AVD American Vanguard Corporation

Sets $15MM Adjusted EBITDA Gain as Transformation Target

American Vanguard Corporation (NYSE: AVD) today announced financial results for the fourth quarter and full year ended December 31, 2023.

Fiscal 2023 Fourth Quarter Financial Highlights – versus Fiscal 2022 Fourth Quarter:

• Net sales were $172.2 million in 2023, compared to $159.5 million in 2022
• Net income was $7.0 million in 2023, compared to $3.9 million in 2022
• Earnings per diluted share of $0.25 in 2023, compared to $0.13 in 2022
• Adjusted EBITDA1 of $21 million in 2023, compared to $12 million in 2022

Fiscal 2023 Full Year Financial Highlights – versus Fiscal 2022 Full Year:

• Net sales were $579 million in 2023, compared to $610 million in 2022
• Net income was $7.5 million in 2023, compared to $27.4 million in 2022
• Earnings per diluted share of $0.26 in 2023, compared to $0.92 in 2022
• Adjusted EBITDA1 of $55 million in 2023, compared to $73 million in 2022

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We rebounded sharply in Q4 after having weathered the effect of global destocking within the distribution channel, the oversupply of Chinese generic products into multiple regions, and the unavailability of our most profitable products due to supply chain issues. Increased demand during Q4 provided evidence that destocking activity continues to subside and that, even while showing greater discipline, procurement within the distribution channel is following more normal patterns. During the quarter, we achieved predicted revenue growth, maintained solid manufacturing operations, sustained strong profit margins by bolstering brand value and strengthened our balance sheet.”

Mr. Wintemute concluded: “Looking forward, we believe that our company is situated well in both domestic and international markets and are targeting 8 to 12% revenue growth resulting in a full year adjusted EBITDA range of $70 to $80 million in 2024. We expect gross profit margins to remain strong, operating expenses to be tightly managed, and factory performance to be efficient. In addition, with the assistance of our consultant Kearney, through our business transformation initiative, we are targeting growth of adjusted EBITDA to 15% of net sales or an additional $15 million or more of adjusted EBITDA on a full year basis. The full benefit of the transformation will be realized by 2026 through a combination of operational, commercial, digital, and general and administrative sub-initiatives. We look forward to giving you a 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 5:00 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. 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.

CONSOLIDATED BALANCE SHEETS

December 31, 2023 and 2022

(In thousands, except share data)

(Unaudited)

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,416

 

 

$

20,328

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for credit losses of $7,107 and $5,136, respectively

 

 

182,613

 

 

 

156,492

 

Other

 

 

8,356

 

 

 

9,816

 

Total receivables, net

 

 

190,969

 

 

 

166,308

 

Inventories

 

 

219,551

 

 

 

184,190

 

Prepaid expenses

 

 

6,261

 

 

 

15,850

 

Income taxes receivable

 

 

3,824

 

 

 

1,891

 

Total current assets

 

 

432,021

 

 

 

388,567

 

Property, plant and equipment, net

 

 

74,560

 

 

 

70,912

 

Operating lease right-of-use assets, net

 

 

22,417

 

 

 

24,250

 

Intangible assets, net of amortization

 

 

172,508

 

 

 

184,664

 

Goodwill

 

 

51,199

 

 

 

47,010

 

Deferred income tax assets

 

 

2,849

 

 

 

141

 

Other assets

 

 

11,994

 

 

 

10,769

 

Total assets

 

$

767,548

 

 

$

726,313

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

68,833

 

 

$

69,000

 

Customer prepayments

 

 

65,560

 

 

 

110,597

 

Accrued program costs

 

 

68,076

 

 

 

60,743

 

Accrued expenses and other payables

 

 

16,354

 

 

 

20,982

 

Operating lease liabilities, current

 

 

6,081

 

 

 

5,279

 

Income taxes payable

 

 

5,591

 

 

 

—

 

Total current liabilities

 

 

230,495

 

 

 

266,601

 

Long-term debt

 

 

138,900

 

 

 

51,477

 

Operating lease liabilities, long-term

 

 

17,113

 

 

 

19,492

 

Deferred income tax liabilities

 

 

7,892

 

 

 

14,597

 

Other liabilities

 

 

3,138

 

 

 

4,167

 

Total liabilities

 

 

397,538

 

 

 

356,334

 

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 34,676,787 shares in 2023 and 34,446,194 shares in 2022

 

 

3,467

 

 

 

3,444

 

Additional paid-in capital

 

 

110,810

 

 

 

105,634

 

Accumulated other comprehensive loss

 

 

(5,963

)

 

 

(12,182

)

Retained earnings

 

 

332,897

 

 

 

328,745

 

 

 

 

441,211

 

 

 

425,641

 

Less treasury stock at cost, 5,915,182 shares in 2023 and 5,029,892 in 2022

 

 

(71,201

)

 

 

(55,662

)

Total stockholders’ equity

 

 

370,010

 

