American Vanguard Reports Full Year 2022 Results

FY Net Income Increased 47% - Strong Outlook for 2023

American Vanguard Corporation (NYSE: AVD) today announced financial results for the full year ended December 31, 2022.

Fiscal 2022 Full Year Financial Highlights – versus Fiscal 2021 Full Year:

  • Net sales were $610 million in 2022, compared to $558 million in 2021 (up 9%)
  • Net income was $ 27.4 million in 2022, compared to $18.6 million in 2021 (up 47%)
  • Earnings per diluted share of $0.92 in 2022, compared to $0.61 in 2021 (up 51%)
  • Adjusted EBITDA1 of $73.1 million in 2022, compared to $63.5 million in 2021 (up 15%)

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our full-year performance in 2022 exceeded that of 2021 in virtually every financial metric with net sales up 9% and net income up 47%. With high commodity prices and a strong farm economy, our U.S. Crop business recorded increased sales of our products in corn, soybeans, cotton, potatoes, and many fruits and vegetables. Our Non-Crop business experienced flat overall sales, in spite of a 30% drop in the domestic consumer product market. Further, our international business grew by 13% year-over-year, with increased sales of soil fumigants in Mexico and Australia, a milestone $100 million net sales record in Central America and expansion of our Green Solutions business into key markets. With demand for many of the high margin products that we produce in-house, we experienced greater efficiency within our manufacturing operations. At the same time, we strengthened our balance sheet through prudent allocation of capital, generation of cash and reduction of debt.”

Mr. Wintemute continued: “Looking forward, we are well positioned in both domestic and international markets for 2023, during which we are targeting increased net sales, and consistent gross profit and operating expense performance when compared to sales. During 2023, we are forecasting higher interest rates (due to the FOMC’s regular increases in the interest rate) and consequently higher expense. At the bottom line, we expect to see a solid increase in both net income, earnings per share, and adjusted EBITDA. During 2023, we will continue to develop our key strategic growth initiatives in innovative Core products, Green Solutions and SIMPAS/Ultimus technologies.”

2023 Performance Targets

 Range

Growth v. 2022

Net Sales

 $655M-$685M

8-12%

Gross Margin %

 38-41%

Similar

OPEX as % Sales

 31-33%

Similar

Adjusted EBITDA

 $86M-$91M

18-25%

Net Income

 $34M-$37M

22-34%

Mr. Wintemute concluded: "During 2022 we have repurchased 1.7 million shares of the Company’s stock, representing approximately 5.5% of the outstanding shares. Furthermore, the board has authorized management to repurchase additional shares up to a total of $15 million dollars during 2023. Additionally, during 2022 we increased dividends per share by 31% reflecting our very strong financial performance. We look forward to giving you a more detailed presentation during our upcoming earnings call.”

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, COO, David T. Johnson, CFO, Scott Hendrix, U.S. Crop SVP and Jim Thompson, Leader of the Green Solutions Initiative, will conduct a conference call focusing on the financial results and strategic themes…at 4:30 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 and the Standard & Poor’s Small Cap 600 Index. 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

CONSOLIDATED BALANCE SHEETS

December 31, 2022 and 2021

(In thousands, except share data)

(Unaudited)

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,328

 

 

$

16,285

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for doubtful accounts of $5,136 and $3,938,

respectively

 

 

156,492

 

 

 

149,326

 

Other

 

 

9,816

 

 

 

9,595

 

Total receivables, net

 

 

166,308

 

 

 

158,921

 

Inventories, net

 

 

184,190

 

 

 

154,306

 

Prepaid expenses

 

 

15,850

 

 

 

12,488

 

Income taxes receivable

 

 

1,891

 

 

 

 

Total current assets

 

 

388,567

 

 

 

342,000

 

Property, plant and equipment, net

 

 

70,912

 

 

 

66,111

 

Operating lease right-of-use assets

 

 

24,250

 

 

 

25,386

 

Intangible assets, net of amortization

 

 

184,664

 

 

 

197,841

 

Goodwill

 

 

47,010

 

 

 

46,260

 

Other assets

 

 

10,769

 

 

 

16,292

 

Deferred income tax assets, net

 

 

141

 

 

 

270

 

Total assets

 

$

726,313

 

 

$

694,160

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of other liabilities

 

$

 

 

$

802

 

Accounts payable

 

 

69,000

 

 

 

67,140

 

Customer prepayments

 

 

110,597

 

 

 

63,064

 

Accrued program costs

 

 

60,743

 

 

 

63,245

 

Accrued expenses and other payables

 

 

20,982

 

 

 

20,745

 

Income taxes payable

 

 

 

 

 

3,006

 

Operating lease liabilities, current

 

 

5,279

 

 

 

5,059

 

Total current liabilities

 

 

266,601

 

 

 

223,061

 

Long-term debt, net of deferred loan fees

 

 

51,477

 

 

 

52,240

 

Other liabilities, excluding current installments

 

 

4,167

 

 

 

5,335

 

Operating lease liabilities, long-term

 

 

19,492

 

 

 

20,780

 

Deferred income tax liabilities, net

 

 

14,597

 

 

