AVD American Vanguard Corporation

Reiterating full-year 2024 Adj. EBITDA guidance Non-Crop Revenues Grew 17%; Green Solutions Revenues Grew 18% Y/o/Y

Business transformation continues to accelerate, raising expected annual benefit to $20 million Company reduced debt by $32.5 million

American Vanguard® Company, a diversified specialty and agricultural products company that develops, manufactures, and markets solutions for crop protection and nutrition, turf and ornamental management and commercial pest control, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial and Operational Highlights – versus Third Quarter 2023:

• Net sales of $118.3 million ($130.7 million when excluding Dacthal product recall impact) v. $149.5 million;
• Adjusted EBITDA1 of $1.8 million v. $11.4 million;
• Maintaining full-year 2024 Adjusted EBITDA guidance of $40 million to $50 million
• EPS of $(0.92) v. ($0.01)
• Decreased debt by $32.5 million from $211.3 million in the previous quarter

First nine months 2024 Financial and Operational Highlights – versus first nine months 2023:

• Net sales of $381.7 million ($394.1 million when excluding Dacthal product recall impact) v. $407.2 million;
• Adjusted EBITDA of $23.3 million v. $33.5 million;
• EPS of $(1.28) v. $0.02

Other Highlights:

• Raising expected full-year transformation related benefits to $20 million from $15 million
• The Board is actively engaged in recruiting a CEO to build upon the transformation momentum

Timothy J. Donnelly, Acting CEO of American Vanguard, stated “We remain focused on transforming our Company into an efficient, reliable and profitable supplier to the Ag industry. We are pleased with the results that we are beginning to see from our business transformation. While we continue to manage through macroeconomic headwinds, we are seeing pockets of strength. For example, our non-crop business grew 17% as compared to the year ago period, and our green solutions portfolio grew 18% as compared to the year ago period. The growth in these areas was offset by pressure from generics, but the single biggest factor was a significant drop in Aztec sales year over year. Sales in 2023 were unusually high as a result of a previous supply shortage.”

Mr. Donnelly continued, “As we transform the business, we are incurring one-time charges associated with positioning American Vanguard for longer-term growth. During the quarter we incurred a $8.1 million transformation charge. Additionally, during the quarter we recorded a $16.2 million charge associated with the collection and disposal of Dacthal. The Company benefitted from this profitable product for many years, and we are now taking the necessary steps to safely recall and dispose of it.”

David T. Johnson, Vice President, CFO and Treasurer, stated “Despite the macro headwinds, the Company remains steadfast in its transformation roadmap, which presents a clear path towards achieving a 15% adjusted-EBITDA margin across the ag-cycle. We are pleased to have been able to pay down a material amount of debt during the quarter, decreasing our long-term debt to $179 million from $211 million at the end of the previous quarter. We expect to further improve our liquidity as we decrease our inventory in our seasonally strong 4th quarter. We remain optimistic that we can decrease inventory to 34% of sales by year end, down $25 million versus last year. We are pleased with the hard work of our employees in pursuing the business transformation projects. Furthermore, through their hard work we were able to reduce operating expenses, excluding transformation costs, for both the three month and nine month periods ended September 30, 2024, as compared to the prior year period.”

Mark Bassett, a board member who is temporarily working with the Company’s Office of the CEO commented, “Within our transformation, we are encouraged by the initial progress that we have made and see an opportunity for even greater benefits than we had originally calculated. We now expect to achieve $20 million in transformation related benefits instead of our previous estimate of $15 million.”

Dr. Bassett concluded, “I want to reiterate our full year 2024 revenue (down 2% to flat, excluding the product recall charge) and adjusted EBITDA ($40 - $50 million) targets. I view this achievement as a testament to the resiliency of this Company, especially in the wake of the current market conditions. We are focused on returning American Vanguard to a position of consistent free cash flow generation, which in the near-term will be allocated towards further deleveraging, but over the medium to long-term we expect to be able to apply these cash flows to growth opportunities.”

