Q3 Sales in line with prior year, Rebound
Expected in Q4, Transformation Plan Underway
American Vanguard Corporation (NYSE: AVD) today announced
financial results for the third quarter and nine months ended
September 30, 2023, and a transformation plan for future growth,
operational efficiency and profitability.
Flat Quarterly Sales in Spite of Global Destocking
Chairman and CEO, Eric Wintemute stated: “With respect to our
financial performance, in spite of global destocking by customers
to limit inventory carrying costs, we recorded sales that were
about even with those of the prior year quarter. With channel
inventory at historic lows, sales of our premier corn soil
insecticide Aztec were strong, as were those of soil fumigants used
on high-value crops in the Pacific Northwest. Within our US
non-crop business, we are seeing more normalized trends in nursery,
ornamental and professional products. Our International businesses
are still feeling the effects of low-priced generic products in
certain regions (especially Central America), while Mexico and
Australia remain strong.”
3 Months Ended
September 30, 2023
September 30, 2022
Net sales
$
149,516
$
152,267
Net income (loss)
$
(325
)
$
6,741
EPS
$
(0.01
)
$
0.23
Adjusted EBITDA
$
11,364
$
18,912
9 Months Ended
September 30, 2023
September 30, 2022
Net sales
$
407,191
$
450,063
Net income
$
540
$
23,506
EPS
$
0.02
$
0.78
Adjusted EBITDA
$
33,536
$
61,435
Fourth Quarter Expected to Rebound
Mr. Wintemute added, “As we reported in our last earnings call,
we anticipate improved sales and profitability in the fourth
quarter as compared to the first nine months of this fiscal year.
Even now, early in the quarter, we are experiencing strong sales,
particularly within our US Crop business. This is the quarter in
which many of our customers make commitments in order to qualify
for program discounts, including early pay. In light of stronger US
crop demand, more normalized US non-crop demand and continued
international pressure, we are targeting full year financial
performance as per the table below.”
Metric
2023 Range
2022 Actual
Net sales
$580MM - $590MM
$610MM
Gross margin %
30% - 32%
32%
Adjusted EBITDA
$55MM - $59MM
$73.0MM
Company Announces Three-Part Transformation Plan for Growth
and Profitability
Mr. Wintemute continued, “We are committed to returning greater
value to investors despite current market conditions. To that end,
members of the board and senior management have developed a
three-pronged plan to improve operating leverage and align people
and processes with enhanced profit. First, we have taken time
one-on-one with each functional group to scrutinize operating
expenses and identified approximately $15 million in operating
profit and interest savings to which we will be holding our
managers accountable. These measures include enhanced working
capital management, greater factory efficiency, reduced operating
expenses, decreases in freight and raw materials expense and lower
debt and interest expense.”
“Second, working with our ERP sponsor, QAD, and global business
consultant, Kearney, we are implementing a complete digital
transformation across all business centers and processes. Through
this initiative, we will improve data integrity, enhance accounting
efficiency and improve management reporting so that we can make
faster, better-informed decisions in the face of volatile markets,
supply chains, climate and geopolitical shifts.”
“Third, we are launching an organizational transformation in
which we evaluate how we are structured, how we are incentivized to
operate and how we can best gain the greatest efficiencies and
operating leverage. To that end, the Company has initiated a search
(led by our newly-appointed Senior Vice President of Human
Resources, Shirin Khosravi) for a Chief Transformation Officer who,
working with both our internal team and external consultants, will
lead the transformation project, recommend and implement
appropriate changes and define key performance indicators to
achieve better business results.”
2024 Targets Significant Improvement
Mr. Wintemute continued, “There is a general sense of optimism
for 2024 within the Agriculture industry. Commodity prices remain
relatively stable, the farm economy is sound, interest rates appear
to have peaked, and we have observed strong demand for proprietary
products, of which we have many in our portfolio. For that reason,
we are targeting 8% - 12% growth in sales and 25% - 35% growth in
adjusted EBITDA for full year 2024. We will provide greater clarity
on our outlook for 2024 and beyond this January.”
Concluding Thoughts
Mr. Wintemute stated further, “In light of higher interest
expense and in order to ensure that we have ample borrowing
capacity from our senior credit facility, we reached out to our
senior lenders, led by BMO, to negotiate an expansion of our
financial covenants. I am pleased to report that our senior lenders
were, as usual, very supportive and have agreed to an amendment
that gives us a secure runway through September 2024. We thank BMO
and our other lenders for their support.”
