American Vanguard Reports Full Year 2022 Results

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 EBITDA^1	$	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

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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.