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 more than 1,000 product registrations in 56 nations worldwide. Its strategy rests on two growth initiatives – i) Core Business through innovation of conventional products and ii) Green Solutions with more than 120 biorational products – including fertilizers, microbials, nutritionals and non-conventional products. American Vanguard is included on the Russell 2000® and Russell 3000® Indexes. To learn more about the Company, please reference 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, 2024

 

 

December 31, 2023

 

Current assets:

 

 

 

 

 

 

Cash

 

$

11,880

 

 

$

11,416

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for credit losses of $8,661 and $7,107, respectively

 

 

146,145

 

 

 

182,613

 

Other

 

 

5,852

 

 

 

8,356

 

Total receivables, net

 

 

151,997

 

 

 

190,969

 

Inventories

 

 

246,037

 

 

 

219,551

 

Prepaid expenses

 

 

7,501

 

 

 

6,261

 

Income taxes receivable

 

 

7,690

 

 

 

3,824

 

Total current assets

 

 

425,105

 

 

 

432,021

 

Property, plant and equipment, net

 

 

73,494

 

 

 

74,560

 

Operating lease right-of-use assets, net

 

 

21,448

 

 

 

22,417

 

Intangible assets, net of amortization

 

 

164,480

 

 

 

172,508

 

Goodwill

 

 

48,012

 

 

 

51,199

 

Deferred income tax assets

 

 

12,218

 

 

 

2,849

 

Other assets

 

 

14,701

 

 

 

11,994

 

Total assets

 

$

759,458

 

 

$

767,548

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

73,557

 

 

$

68,833

 

Customer prepayments

 

 

27,183

 

 

 

65,560

 

Accrued program costs

 

 

85,665

 

 

 

68,076

 

Accrued expenses and other payables

 

 

29,066

 

 

 

16,354

 

Operating lease liabilities, current

 

 

6,604

 

 

 

6,081

 

Income taxes payable

 

 

3,229

 

 

 

5,591

 

Total current liabilities

 

 

225,304

 

 

 

230,495

 

Long-term debt

 

 

178,749

 

 

 

138,900

 

Operating lease liabilities, long term

 

 

15,574

 

 

 

17,113

 

Deferred income tax liabilities

 

 

9,167

 

 

 

7,892

 

Other liabilities

 

 

2,756

 

 

 

3,138

 

Total liabilities

 

 

431,550

 

 

 

397,538

 

Commitments and contingent liabilities (Note 12)

 

 

 

 

 

 

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 34,525,983 shares at September 30, 2024 and 34,676,787 shares at December 31, 2023

 

 

3,452

 

 

 

3,467

 

Additional paid-in capital

 

 

114,196

 

 

 

110,810

 

Accumulated other comprehensive loss

 

 

(13,849

)

 

 

(5,963

)

Retained earnings

 

 

295,310

 

 

 

332,897

 

Less treasury stock at cost, 5,915,182 shares at September 30, 2024 and December 31, 2023

 

 

(71,201

)

 

 

(71,201

)

Total stockholders’ equity

 

 

327,908

 

 

 

370,010

 

Total liabilities and stockholders’ equity

 

$

759,458

 

 

$

767,548

 

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,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net sales

 

$

118,307

 

 

$

149,516

 

 

$

381,659

 

 

$

407,191

 

Cost of sales

 

 

(101,014

)

 

 

(106,432

)

 

 

(284,185

)

 

 

(282,662

)

Gross profit

 

 

17,293

 

 

 

43,084

 

 

 

97,474

 

 

 

124,529

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

(26,365

)

 

 

(29,813

)

 

 

(86,885

)

 

 

(85,954

)

Research, product development and regulatory

 

 

(11,177

)

 

 

(9,080

)

 

 

(25,482

)

 

 

(27,363

)

Transformation

 

 

(8,139

)

 

 

—

 

 

 

(16,636

)

 

 

—

 

Operating (loss) income

 

 

(28,388

)

 

 

4,191

 

 

 

(31,529

)

 

 

11,212

 

Change in fair value of equity investment

 

 

—

 

 

 

(247

)

 

 

513

 

 

 

(324

)

Interest expense, net

 

 

(4,378

)

 

 

(3,384

)

 

 

(11,988

)

 

 

(8,282

)

(Loss) income before income tax benefit (expense)

 

 

(32,766

)

 

 

560

 

 

 

(43,004

)

 

 

2,606

 

Income tax benefit (expense)

 

 

7,024

 

 

 

(885

)

 

 

7,093

 

 

 