Mr. Wintemute concluded, “Times like this call for more effort,
more innovation and more openness to change. We will continue to
draw from our experience to provide high value products to our
customers, to exercise strict financial discipline and to invest in
our digital platform while transforming our global business into an
optimized, agile and efficient enterprise. Please join us for our
upcoming earnings call, during which we will give you more detail
on our plans, our performance and our outlook.”
Conference Call
Eric Wintemute, Chairman & CEO and David T. Johnson, VP
& CFO, will conduct a conference call focusing on the financial
results and strategic themes at 5 pm ET on November 8, 2023.
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, manufactures, and
markets solutions for crop protection and nutrition, turf and
ornamentals management, commercial and consumer pest control. 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 130 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 in 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
September 30, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
11,529
$
20,328
Receivables:
Trade, net of allowance for doubtful
accounts of $6,274 and $5,136, respectively
185,619
156,492
Other
11,919
9,816
Total receivables, net
197,538
166,308
Inventories
247,932
184,190
Prepaid expenses
8,517
15,850
Income taxes receivable
6,071
1,891
Total current assets
471,587
388,567
Property, plant and equipment, net
73,205
70,912
Operating lease right-of-use assets,
net
22,907
24,250
Intangible assets, net
174,918
184,664
Goodwill
47,426
47,010
Other assets
12,435
10,769
Deferred income tax assets, net
366
141
Total assets
$
802,844
$
726,313
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
71,054
$
69,000
Customer prepayments
5,998
110,597
Accrued program costs
90,367
60,743
Accrued expenses and other payables
16,555
20,982
Current operating lease liabilities
5,553
5,279
Total current liabilities
189,527
266,601
Long-term debt, net
218,000
51,477
Long-term operating lease liabilities
18,102
19,492
Other liabilities, net of current
installments
4,805
4,167
Deferred income tax liabilities, net
13,709
14,597
Total liabilities
444,143
356,334
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 34,666,431 shares at September
30, 2023 and 34,446,194 shares at December 31, 2022
3,467
3,444
Additional paid-in capital
108,937
105,634
Accumulated other comprehensive loss
(9,254
)
(12,182
)
Retained earnings
326,752
328,745
Less treasury stock at cost, 5,915,182
shares at September 30, 2023 and 5,029,892 shares at December 31,
2022
(71,201
)
(55,662
)
Total stockholders’ equity
358,701
369,979
Total liabilities and stockholders'
equity
$
802,844
$
726,313
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,
2023
2022
2023
2022
Net sales
$
149,516
$
152,267
$
407,191
$
450,063
Cost of sales
(106,432
)
(102,629
)
(282,662
)
(299,698
)
Gross profit
43,084
49,638
124,529
150,365
Operating expenses
(38,893
)
(38,394
)
(113,317
)
(113,559
)
Operating income
4,191
11,244
11,212
36,806
Change in fair value of equity
investments
(247
)
(454
)
(324
)
(857
)
Interest expense, net
(3,384
)
(1,086
)
(8,282
)
(2,256
)
Income before provision for income
taxes
560
9,704
2,606
33,693
Income tax expense
(885
)
(2,963
)
(2,066
)
(10,187
)
Net income (loss)
$
(325
)
$
6,741
$
540
$
23,506
Net income (loss) per common
share—basic
$
(.01
)
$
.23
$
.02
$
.80
Net income (loss) per common
share—assuming dilution
$
(.01
)
$
.23
$
.02
$
.78
Weighted average shares
outstanding—basic
27,919
29,214
28,236
29,496
Weighted average shares
outstanding—assuming dilution
27,919
29,805
28,656
30,128
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
ANALYSIS OF SALES
(In thousands)
(Unaudited)
Quarter Ended September 30,
2023 and 2022:
2023
2022
Change
% Change
Net sales:
U.S. crop
$
67,749
$
69,101
$
(1,352
)
-2
%
U.S. non-crop
19,250
18,946
304
2
%
Total U.S.