 

20,006

 

Total liabilities

 

 

356,334

 

 

 

321,422

 

Commitments and contingent liabilities (Notes 5 and 11)

 

 

 

 

 

 

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 34,446,194 shares in 2022 and 34,248,218 shares in 2021

 

 

3,444

 

 

 

3,426

 

Additional paid-in capital

 

 

105,634

 

 

 

101,450

 

Accumulated other comprehensive loss

 

 

(12,182

)

 

 

(13,784

)

Retained earnings

 

 

328,745

 

 

 

304,385

 

 

 

 

425,641

 

 

 

395,477

 

Less treasury stock at cost, 5,029,892 shares in 2022 and 3,361,040 in 2021

 

 

(55,662

)

 

 

(22,739

)

Total stockholders’ equity

 

 

369,979

 

 

 

372,738

 

Total liabilities and stockholders’ equity

 

$

726,313

 

 

$

694,160

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2022, 2021 and 2020

(In thousands, except per share data)

(Unaudited)

 

 

2022

 

 

2021

 

 

2020

 

Net sales

 

$

609,615

 

 

$

557,676

 

 

$

458,704

 

Cost of sales

 

 

(368,263

)

 

 

(343,629

)

 

 

(286,114

)

Gross profit

 

 

241,352

 

 

 

214,047

 

 

 

172,590

 

Operating expenses

 

 

(200,701

)

 

 

(183,272

)

 

 

(154,339

)

Bargain purchase gain on business acquisition

 

 

 

 

 

171

 

 

 

4,657

 

Operating income

 

 

40,651

 

 

 

30,946

 

 

 

22,908

 

Change in fair value of equity investments, net

 

 

(732

)

 

 

(790

)

 

 

717

 

Other income

 

 

 

 

 

672

 

 

 

 

Interest expense, net

 

 

(3,954

)

 

 

(3,687

)

 

 

(5,178

)

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

 

 

35,965

 

 

 

27,141

 

 

 

18,447

 

Provision for income taxes

 

 

(8,561

)

 

 

(8,166

)

 

 

(3,080

)

Income before loss on equity method investment

 

 

27,404

 

 

 

18,975

 

 

 

15,367

 

Loss from equity method investment

 

 

 

 

 

(388

)

 

 

(125

)

Net income

 

$

27,404

 

 

$

18,587

 

 

$

15,242

 

Earnings per common share—basic

 

$

0.94

 

 

$

0.62

 

 

$

0.52

 

Earnings per common share—assuming dilution

 

$

0.92

 

 

$

0.61

 

 

$

0.51

 

Weighted average shares outstanding—basic

 

 

29,234

 

 

 

29,811

 

 

 

29,450

 

Weighted average shares outstanding—assuming dilution

 

 

29,872

 

 

 

30,410

 

 

 

29,993

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

ANALYSIS OF SALES

For the years and quarters ended December 31, 2022 and 2021

(Unaudited)

 

For the quarters ended December 31,

 

 

For the years ended December 31,

 

 

2022

 

2021

 

 

2022

 

 

2021

 

Net sales:

 

 

 

 

 

 

 

 

 

 

U.S. crop

$

68,121

 

$

79,580

 

 

$

288,624

 

 

$

263,632

 

U.S. non-crop

 

23,061

 

 

18,042

 

 

 

76,709

 

 

 

78,605

 

Total U.S.

 

91,182

 

 

97,622

 

 

 

365,333

 

 

 

342,237

 

International

 

68,797

 

 

61,991

 

 

 

244,282

 

 

 

215,439

 

Total net sales

$

159,979

 

$

159,613

 

 

$

609,615

 

 

$

557,676

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

U.S. crop

$

27,910

 

$

31,255

 

 

$

132,509

 

 

$

109,568

 

U.S. non-crop

 

10,431

 

 

9,396

 

 

 

35,257

 

 

 

37,443

 

Total U.S.

 

38,341

 

 

40,651

 

 

 

167,766

 

 

 

147,011

 

International

 

20,655

 

 

19,062

 

 

 

73,586

 

 

 

67,036

 

Total gross profit

$

58,996

 

$

59,713

 

 

$

241,352

 

 

$

214,047

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2022, 2021 and 2020

(In thousands)

(Unaudited)

 

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

27,404

 

 

$

18,587

 

 

$

15,242

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

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

 

 

22,138

 

 

 

22,229

 

 

 

19,902

 

Loss on disposal of property, plant and equipment

 

 

268

 

 

 

194

 

 

 

119

 

Amortization of other long-term assets

 

 

3,573

 

 

 

3,943

 

 

 

3,947

 

Amortization and accretion of deferred loan fees and discounted liabilities

 

 

289

 

 

 

359

 

 

 

309

 

Provision for bad debts

 

 

1,171

 

 

 

649

 

 

 

1,002

 

Provision for inventory obsolescence

 

 

340

 

 

 

1,034

 

 

 

738

 

Loan principal and interest forgiveness

 

 

 

 

 

(672

)

 

 

 

Fair value adjustment of contingent consideration

 

 

610

 

 

 

758

 

 

 

250

 

Decrease in environmental liability

 