(2,066

)

Net (loss) income

 

$

(25,742

)

 

$

(325

)

 

$

(35,911

)

 

$

540

 

Net (loss) income per common share—basic

 

$

(0.92

)

 

$

(0.01

)

 

$

(1.28

)

 

$

0.02

 

Net (loss) income per common share—assuming dilution

 

$

(0.92

)

 

$

(0.01

)

 

$

(1.28

)

 

$

0.02

 

Weighted average shares outstanding—basic

 

 

28,009

 

 

 

27,919

 

 

 

28,015

 

 

 

28,236

 

Weighted average shares outstanding—assuming dilution

 

 

28,009

 

 

 

27,919

 

 

 

28,015

 

 

 

28,656

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

(In thousands), (Unaudited)

 

 

 

For the three months

ended September 30,

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

35,533

 

 

$

67,749

 

 

$

(32,216

)

 

 

-48

%

U.S. non-crop

 

 

22,454

 

 

 

19,250

 

 

 

3,204

 

 

 

17

%

U.S. total

 

 

57,987

 

 

 

86,999

 

 

 

(29,012

)

 

 

-33

%

International

 

 

60,320

 

 

 

62,517

 

 

 

(2,197

)

 

 

-4

%

Total net sales

 

$

118,307

 

 

$

149,516

 

 

$

(31,209

)

 

 

-21

%

Total cost of sales

 

$

(101,014

)

 

$

(106,432

)

 

$

5,418

 

 

 

-5

%

Total gross profit

 

$

17,293

 

 

$

43,084

 

 

$

(25,791

)

 

 

-60

%

Gross margin

 

 

15

%

 

 

29

%

 

 

 

 

 

 

 

 

 

 

Impact of Dacthal Recall

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

(11,783

)

 

$

—

 

 

$

(11,783

)

 

 

 

 

U.S. non-crop

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

Total U.S.

 

 

(11,783

)

 

 

—

 

 

 

(11,783

)

 

 

 

 

International

 

 

(620

)

 

 

—

 

 

 

(620

)

 

 

 

 

Total net sales

 

$

(12,403

)

 

$

—

 

 

$

(12,403

)

 

 

 

 

Total cost of sales

 

 

(3,788

)

 

 

—

 

 

 

(3,788

)

 

 

 

 

Total gross profit

 

$

(16,191

)

 

$

—

 

 

$

(16,191

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months

ended September 30,

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

% Change

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

155,075

 

 

$

185,823

 

 

$

(30,748

)

 

 

-17

%

U.S. non-crop

 

 

59,241

 

 

 

50,041

 

 

 

9,200

 

 

 

18

%

U.S. total

 

 

214,316

 

 

 

235,864

 

 

 

(21,548

)

 

 

-9

%

International

 

 

167,343

 

 

 

171,327

 

 

 

(3,984

)

 

 

-2

%

Total net sales

 

$

381,659

 

 

$

407,191

 

 

$

(25,532

)

 

 

-6

%

Total cost of sales

 

$

(284,185

)

 

$

(282,662

)

 

$

(1,523

)

 

 

1

%

Total gross profit

 

$

97,474

 

 

$

124,529

 

 

$

(27,055

)

 

 

-22

%

 

 

 

26

%

 

 

31

%

 

 

 

 

 

 

 

 

 

 

Impact of Dacthal Recall

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

 

$

(11,783

)

 

$

—

 

 

$

(11,783

)

 

 

 

 

U.S. non-crop

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

Total U.S.

 

 

(11,783

)

 

 

—

 

 

 

(11,783

)

 

 

 

 

International

 

 

(620

)

 

 

—

 

 

 

(620

)

 

 

 

 

Total net sales

 

$

(12,403

)

 

$

—

 

 

$

(12,403

)

 

 

 

 

Total cost of sales

 

 

(3,788

)

 

 

—

 

 

 

(3,788

)

 

 

 

 

Total gross profit

 

$

(16,191

)

 

$

—

 

 

$

(16,191

)

 

 

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(35,911

)

 

$

540

 

Adjustments to reconcile net (loss) income to net cash used in operating activities:

 

 

 

 

 

 

Depreciation of property, plant and equipment

 

 

6,655

 

 

 

6,396

 

Amortization of intangibles assets

 