86,999
88,047
(1,048
)
-1
%
International
62,517
64,220
(1,703
)
-3
%
Total net sales
149,516
152,267
(2,751
)
-2
%
Total cost of sales
(106,432
)
(102,629
)
(3,803
)
4
%
Total gross profit
$
43,084
$
49,638
$
(6,554
)
-13
%
Total gross margin
29
%
33
%
Nine months ended September
30, 2023, and 2022
2023
2022
Change
% Change
Net sales:
U.S. crop
$
185,823
$
220,303
$
(34,480
)
-16
%
U.S. non-crop
50,041
53,844
(3,803
)
-7
%
Total U.S.
235,864
274,147
(38,283
)
-14
%
International
171,327
175,916
(4,589
)
-3
%
Total net sales
407,191
450,063
(42,872
)
-10
%
Total cost of sales
(282,662
)
(299,698
)
17,036
-6
%
Total gross profit
$
124,529
$
150,365
$
(25,836
)
-17
%
Total gross margin
31
%
33
%
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Nine Months
Ended
September 30,
2023
2022
Cash flows from operating activities:
Net income
$
540
$
23,506
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization of property,
plant and equipment
6,396
6,207
Amortization of intangibles assets
10,009
10,442
Amortization of other long-term assets
1,445
2,656
Loss on disposal of property, plant and
equipment
7
265
Accretion of discounted liabilities
—
28
Amortization of deferred loan fees
174
174
Provision for bad debts
952
597
Fair value adjustment to contingent
consideration
—
621
Stock-based compensation
4,257
4,396
Change in deferred income taxes
(977
)
(64
)
Changes in liabilities for uncertain tax
positions or unrecognized tax benefits
467
—
Change in fair value of equity
investments
324
857
Net foreign currency adjustments
199
218
Changes in assets and liabilities
associated with operations:
Increase in net receivables
(29,055
)
(46,289
)
Increase in inventories
(58,163
)
(38,987
)
Increase in prepaid expenses and other
assets
(633
)
(4,272
)
Increase in income tax receivable/payable,
net
(4,046
)
(5,201
)
Increase in net operating lease
liability
227
10
Increase in accounts payable
1,240
14,418
Decrease in customer prepayments
(104,590
)
(62,831
)
Increase in accrued program costs
29,779
45,016
(Decrease) increase in other payables and
accrued expenses
(4,406
)
2,555
Net cash used in operating activities
(145,854
)
(45,678
)
Cash flows from investing activities:
Capital expenditures
(8,589
)
(8,946
)
Proceeds from disposal of property, plant
and equipment
200
46
Intangible assets
(759
)
(1,078
)
Net cash used in investing activities
(9,148
)
(9,978
)
Cash flows from financing activities:
Payments under line of credit
agreement
(62,800
)
(64,000
)
Borrowings under line of credit
agreement
228,500
160,000
Net receipt from the issuance of common
stock under ESPP
980
837
Net receipt from the exercise of stock
options
46
783
Payment for tax withholding on stock-based
compensation awards
(1,957
)
(2,020
)
Repurchase of common stock
(15,539
)
(33,731
)
Payment of cash dividends
(2,550
)
(2,072
)
Net cash provided by financing
activities
146,680
59,797
Net (decrease) increase in cash and cash
equivalents
(8,322
)
4,141
Effect of exchange rate changes on cash
and cash equivalents
(477
)
382
Cash and cash equivalents at beginning of
period
20,328
16,285
Cash and cash equivalents at end of
period
$
11,529
$
20,808
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED EBITDA
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net income (loss)
$
(325
)
$
6,741
$
540
$
23,506
Provision for income taxes
885
2,963
2,066
10,187
Interest expense, net
3,384
1,086
8,282
2,256
Depreciation and amortization
5,704
6,562
17,850
19,305
Stock compensation
1,716
1,560
4,257
4,396
Proxy contest activities
-
-
541
1,785
Adjusted EBITDA1
$
11,364
$
18,912
$
33,536
$
61,435
____________________________
1 Adjusted earnings before interest,
taxes, depreciation, amortization, non-cash stock compensation, and
proxy contest activities. 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 (loss), 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. We provide these measures because we believe that they
provide helpful comparisons to other companies in our industry and
peer group. 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/20231108203809/en/
Company Contact: American Vanguard Corporation William A. Kuser,
Director of Investor Relations (949) 260-1200
williamk@amvac.com
Investor Representative the Equity Group Inc.
www.theequitygroup.com Lena Cati (212) 836-9611
lcati@equityny.com
American Vanguard (NYSE:AVD)
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から 4 2024 まで 5 2024
American Vanguard (NYSE:AVD)
過去 株価チャート
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