prepaid expenses			13,896				10,499
Income taxes receivable			1,679				3,046
Total current assets			373,082				331,725
Property, plant and equipment, net			66,533				65,382
Operating lease right-of-use assets			21,601				12,198
Intangible assets, net of amortization			195,655				197,514
Goodwill			48,154				52,108
Other assets			27,678				18,602
Deferred income tax assets, net			2,739				2,764
Total assets		$	735,442			$	680,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other liabilities		$	1,629			$	2,647
Accounts payable			65,073				59,253
Deferred revenue			13,205				43,611
Accrued program costs			64,534				45,441
Accrued expenses and other payables			17,441				16,184
Operating lease liabilities, current			3,993				4,188
Total current liabilities			165,875				171,324
Long-term debt, net of deferred loan fees			149,378				107,442
Operating lease liabilities, long-term			17,655				8,177
Other liabilities, excluding current installments			8,209				9,054
Deferred income tax liabilities			24,954				23,560
Total liabilities			366,071				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 34,261,651 shares at June 30, 2021 and 33,922,433 shares at December 31, 2020			3,428				3,394
Additional paid-in capital			97,813				96,642
Accumulated other comprehensive loss			(8,911	)			(9,322	)
Retained earnings			295,201				288,182
			387,531				378,896
Less treasury stock at cost, 3,061,040 shares at June 30, 2021 and December 31, 2020			(18,160	)			(18,160	)
Total stockholders’ equity			369,371				360,736
Total liabilities and stockholders' equity		$	735,442			$	680,293

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2021				2020				2021				2020
Net sales		$	134,610			$	104,555			$	250,765			$	200,517
Cost of sales			(82,471	)			(64,249	)			(153,495	)			(121,830	)
Gross profit			52,139				40,306				97,270				78,687
Operating expenses			(43,080	)			(33,579	)			(84,524	)			(70,124	)
Adjustment to bargain purchase gain on business acquisition			(88	)			—				(121	)			—
Operating income			8,971				6,727				12,625				8,563
Change in fair value of an equity investment			(295	)			24				771				24
Other income			—				—				672				—
Interest expense, net			(1,013	)			(1,274	)			(1,959	)			(2,782	)
Income before provision for income taxes and loss on equity method investment			7,663				5,477				12,109				5,805
Income tax expense			(2,445	)			(1,565	)			(3,807	)			(1,360	)
Income before loss on equity method investment			5,218				3,912				8,302				4,445
Loss from equity method investment			(74	)			(25	)			(87	)			(38	)
Net income		$	5,144			$	3,887			$	8,215			$	4,407
Earnings per common share—basic		$	.17			$	.13			$	.28			$	.15
Earnings per common share—assuming dilution		$	.17			$	.13			$	.27			$	.15
Weighted average shares outstanding—basic			29,930				29,413				29,834				29,350
Weighted average shares outstanding—assuming dilution			30,499				29,854				30,511				29,904

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(In thousands)
(Unaudited)
		For the three months ended June 30,
		2021			2020			Change			% Change
Net sales:
U.S. crop		$	62,575		$	44,670		$	17,905		40	%
U.S. non-crop			21,488			13,872			7,616		55	%
U.S. total			84,063			58,542			25,521		44	%
International			50,547			46,013			4,534		10	%
Net sales:		$	134,610		$	104,555		$	30,055		29	%
Gross profit:
U.S. crop		$	26,805		$	21,758		$	5,047		23	%
U.S. non-crop			9,782			7,029			2,753		39	%
U.S. total			36,587			28,787			7,800		27	%
International			15,552			11,519			4,033		35	%
Total gross profit:		$	52,139		$	40,306		$	11,833		29	%

