American Vanguard Reports Second Quarter & Mid-Year 2014 Results

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--

American Vanguard Corporation AVD announced financial results for the second quarter and six month period ended June 30, 2014.

Fiscal 2014 Second Quarter Financial Highlights – versus Fiscal 2013 Second Quarter:

• Net sales of $68.3 million, compared with $86.8 million
• Net income of $0.1 million, compared with $8.4 million
• Earnings per diluted share were $0.01, compared with $0.29

Fiscal 2014 First Half Financial Highlights – versus Fiscal 2013 First Half

• Net sales of $149.4 million, compared with $208.3 million
• Net income of $2.3 million, compared with $25.3 million
• Earnings per diluted share were $0.08, compared with $0.88

Note: Complete details are available in the financial schedules attached to this press release

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “As we previously reported, surplus inventory of corn products in the agriculture distribution channel resulted in significantly lower re-stocking procurement from manufacturers this season. Additionally, as we indicated, reduced production of these products in our manufacturing facilities has resulted in increased unabsorbed fixed factory costs which have negatively impacted profitability for the quarter and year to date.”

Mr. Wintemute concluded: “We believe that channel inventories have been reduced significantly this spring and that more normal purchasing patterns are likely to resume for the 2015 season which should start later this year and into the pre-planting months of 2015. We are undertaking cost reduction programs to right-size our manufacturing function with the product demand that we are forecasting. We have trimmed our operating expenses and will remain disciplined in our capital expenditures. We look forward to providing additional color on business and financial conditions in our earnings call later today.”

Conference Call

Eric Wintemute, Chairman & CEO and David Johnson, VP & CFO, will conduct a conference call focusing on the financial results at 4:30 pm ET / 1:30 pm PT on Thursday, July 31, 2014. 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 as well as the S&P Small Cap 600 Index. To learn more about American Vanguard, please reference the Company's web site at www.amvac-chemical.com.

The Company, from time to time, may discuss forward-looking information. Except for the historical information contained in the conference call referenced 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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share data) (Unaudited)
					For the three months ended June 30										For the six months ended June 30
					2014					2013					2014					2013
Net sales					$	68,313				$	86,761				$	149,408				$	208,298
Cost of sales						42,253					44,695					94,443					112,451
Gross profit						26,060					42,066					54,965					95,847
Operating expenses						25,337					29,169					50,280					56,798
Operating income						723					12,897					4,685					39,049
Interest expense						857					701					1,488					1,248
Less interest capitalized						(13	)				(31	)				(31	)				(225	)
(Loss) income before income taxes and loss on equity investment						(121	)				12,227					3,228					38,026
Income taxes (benefit) expense						(160	)				3,961					856					12,941
Income before loss on equity investment						39					8,266					2,372					25,085
Deduct net loss from equity method investment						(68	)				—					(396	)				—
Net (loss) income						(29	)				8,266					1,976					25,085
Add back net loss attributable to non-controlling interest						174					120					328					216
Net income attributable to American Vanguard Corporation						145					8,386					2,304					25,301
Change in fair value of interest rate swaps						145					174					281					352
Foreign currency translation adjustment						92					(476	)				143					(69	)
Comprehensive income					$	382				$	8,084				$	2,728				$	25,584
Earnings per common share—basic					$	.01				$	.29				$	.08				$	.89
Earnings per common share—assuming dilution					$	.01				$	.29				$	.08				$	.88
Weighted average shares outstanding—basic						28,408					28,295					28,404					28,280
Weighted average shares outstanding—assuming dilution						28,795					28,886					28,877					28,884

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)
ASSETS
					June 30, 2014					Dec. 31, 2013
Current assets:
Cash and cash equivalents					$	4,189				$	6,680
Receivables:
Trade, net of allowance for doubtful accounts of $414 and $392, respectively						73,239					74,060
Other						2,738					892
Total receivables						75,977					74,952
Inventories						175,240					139,830
Prepaid expenses						14,049					11,435
Income taxes receivable						10,230					10,088
Deferred income tax assets						6,521					6,521
Total current assets						286,206					249,506
Property, plant and equipment, net						51,621					52,468
Intangible assets, net of applicable amortization						103,865					107,007
Other assets						37,750					38,462
					$	479,442				$	447,443
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt					$	70				$	69
Current installments of other liabilities						1,440					2,132
Accounts payable						23,900					40,702
Deferred revenue						1,512					3,788
Accrued program costs						74,359					53,630
Accrued expenses and other payables						5,996					10,178
Total current liabilities						107,277					110,499
Long-term debt, excluding current installments						86,091					51,676
Other liabilities, excluding current installments						3,981					4,143
Deferred income tax liabilities						23,002					23,330
Total liabilities						220,351					189,648
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      31,528,400 shares at June 30, 2014 and 31,092,782 shares at December 31, 2013						3,153					3,109
Additional paid-in capital						63,380					60,160
Accumulated other comprehensive loss						(624	)				(1,048	)
Retained earnings						201,937					202,470
						267,846					264,691
Less treasury stock, at cost, 2,450,634 shares at June 30, 2014 and 2,380,634 shares at      December 31, 2013						(8,269	)				(6,738	)
American Vanguard Corporation stockholders' equity						259,577					257,953
Non-controlling interest						(486	)				(158	)
Total stockholders' equity						259,091					257,795
					$	479,442				$	447,443

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For The Six Months Ended June 30, 2014 and 2013 (Unaudited)
Increase (decrease) in cash					2014					2013
Cash flows from operating activities:
Net income					$	1,976				$	25,085
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization of fixed and intangible assets						7,996					7,461
Amortization of other long term assets						3,027					1,802
Amortization of discounted liabilities						175					86
Stock-based compensation						1,806					1,747
Tax benefit from exercise of stock options						(262	)				(57	)
Loss from equity method investment						396					—
Gain on dilution of equity method investment						(256	)				—
Changes in assets and liabilities associated with operations:
(Increase) decrease in net receivables						(1,025	)				8,513
Increase in inventories						(35,410	)				(39,199	)
Increase in prepaid expenses and other assets						(5,069	)				(9,837	)
Decrease (increase) in income tax receivable						120					(1,404	)
Decrease in accounts payable						(16,521	)				(8,532	)
Decrease in deferred revenue						(2,276	)				(20,149	)
Increase in other payables and accrued expenses						16,264					54,529
Net cash (used in) provided by operating activities						(29,059	)				20,045
Cash flows from investing activities:
Capital expenditures						(3,954	)				(8,360	)
Investment						—					(3,687	)
Net cash used in investing activities						(3,954	)				(12,047	)
Cash flows from financing activities:
Net borrowings under line of credit agreement						34,450					40,750
Payments on long-term debt						—					(46,000	)
Payments on other long-term liabilities						(1,109	)				(1,238	)
Tax benefit from exercise of stock options						262					57
Decrease in other notes payable						—					(6,154	)
Repurchases of common stock						(1,531	)				—
Payment of cash dividends						(2,836	)				(1,976	)
Proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock      options)						1,196					527
Net cash provided by (used in) financing activities						30,432					(14,034	)
Net decrease in cash and cash equivalents						(2,581	)				(6,036	)
Cash and cash equivalents at beginning of period						6,680					38,476
Effect of exchange rate changes on cash						90					(26	)
Cash and cash equivalents as of the end of the period					$	4,189				$	32,414