American Vanguard Reports Third Quarter & Nine Month 2009 Results

November 4, 2009 9:00 AM EST

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- American Vanguard Corporation (NYSE: AVD), today announced financial results for the three and nine month periods ended September 30, 2009.

Fiscal 2009 Third Quarter Financial Highlights - versus Fiscal 2008 Third Quarter:

    --  Net sales were $66.4 million compared to $67.6 million.
    --  Net income was $2.1 million compared to $6.0 million.
    --  Earnings per diluted share were $0.08 versus $0.22.

Fiscal 2009 Nine Month Financial Highlights - versus Fiscal 2008 Nine Month Results:

    --  Net sales were $158.5 million compared to $166.5 million.
    --  Net income was $2.8 million compared to $12.1 million.
    --  Earnings per diluted share were $0.10 versus $0.44.

Eric Wintemute, President and CEO of American Vanguard, stated: "Amidst challenging conditions in the Ag Chemical marketplace presently, we delivered quarterly sales revenues roughly equal to the same period last year. While some of our product portfolio outperformed the prior year period, we were negatively impacted by diminished sales of two very important seasonal contributors. Reduced demand for our Dibrom(R) mosquito adulticide resulted from less hurricane related precipitation in the Gulf Coast region. Relative to a very strong season in 2008, sales of this highly profitable mosquito eradicator were off by about 70% this year. Additionally, quarterly global sales of our leading fungicide product were about 35% below the prior year, as a result of reduced demand in international markets.

"As we previously reported, we have reacted to recent softness in domestic market demand by scaling back the production output of our manufacturing facilities in order to refrain from building excess inventories. Running factories at reduced operating rates has made it necessary to expense unabsorbed overheads resulting in lower gross profit margins. Indeed, the combination of lower sales of high margin products like Dibrom and the expensing of unabsorbed manufacturing costs has resulted in diminished profitability in the current quarter."

Mr. Wintemute continued: "We have made significant progress toward the balance sheet objectives that we established in our last quarterly report to shareholders. During the current quarter, we reduced inventory levels by over 10%, maintained our diligence in receivables collection and generated sufficient cash to reduce the outstanding balance on our revolving credit line by over 35%."

Mr. Wintemute concluded, "Our organization is focusing its full attention on improving our operating performance, achieving better financial results and strengthening our corporate balance sheet."

Conference Call

Eric Wintemute, President & CEO, Trevor Thorley, EVP & COO and David T. Johnson, CFO, will conduct a conference call focusing on the financial results at 12:00 pm ET / 9:00 am PT on Wednesday, November 4, 2009. Interested parties may participate in the call by dialing 706-679-3155 - please call in 10 minutes before the call is scheduled to begin, and ask for the American Vanguard call (conference ID # 33510653). 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(R) and Russell 3000(R) 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 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

(Unaudited)

                                For the three months    For the nine months

                                ended September 30      ended September 30

                                2009        2008        2009         2008

Net sales                       $ 66,371    $ 67,636    $ 158,493    $ 166,478

Cost of sales                     45,007      38,850      102,154      96,344

Gross profit                      21,364      28,786      56,339       70,134

Operating expenses                17,470      18,111      49,570       47,493

Operating income                  3,894       10,675      6,769        22,641

Interest expense                  825         1,098       2,622        3,345

Interest income                   --          --          --           (75     )

Interest capitalized              (12    )    (63    )    (38     )    (171    )

Income before income taxes        3,081       9,640       4,185        19,542

Income tax expense                984         3,611       1,393        7,438

Net income                      $ 2,097     $ 6,029     $ 2,792      $ 12,104

Earnings per common             $ .08       $ .23       $ .10        $ .46
share--basic

Earnings per common             $ .08       $ .22       $ .10        $ .44
share--assuming dilution

Weighted average shares           27,124      26,788      27,071       26,596
outstanding--basic

Weighted average shares           27,609      27,580      27,660       27,500
outstanding--assuming dilution

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

ASSETS

                                                      September 30,  Dec. 31,

                                                      2009           2008

                                                      (Unaudited)    (Note)

Current assets:

Cash and cash equivalents                             $ 901          $ 1,229

Receivables:

Trade, net of allowance for doubtful accounts of        56,355         51,405
$330 and $472

Other                                                   328            563

                                                        56,683         51,968

Inventories                                             99,475         90,626

Prepaid expenses                                        1,568          1,688

Total current assets                                    158,627        145,511

Property, plant and equipment, net                      40,247         41,241

Intangible assets                                       88,083         91,079

Other assets                                            9,443          9,106

LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      $ 296,400      $ 286,937

                                                      September 30,  Dec. 31,

                                                      2009           2008

                                                      (Unaudited)    (Note)

Current liabilities:

Current installments of long-term debt                $ 9,506        $ 6,656

Accounts payable                                        17,390         16,196

Accrued program costs                                   24,989         16,204

Accrued expenses and other payables                     5,283          6,767

Income taxes payable                                    954            3,332

Total current liabilities                               58,122         49,155

Long-term debt, excluding current installments          72,268         75,748

Deferred income taxes                                   6,021          6,091

Total liabilities                                       136,411        130,994

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 29,412,015 shares at          2,941          2,920
September 30, 2009 and 29,209,863 shares at December
31, 2008

Additional paid-in capital                              40,215         38,873

Accumulated other comprehensive loss                    (2,091  )      (3,593  )

Retained earnings                                       122,077        120,896

                                                        163,142        159,096

Less treasury stock, at cost, 2,260,996 shares at       (3,153  )      (3,153  )
September 30, 2009 and December 31, 2008

Total stockholders' equity                              159,989        155,943

                                                      $ 296,400      $ 286,937

Note: The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The Nine Months Ended September 30, 2009 and 2008

(Unaudited)

Increase (decrease) in cash                             2009        2008

Cash flows from operating activities:

Net income                                              $ 2,792     $ 12,104

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

Depreciation and amortization                             10,124      8,711

Deferred income tax                                       (70    )    774

Stock-based compensation expense related to stock         895         554
options and employee stock purchases

Changes in assets and liabilities associated with
operations:

Increase in receivables                                   (4,715 )    (10,461 )

Increase in inventories                                   (8,849 )    (25,792 )

Increase in prepaid expenses and other assets             (2,281 )    (1,702  )

Increase in accounts payable                              2,351       4,317

Increase in other current liabilities                     4,103       9,303

Net cash provided (used in) operating activities          4,350       (2,192  )

Cash flows from investing activities:

Capital expenditures                                      (3,746 )    (8,101  )

Acquisitions of intangible assets                         --          (8,892  )

Net cash used in investing activities                     (3,746 )    (16,993 )

Cash flows from financing activities:

Net borrowings under line of credit agreement             3,000       23,000

Principal payments on long-term debt                      (3,080 )    (3,080  )

Proceeds from the issuance of common stock from           468         1,329
exercise of stock options and sale of stock under ESPP

Acquisition of Treasury stock                             --          (408    )

Payment of cash dividends                                 (1,341 )    (1,323  )

Net cash (used in) provided by financing activities       (953   )    19,518

Net (decrease) increase in cash                           (349   )    333

Cash and cash equivalents at beginning of period          1,229       3,201

Effect of exchange rate changes on cash                   21          (380    )

Cash and cash equivalents as of September 30,           $ 901       $ 3,154

    Source: American Vanguard Corporation

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