 

 

369,979

 

Total liabilities and stockholders’ equity

 

$

767,548

 

 

$

726,313

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2023, 2022 and 2021

(In thousands, except per share data)

(Unaudited)

 

 

 

2023

 

 

2022

 

 

2021

 

Net sales

 

$

579,371

 

 

$

609,615

 

 

$

557,676

 

Cost of sales

 

 

(400,207

)

 

 

(417,227

)

 

 

(386,953

)

Gross profit

 

 

179,164

 

 

 

192,388

 

 

 

170,723

 

Operating expenses

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

(117,844

)

 

 

(119,921

)

 

 

(111,093

)

Research, product and regulatory

 

 

(38,025

)

 

 

(31,816

)

 

 

(28,855

)

Total operating expenses

 

 

(155,869

)

 

 

(151,737

)

 

 

(139,948

)

Bargain purchase gain on business acquisition

 

 

—

 

 

 

—

 

 

 

171

 

Operating income

 

 

23,295

 

 

 

40,651

 

 

 

30,946

 

Change in fair value of equity investments, net

 

 

(359

)

 

 

(732

)

 

 

(790

)

Other income

 

 

—

 

 

 

—

 

 

 

672

 

Interest expense, net

 

 

(12,639

)

 

 

(3,954

)

 

 

(3,687

)

Income before provision for income taxes and loss on equity method investment

 

 

10,297

 

 

 

35,965

 

 

 

27,141

 

Provision for income taxes

 

 

(2,778

)

 

 

(8,561

)

 

 

(8,166

)

Income before loss on equity method investment

 

 

7,519

 

 

 

27,404

 

 

 

18,975

 

Loss from equity method investment

 

 

—

 

 

 

—

 

 

 

(388

)

Net income

 

$

7,519

 

 

$

27,404

 

 

$

18,587

 

Earnings per common share—basic

 

$

0.27

 

 

$

0.94

 

 

$

0.62

 

Earnings per common share—assuming dilution

 

$

0.26

 

 

$

0.92

 

 

$

0.61

 

Weighted average shares outstanding—basic

 

 

28,128

 

 

 

29,234

 

 

 

29,811

 

Weighted average shares outstanding—assuming dilution

 

 

28,533

 

 

 

29,872

 

 

 

30,410

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the years and quarters ended December 31, 2023 and 2022

(Unaudited)

 

 

For the quarters ended December 31,

 

 

For the years ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. crop

$

83,406

 

 

$

68,231

 

 

$

269,229

 

 

$

288,624

 

U.S. non-crop

 

25,246

 

 

 

22,865

 

 

 

75,287

 

 

 

76,709

 

Total U.S.

 

108,652

 

 

 

91,096

 

 

 

344,516

 

 

 

365,333

 

International

 

63,528

 

 

 

68,366

 

 

 

234,855

 

 

 

244,282

 

Total net sales

$

172,180

 

 

$

159,462

 

 

$

579,371

 

 

$

609,615

 

Total cost of sales

$

(117,545

)

 

$

(117,529

)

 

$

(400,207

)

 

$

(417,227

)

Total gross profit

 

54,635

 

 

 

41,933

 

 

 

179,164

 

 

 

192,388

 

Total gross margin

 

32

%

 

 

26

%

 

 

31

%

 

 

32

%

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2023, 2022 and 2021

(In thousands)

(Unaudited)

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

7,519

 

 

$

27,404

 

 

$

18,587

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization of property, plant and equipment and intangible assets

 

 

21,780

 

 

 

22,138

 

 

 

22,229

 

Amortization of other long-term assets

 

 

1,754

 

 

 

3,573

 

 

 

3,943

 

Amortization and accretion of deferred loan fees and discounted liabilities

 

 

254

 

 

 

289

 

 

 

359

 

Loss on disposal of property, plant and equipment

 

 

—

 

 

 

268

 

 

 

194

 

Provision for bad debts

 

 

1,935

 

 

 

1,171

 

 

 

649

 

Provision for inventory obsolescence

 

 

517

 

 

 

340

 

 

 

1,034

 

Loan principal and interest forgiveness

 

 

—

 

 

 

—

 

 

 

(672

)

Fair value adjustment of contingent consideration

 

 

—

 

 

 

610

 

 

 

758

 

Decrease in environmental liability

 

 

—

 

 

 

—

 

 

 

(167

)

Stock-based compensation

 

 

6,138

 

 

 

5,684

 

 

 

6,880

 

Deferred income taxes

 

 

(9,710

)

 

 

(5,278

)

 

 

(2,090

)

Changes in liabilities for uncertain tax positions or unrecognized tax benefits

 

 

(508

)

 

 

(1,441

)

 

 

(1,783

)

Change in equity investment fair value

 

 

359

 

 

 

732

 

 

 

790

 

Loss from equity method investment

 

 

—

 

 

 

—

 

 

 

388

 

Bargain purchase gain

 

 

—

 

 