 

9,947

 

 

 

10,009

 

Amortization of other long-term assets

 

 

199

 

 

 

1,445

 

Amortization of deferred loan fees

 

 

342

 

 

 

174

 

Provision for bad debts

 

 

1,278

 

 

 

952

 

Stock-based compensation

 

 

3,887

 

 

 

4,257

 

Change in deferred income taxes

 

 

(9,110

)

 

 

(977

)

Changes in liabilities for uncertain tax positions or unrecognized tax benefits

 

 

106

 

 

 

467

 

Change in equity investment fair value

 

 

(513

)

 

 

324

 

Other

 

 

110

 

 

 

7

 

Foreign currency transaction losses

 

 

121

 

 

 

199

 

Changes in assets and liabilities associated with operations:

 

 

 

 

 

 

Decrease (increase) in net receivables

 

 

33,475

 

 

 

(29,055

)

Increase in inventories

 

 

(29,429

)

 

 

(58,163

)

Increase in prepaid expenses and other assets

 

 

(4,107

)

 

 

(633

)

Change in income tax receivable/payable, net

 

 

(6,216

)

 

 

(4,046

)

Increase (decrease) in net operating lease liability

 

 

(48

)

 

 

227

 

Increase in accounts payable

 

 

6,141

 

 

 

1,240

 

Decrease in customer prepayments

 

 

(38,375

)

 

 

(104,590

)

Increase in accrued program costs

 

 

17,721

 

 

 

29,779

 

Increase (decrease) in other payables and accrued expenses

 

 

13,878

 

 

 

(4,406

)

Net cash used in operating activities

 

 

(29,849

)

 

 

(145,854

)

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(6,106

)

 

 

(8,589

)

Proceeds from disposal of property, plant and equipment

 

 

66

 

 

 

200

 

Intangible assets

 

 

(341

)

 

 

(759

)

Net cash used in investing activities

 

 

(6,381

)

 

 

(9,148

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(168,188

)

 

 

(62,800

)

Borrowings under line of credit agreement

 

 

208,037

 

 

 

228,500

 

Receipt from the issuance of common stock under ESPP

 

 

901

 

 

 

980

 

Net receipt from the exercise of stock options

 

 

—

 

 

 

46

 

Net payment for tax withholding on stock-based compensation awards

 

 

(1,416

)

 

 

(1,957

)

Repurchase of common stock

 

 

—

 

 

 

(15,539

)

Payment of cash dividends

 

 

(2,510

)

 

 

(2,550

)

Net cash provided by financing activities

 

 

36,824

 

 

 

146,680

 

Net increase (decrease) in cash and cash equivalents

 

 

594

 

 

 

(8,322

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(130

)

 

 

(477

)

Cash and cash equivalents at beginning of period

 

 

11,416

 

 

 

20,328

 

Cash and cash equivalents at end of period

 

$

11,880

 

 

$

11,529

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net (loss) income

 

$

(25,742

)

 

$

(325

)

 

$

(35,911

)

 

$

540

 

Income tax (benefit) expense

 

 

(7,024

)

 

 

885

 

 

 

(7,093

)

 

 

2,066

 

Interest expense, net

 

 

4,378

 

 

 

3,384

 

 

 

11,988

 

 

 

8,282

 

Depreciation and amortization

 

 

5,703

 

 

 

5,704

 

 

 

16,801

 

 

 

17,850

 

Stock-based compensation

 

 

1,135

 

 

 

1,716

 

 

 

3,887

 

 

 

4,257

 

Transformation costs & legal reserves

 

 

7,159

 

 

 

—

 

 

 

17,402

 

 

 

—

 

Dacthal returns

 

 

16,191

 

 

 

—

 

 

 

16,191

 

 

 

—

 

Proxy contest activities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

541

 

Adjusted EBITDA2

 

$

1,800

 

 

$

11,364

 

 

$

23,265

 

 

$

33,536

 

______________________________ 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 (loss), operating income (loss) 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 (loss), operating income (loss) 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241111947698/en/

American Vanguard Corporation Anthony Young, Director of Investor Relations anthonyy@amvac.com (949) 221-6119

Investor Representative Alpha IR Group Robert Winters Robert.winters@alpha-ir.com (929) 266-6315