 

 

 

 

(167

)

 

 

(1,155

)

Stock-based compensation

 

 

5,684

 

 

 

6,880

 

 

 

6,561

 

(Decrease) increase in deferred income taxes

 

 

(5,278

)

 

 

(2,090

)

 

 

969

 

Changes in liabilities for uncertain tax positions or unrecognized tax benefits

 

 

(1,441

)

 

 

(1,783

)

 

 

(2,092

)

Change in equity investment fair value

 

 

732

 

 

 

790

 

 

 

(717

)

Loss from equity method investment

 

 

 

 

 

388

 

 

 

125

 

Bargain purchase gain

 

 

 

 

 

(171

)

 

 

(4,657

)

Net foreign currency adjustment

 

 

(29

)

 

 

(225

)

 

 

126

 

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

 

 

 

 

 

 

 

 

 

(Increase) decrease in net receivables

 

 

(6,447

)

 

 

(24,347

)

 

 

15,407

 

(Increase) decrease in inventories

 

 

(29,560

)

 

 

8,323

 

 

 

6,683

 

(Increase) decrease in income tax receivable, net

 

 

(4,910

)

 

 

6,051

 

 

 

(287

)

(Increase) decrease in prepaid expenses and other assets

 

 

(3,082

)

 

 

(4,581

)

 

 

140

 

Increase in net operating lease liability

 

 

68

 

 

 

286

 

 

 

18

 

Increase (decrease) in accounts payable

 

 

1,704

 

 

 

8,783

 

 

 

(8,199

)

Increase in deferred revenue

 

 

47,551

 

 

 

19,280

 

 

 

36,803

 

(Decrease) increase in accrued program costs

 

 

(2,449

)

 

 

17,877

 

 

 

(2,517

)

Increase in other payables and accrued expenses

 

 

90

 

 

 

3,986

 

 

 

1,607

 

Payment of contingent consideration

 

 

(1,321

)

 

 

 

 

 

 

Net cash provided by operating activities

 

 

57,105

 

 

 

86,361

 

 

 

90,324

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(13,261

)

 

 

(9,518

)

 

 

(11,249

)

Proceeds from disposal of property, plant and equipment

 

 

84

 

 

 

 

 

 

 

Acquisitions of businesses and product lines

 

 

 

 

 

(10,000

)

 

 

(19,342

)

Intangible assets

 

 

(1,293

)

 

 

(524

)

 

 

(4,014

)

Investment

 

 

 

 

 

 

 

 

(1,190

)

Net cash used in investing activities

 

 

(14,470

)

 

 

(20,042

)

 

 

(35,795

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Payments under line of credit agreement

 

 

(254,000

)

 

 

(186,569

)

 

 

(168,400

)

Borrowings under line of credit agreement

 

 

253,000

 

 

 

131,000

 

 

 

126,776

 

Payment of contingent consideration

 

 

(68

)

 

 

(1,301

)

 

 

(1,227

)

Net receipt from the issuance of common stock under ESPP

 

 

837

 

 

 

743

 

 

 

721

 

Net receipt from the exercise of stock options

 

 

827

 

 

 

172

 

 

 

1,603

 

Net payment from common stock purchased for tax withholding

 

 

(2,067

)

 

 

(2,955

)

 

 

(2,745

)

Repurchase of common stock

 

 

(34,002

)

 

 

(4,579

)

 

 

 

Payment of cash dividends

 

 

(2,787

)

 

 

(2,382

)

 

 

(1,168

)

Net cash used in financing activities

 

 

(38,260

)

 

 

(65,871

)

 

 

(44,440

)

Net increase in cash and cash equivalents

 

 

4,375

 

 

 

448

 

 

 

10,089

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(332

)

 

 

(86

)

 

 

(747

)

Cash and cash equivalents at beginning of year

 

 

16,285

 

 

 

15,923

 

 

 

6,581

 

Cash and cash equivalents at end of year

 

$

20,328

 

 

$

16,285

 

 

$

15,923

 

 

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO EBITDA

For the years and quarters ended December 31, 2022 and 2021

(Unaudited)

 

For the years ended December 31,

 

 

2022

 

 

2021

 

Net income

$

27,404

 

 

$

18,587

 

Provision for income taxes

 

8,561

 

 

 

8,166

 

Interest expense, net

 

3,954

 

 

 

3,687

 

Proxy costs

 

1,785

 

 

 

 

Depreciation and amortization

 

25,711

 

 

 

26,172

 

Stock compensation expense

 

5,684

 

 

 

6,880

 

Adjusted EBITDA1

$

73,099

 

 

$

63,492

 

 

For the quarters ended December 31,

 

 

2022

 

 

2021

 

Net income

$

3,898

 

 

$

4,874

 

Provision for income taxes

 

(1,626

)

 

 

2,842

 

Interest expense, net

 

1,698

 

 

 

766

 

Depreciation and amortization

 

6,406

 

 

 

6,146

 

Stock compensation expense

 

1,288

 

 

 

1,571

 

Adjusted EBITDA1

$

11,664

 

 

$

16,199

 

_____________________________________

1 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 measures 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.

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