 

—

 

 

 

(171

)

Non-cash lease expense

 

 

256

 

 

 

68

 

 

 

286

 

Foreign currency transaction gains

 

 

(581

)

 

 

(29

)

 

 

(225

)

Changes in assets and liabilities associated with operations, net of business combinations:

 

 

 

 

 

 

 

 

 

Increase in net receivables

 

 

(20,278

)

 

 

(6,447

)

 

 

(24,347

)

(Increase) decrease in inventories

 

 

(27,832

)

 

 

(29,560

)

 

 

8,323

 

(Increase) decrease in income tax receivable, net

 

 

3,568

 

 

 

(4,910

)

 

 

6,051

 

(Increase) decrease in prepaid expenses and other assets

 

 

1,269

 

 

 

(3,082

)

 

 

(4,581

)

Increase (decrease) in accounts payable

 

 

(2,287

)

 

 

1,704

 

 

 

8,783

 

(Decrease) Increase in deferred revenue

 

 

(45,079

)

 

 

47,551

 

 

 

19,280

 

Increase (decrease) in accrued program costs

 

 

7,244

 

 

 

(2,449

)

 

 

17,877

 

Increase (decrease) in other payables and accrued expenses

 

 

(5,066

)

 

 

90

 

 

 

3,986

 

Decrease in contingent consideration

 

 

—

 

 

 

(1,321

)

 

 

—

 

Net cash (used in) provided by operating activities

 

 

(58,748

)

 

 

57,105

 

 

 

86,361

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(11,878

)

 

 

(13,261

)

 

 

(9,518

)

Proceeds from disposal of property, plant and equipment

 

 

242

 

 

 

84

 

 

 

—

 

Acquisitions of business and product line

 

 

(5,195

)

 

 

—

 

 

 

(10,000

)

Intangible assets

 

 

(186

)

 

 

(1,293

)

 

 

(524

)

Net cash used in investing activities

 

 

(17,017

)

 

 

(14,470

)

 

 

(20,042

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(172,500

)

 

 

(254,000

)

 

 

(186,569

)

Borrowings under line of credit agreement

 

 

259,100

 

 

 

253,000

 

 

 

131,000

 

Payment of contingent consideration

 

 

—

 

 

 

(68

)

 

 

(1,301

)

Net receipt from the issuance of common stock under ESPP

 

 

981

 

 

 

837

 

 

 

743

 

Net receipt from the exercise of stock options

 

 

46

 

 

 

827

 

 

 

172

 

Net payment from common stock purchased for tax withholding

 

 

(1,967

)

 

 

(2,067

)

 

 

(2,955

)

Repurchase of common stock

 

 

(15,539

)

 

 

(34,002

)

 

 

(4,579

)

Payment of cash dividends

 

 

(3,384

)

 

 

(2,787

)

 

 

(2,382

)

Net cash provided by (used in) financing activities

 

 

66,737

 

 

 

(38,260

)

 

 

(65,871

)

Net (decrease) increase in cash and cash equivalents

 

 

(9,028

)

 

 

4,375

 

 

 

448

 

Effect of exchange rate changes on cash and cash equivalents

 

 

116

 

 

 

(332

)

 

 

(86

)

Cash and cash equivalents at beginning of year

 

 

20,328

 

 

 

16,285

 

 

 

15,923

 

Cash and cash equivalents at end of year

 

$

11,416

 

 

$

20,328

 

 

$

16,285

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO EBITDA

For the years and quarters ended December 31, 2023 and 2022

(Unaudited)

 

 

For the years ended December 31,

 

 

2023

 

 

2022

 

Net income

$

7,519

 

 

$

27,404

 

Provision for income taxes

 

2,778

 

 

 

8,561

 

Interest expense, net

 

12,639

 

 

 

3,954

 

Proxy costs

 

541

 

 

 

1,785

 

Depreciation and amortization

 

23,534

 

 

 

25,711

 

Stock compensation expense

 

6,138

 

 

 

5,684

 

Transformation costs

 

957

 

 

 

-

 

Adjusted EBITDA2

$

54,106

 

 

$

73,099

 

 

For the quarters ended December 31,

 

 

2023

 

 

2022

 

Net income

$

6,979

 

 

$

3,898

 

Provision (benefit) for income taxes

 

712

 

 

 

(1,626

)

Interest expense, net

 

4,357

 

 

 

1,698

 

Depreciation and amortization

 

5,684

 

 

 

6,406

 

Stock compensation expense

 

1,881

 

 

 

1,288

 

Transformation costs

 

957

 

 

 

—

 

Adjusted EBITDA2

$

20,570

 

 

$

11,664

 

______________________________ 1 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 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/20240314306132/en/

Company Contact: American Vanguard Corporation William A. Kuser, Director of Investor Relations (949) 260-1200 williamk@amvac-chemical.com

Investor Representative the Equity Group Inc. www.theequitygroup.com Lena Cati Lcati@equityny.com