American Vanguard Reports Q1 2024 Results

Adjusted EBITDA up 35%, Operating Income up 87%

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Highlights – versus First Quarter 2023:

• Net sales of $135 million vs. $125 million
• Adjusted EBITDA¹ of $15.5 million vs. $11.5 million
• Operating Income of $6.1 million vs. $3.3 million
• Net income of $1.6 million vs. $1.9 million
• Earnings per diluted share of $0.06 vs. $0.07

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We attained improved operating leverage with a significant increase in adjusted EBITDA and operating income, during the first quarter as compared to last year. This is due in part to our cost control initiatives, on account of which our operating expenses reduced as a percent of net sales, even after including our transformation costs. We expect to gain greater efficiencies through our transformation program which we have begun in earnest and which we expect will generate an additional $15 million of adjusted EBITDA on an annualized basis by 2026.”

He continued, “Further, it is pleasing to note that we experienced growth in all three businesses, US Crop, US Non-crop and International. Within US Crop, we recorded strong sales of granular soil insecticides (in light of a stable farm economy), herbicides (in part due to seasonal demand and favorable weather conditions) and cotton and peanut products (driven by increased planted acres for those crops). The destocking initiatives from last year have begun to subside to a degree; however, the distribution channel is still exercising conservatism in their procurement approach.”

Mr. Wintemute continued, “Within US Non-crop, we experienced significantly higher sales, led by our mosquito adulticides (in anticipation of tropical storm activity), pest strips (with a resurgence in consumer and technical sales) and our OHP products for nursery and ornamental uses. Our International business recorded moderately higher sales, led by Mexico and APAC, despite continued overstocking of generic products in other regions. All in, we are encouraged by the resiliency of our markets during the quarter.”

Mr. Wintemute concluded, “Market conditions remain stable with a strong farm economy and a more relaxed procurement approach within the distribution channel compared to last year. That said, in light of concerns raised by USEPA, we have voluntarily suspended sales of our herbicide Dacthal pending potential approval of a label that we believe should answer the agency’s concerns. In light of these factors, we are adjusting our annual targets to achieve an increase in net sales of between 6% and 9% year over year and are setting our adjusted EBITDA target to $60 - $70 million. 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 4:15 pm ET on Thursday, May 9, 2024. 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. Over the past 20 years, through product and business acquisitions, the Company has expanded its operations into 21 countries and now has over 1,000 product registrations in 56 nations worldwide. Its strategy rests on three growth initiatives – i) Core Business (through innovation of conventional products), ii) Green Solutions (with over 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products) and iii) Precision Agriculture innovation (including SIMPAS prescriptive application and Ultimus measure/record/verify technologies). American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. 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	March 31, 2024			December 31, 2023
Current assets:
Cash	$	13,709		$	11,416
Receivables:
Trade, net of allowance for credit losses of $7,798 and $7,107, respectively		187,197			182,613
Other		7,395			8,356
Total receivables, net		194,592			190,969
Inventories		228,309			219,551
Prepaid expenses		7,446			6,261
Income taxes receivable		2,889			3,824
Total current assets		446,945			432,021
Property, plant and equipment, net		75,909			74,560
Operating lease right-of-use assets, net		23,084			22,417
Intangible assets, net of amortization		168,723			172,508
Goodwill		50,469			51,199
Deferred income tax assets		3,307			2,849
Other assets		13,188			11,994
Total assets	$	781,625		$	767,548
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	64,642		$	68,833
Customer prepayments		28,520			65,560
Accrued program costs		74,343			68,076
Accrued expenses and other payables		15,927			16,354
Operating lease liabilities, current		6,358			6,081
Income taxes payable		5,633			5,591
Total current liabilities		195,423			230,495
Long-term debt, net		187,017			138,900
Operating lease liabilities, long term		17,407			17,113
Deferred income tax liabilities		7,157			7,892
Other liabilities		3,038			3,138
Total liabilities		410,042			397,538
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 34,754,634 shares at March 31, 2024 and 34,676,787 shares at December 31, 2023		3,475			3,467
Additional paid-in capital		113,223			110,810
Accumulated other comprehensive loss		(7,527	)		(5,963	)
Retained earnings		333,613			332,897
Less treasury stock at cost, 5,915,182 shares at March 31, 2024 and December 31, 2023		(71,201	)		(71,201	)
Total stockholders’ equity		371,583			370,010
Total liabilities and stockholders’ equity	$	781,625		$	767,548