		For the six months ended June 30,
		2021			2020			Change			% Change
Net sales:
U.S. crop		$	117,330		$	95,032		$	22,298		23	%
U.S. non-crop			38,941			24,865			14,076		57	%
U.S. total			156,271			119,897			36,374		30	%
International			94,494			80,620			13,874		17	%
Net sales:		$	250,765		$	200,517		$	50,248		25	%
Gross profit:
U.S. crop		$	48,076		$	46,003		$	2,073		5	%
U.S. non-crop			19,165			11,748			7,417		63	%
U.S. total			67,241			57,751			9,490		16	%
International			30,029			20,936			9,093		43	%
Total gross profit:		$	97,270		$	78,687		$	18,583		24	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands), (Unaudited)
		For the Six Months Ended June 30,
		2021				2020
Cash flows from operating activities:
Net income		$	8,215			$	4,407
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			10,697				9,665
Amortization of other long-term assets			2,044				1,965
Accretion of discounted liabilities			(9	)			7
Amortization of deferred loan fees			162				139
Provision for bad debts			945				392
Loan principal and interest forgiveness			(672	)			—
Adjustment to contingent consideration			1,014				—
Stock-based compensation			3,598				2,545
Change in deferred income taxes			(353	)			(1,562	)
Change in fair value of an equity investment			(771	)			—
Net foreign currency adjustments			(147	)			594
Loss from equity method investment			87				38
Adjustment to bargain purchase gain on business acquisition			121				—
Changes in assets and liabilities associated with operations:
(Increase) decrease in net receivables			(25,317	)			16,421
Increase in inventories			(11,464	)			(21,706	)
Increase in prepaid expenses and other assets			(3,696	)			(2,297	)
Decrease in income tax receivable			1,374				899
(Decrease) increase in net operating lease liability			(120	)			7
Increase (decrease) in accounts payable			6,190				(12,351	)
Decrease in deferred revenue			(30,407	)			(2,431	)
Increase in accrued program costs			19,098				12,577
Increase (decrease) in other payables and accrued expenses			507				(2,394	)
Net cash (used in) provided by operating activities			(18,904	)			6,915
Cash flows from investing activities:
Capital expenditures			(5,075	)			(6,386	)
Acquisition of product lines			(10,000	)			—
Intangible assets			(241	)			(3,889	)
Investments			(184	)			(1,190	)
Net cash used in investing activities			(15,500	)			(11,465	)
Cash flows from financing activities:
Net borrowings under line of credit agreement			41,774				10,502
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)			(2,393	)			(2,123	)
Payment of cash dividends			(1,189	)			(1,168	)
Net cash provided by financing activities			37,942				5,984
Net increase in cash and cash equivalents			3,538				1,434
Effect of exchange rate changes on cash and cash equivalents			98				585
Cash and cash equivalents at beginning of period			15,923				6,581
Cash and cash equivalents at end of period		$	19,559			$	8,600
Supplemental cash flow information:
Cash paid during the period for:
Interest		$	1,873			$	2,902
Income taxes, net		$	2,757			$	1,901
Non-cash transactions:
ROU assets exchanged for lease liabilities		$	12,067			$	1,502

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
For the three and six months June 30, 2021 and 2020
(Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020
Net income, as reported		$	5,144		$	3,887		$	8,215		$	4,407
Provision for income taxes			2,445			1,565			3,807			1,360
Interest expense, net			1,013			1,274			1,959			2,782
Depreciation and amortization			6,138			5,901			12,741			11,630
EBITDA2		$	14,740		$	12,627		$	26,722		$	20,179

___________________
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.

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FAQ

What are American Vanguard's recent financial results for Q2 2021?

American Vanguard reported net sales of $135 million, a 29% increase compared to Q2 2020, with net income rising to $5.1 million.

What is the earnings per share for American Vanguard in Q2 2021?

Earnings per diluted share for Q2 2021 were $0.17, up 31% from $0.13 in Q2 2020.

What milestones did American Vanguard achieve in 2021?

The company completed the integration of its non-crop business and acquired AgNova, significantly increasing sales in Australia.

What is the financial outlook for American Vanguard in 2021?

The company maintains a forecast of low double-digit revenue growth and stronger growth in net income and EBITDA, assuming favorable market trends.

How much is American Vanguard's new credit facility?

American Vanguard executed a new $275 million Credit Facility to support its growth.