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
	For the three months ended March 31
	2024			2023
Net sales	$	135,143		$	124,885
Cost of sales		(92,725	)		(86,348	)
Gross profit		42,418			38,537
Operating expenses
Selling, general and administrative		(30,621	)		(26,402	)
Research, product development and regulatory		(5,706	)		(8,870	)
Operating income		6,091			3,265
Change in fair value of an equity investment		638			(22	)
Interest expense, net		(3,693	)		(1,686	)
Income before provision for income taxes		3,036			1,557
Income tax (expense) benefit		(1,484	)		361
Net income	$	1,552		$	1,918
Earnings per common share—basic	$	0.06		$	0.07
Earnings per common share—assuming dilution	$	0.06		$	0.07
Weighted average shares outstanding—basic		27,844			28,367
Weighted average shares outstanding—assuming dilution		28,128			29,073

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES ANALYSIS OF SALES (Unaudited)
	For the three months ended March 31,
	2024			2023			Change			% Change
Net sales:
U.S. crop	$	67,257		$	61,876		$	5,381			9	%
U.S. non-crop		17,768			13,899			3,869			28	%
Total U.S.		85,025			75,775			9,250			12	%
International		50,118			49,110			1,008			2	%
Total net sales	$	135,143		$	124,885		$	10,258			8	%
Total cost of sales	$	(92,725	)	$	(86,348	)	$	(6,377	)		7	%
Total gross profit	$	42,418		$	38,537		$	3,881			10	%
Total gross margin		31	%		31	%

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	For the three months ended March 31
	2024			2023
Cash flows from operating activities:
Net income	$	1,552		$	1,918
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment and intangible assets		5,441			5,539
Amortization of other long-term assets		189			714
Provision for bad debts		700			581
Stock-based compensation		2,005			1,474
Change in deferred income taxes		(1,025	)		122
Change in liabilities for uncertain tax positions or unrecognized tax benefits		35			371
Change in equity investment fair value		(638	)		22
Other		(5	)		72
Foreign currency transaction gains		(373	)		(446	)
Changes in assets and liabilities associated with operations:
Increase in net receivables		(5,579	)		(8,779	)
Increase in inventories		(9,353	)		(33,731	)
Increase (decrease) in prepaid expenses and other assets		(1,466	)		600
Change in income tax receivable/payable, net		1,014			(2,965	)
(Decrease) increase in accounts payable		(3,951	)		5,655
Decrease in customer prepayments		(37,037	)		(22,759	)
Increase in accrued program costs		6,399			10,660
Decrease in other payables and accrued expenses		(332	)		(500	)
Net cash used in operating activities		(42,424	)		(41,452	)
Cash flows from investing activities:
Capital expenditures		(3,565	)		(2,590	)
Proceeds from disposal of property, plant and equipment		23			—
Acquisition of a product line		—			(703	)
Intangible assets		(25	)		(15	)
Net cash used in investing activities		(3,567	)		(3,308	)
Cash flows from financing activities:
Payments under line of credit agreement		(35,346	)		(27,300	)
Borrowings under line of credit agreement		83,463			72,000
Net receipt from the issuance of common stock under ESPP		430			480
Net (payment) receipt from the exercise of stock options		—			18
Net payment from common stock purchased for tax withholding		(14	)		(13	)
Repurchase of common stock		—			(557	)
Payment of cash dividends		(834	)		(851	)
Net cash provided by financing activities		47,699			43,777
Net increase (decrease) in cash		1,708			(983	)
Effect of exchange rate changes on cash and cash equivalents		585			223
Cash at beginning of period		11,416			20,328
Cash at end of period	$	13,709		$	19,568

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA (In thousands) (Unaudited)
Reconciliation of Net Income to EBITDA	March 31, 2024		March 31, 2023
Net income, as reported	$	1,552	$	1,918
Provision for income taxes		1,484		(361	)
Interest expense, net		3,693		1,686
Proxy costs		—		541
Depreciation and amortization		5,630		6,253
Stock compensation		2,005		1,474
Transformation costs		1,152		—
Adjusted EBITDA^2	$	15,516	$	11,511

______________________________
¹ Adjusted earnings before interest, taxes, depreciation, and amortization. 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 measure 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.
² Adjusted earnings before interest, taxes, depreciation, and amortization. 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 measure 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.