Form 8-K AMERICAN VANGUARD CORP For: Nov 02

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): November 2, 2016

 

 

AMERICAN VANGUARD CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-13795		95-2588080
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

4695 MacArthur Court

Newport Beach, California 92660

(Address of principal executive offices)

Registrant’s telephone number: (949) 260-1200

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02 Results of Operations and Financial Condition

On November 2, 2016, American Vanguard Corporation (“Registrant”) issued a press release announcing its financial results for the quarter and nine month period ended September 30, 2016. The full text of that press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Current Report on Form 8-K, including the Exhibits attached hereto, is being furnished under Items 2.02 and 9.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit 99.1		Press release dated November 2, 2016 of American Vanguard Corporation regarding financial results for the quarter and nine month period ended September 30, 2016.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, American Vanguard Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		AMERICAN VANGUARD CORPORATION
Date: November 3, 2016		By:		Timothy J. Donnelly
				Timothy J. Donnelly
				Chief Administrative Officer, General Counsel     & Secretary

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INDEX TO EXHIBITS

 

Exhibit No.		Description
Exhibit 99.1		Press release of American Vanguard Corporation dated November 2, 2016 regarding financial results for the quarter and nine month period ended September 30, 2016.

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS THIRD QUARTER & NINE-MONTH 2016 RESULTS

Continued Growth Amid Challenging Industry Conditions

Newport Beach, CA – November 2, 2016 – American Vanguard Corporation (NYSE: AVD), today announced financial results for the third quarter and nine-month period ended September 30, 2016.

Fiscal 2016 Third Quarter Financial Highlights – versus Fiscal 2015 Third Quarter Results

• Net sales increased from $72.5 million to $82.5 million

• Net income increased from $2.8 million to $2.9 million

• Earnings per diluted share improved from $0.09 to $0.10

Fiscal 2016 Nine Month Financial Highlights – versus Fiscal 2015 Nine Month Results

• Net sales increased from $205.6 million to $224.6 million

• Net income increased from $3.6 million to $8.9 million

• Earnings per diluted share improved from $0.12 to $0.30

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

Eric Wintemute, Chairman and CEO of American Vanguard stated: “Our third quarter and nine month financial results reflect management initiatives to expand our revenue base while maintaining strong operational control. In the face of a variety of Ag Industry headwinds during the quarter, we have remained focused on driving growth in our core products, expanding existing US market share positions and controlling our manufacturing costs while continuing to invest in the future of our business both domestically and internationally. In addition, during the nine month period we have focused on driving our newest products to market both in the US with Scepter, our first Soybean herbicide, and internationally with Nemacur and Bromacil, acquired in early 2015.”

Mr. Wintemute continued: “Third quarter revenues were driven by strong sales of our Metam^® soil fumigants, Folex^® cotton defoliant and Mocap^® and Nemacur^® granular insecticides. Quarterly net income improved compared to the prior year but included increased toll manufacturing, and a business mix that included some lower margin products. This had the impact of reducing gross margin compared to net sales, in comparison to the same period of 2015. Through the first nine months of 2016, we are pleased with the 9% revenue growth, the improvement in gross margins from 40% to 41%, and operating expenses which, as a percentage of sales, have decreased from 36% last year to 34.3% this year. Together these factors have generated a 147% increase in net income during the nine month period. Furthermore, we continue to reduce debt, which was $45 million at the end of Q3 2016, as compared to $93 million this time last year.”

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Mr. Wintemute concluded: “As we finish calendar year 2016, we are anticipating improved product mix in the final quarter, lower manufacturing output as we manage inventory towards the goal of $125 million and operating expenses at a lower level relative to revenues, as compared to 2015. As we approach the 2017 planting season, we expect to see: modestly improved demand for our industry-leading portfolio of corn products due to reduced distribution channel inventories; incremental expansion of our international footprint; and gradual growth in our overall crop and non-crop businesses. We will continue to improve manufacturing efficiencies, control operating expenses, lower inventory levels and reduce debt. In the face of challenging conditions, American Vanguard continues to demonstrate its capacity to generate growth, sustain profitability, strengthen the balance sheet and enhance stockholder equity.”

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 Wednesday, November 2, 2016. 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 press releases or 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 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.

 

Company Contact:		Investor Representative
American Vanguard Corporation		The Equity Group Inc.
William A. Kuser, Director of Investor Relations		www.theequitygroup.com
(949) 260-1200		Lena Cati
[email protected]		[email protected] (212) 836-9611

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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
		2016				2015				2016				2015
Net sales		$	82,447			$	72,486			$	224,645			$	205,574
Cost of sales			49,461				41,053				132,761				124,370
Gross profit			32,986				31,433				91,884				81,204
Operating expenses			28,255				26,059				77,429				74,325
Operating income			4,731				5,374				14,455				6,879
Interest expense			301				638				1,304				1,941
Income before provision for income taxes and loss on equity investment			4,430				4,736				13,151				4,938
Income tax expense			1,409				1,643				3,672				958
Income before loss on equity investment			3,021				3,093				9,479				3,980
Net loss from equity investment			(180	)			(389	)			(309	)			(580	)
Net income			2,841				2,704				9,170				3,400
Add back net loss (income) attributable to non-controlling interest			36				68				(253	)			204
Net income attributable to American Vanguard		$	2,877			$	2,772			$	8,917			$	3,604
Earnings per common share—basic		$	0.10			$	0.10			$	0.31			$	0.13
Earnings per common share—assuming dilution		$	0.10			$	0.09			$	0.30			$	0.12
Weighted average shares outstanding—basic			28,957				28,753				28,886				28,653
Weighted average shares outstanding—assuming dilution			29,496				29,289				29,385				29,208

ANALYSIS OF SALES

(In thousands)

For The Three and Nine Months Ended September 30, 2016 and 2015

(Unaudited)

 

		Three Months Ended September 30								Nine Months Ended September 30
		2016				2015				2016				2015
Net sales:
Insecticides		$	25,478			$	23,539			$	89,496			$	85,484
Herbicides/soil fumigants/fungicides			34,242				32,682				80,009				71,973
Other, including plant growth regulators			13,328				7,420				23,148				23,497
Crop			73,048				63,641				192,653				180,954
Non-crop			9,399				8,845				31,992				24,620
Total net sales		$	82,447			$	72,486			$	224,645			$	205,574
Net sales:
US		$	60,033			$	53,167			$	161,661			$	146,231
International			22,414				19,319				62,984				59,343
Total net sales		$	82,447			$	72,486			$	224,645			$	205,574

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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

ASSETS

 

		Sept. 30, 2016				Dec. 31, 2015
Current assets:
Cash and cash equivalents		$	6,594			$	5,524
Receivables:
Trade, net of allowance for doubtful accounts of $159 and $423, respectively			91,091				72,835
Other			3,500				2,554
Total receivables			94,591				75,389
Inventories			141,678				136,477
Prepaid expenses			12,270				11,172
Income taxes receivable			—				168
Deferred income tax assets			8,101				8,101
Total current assets			263,234				236,831
Property, plant and equipment, net			47,760				47,972
Intangible assets, net of applicable amortization			123,420				129,160
Other assets			28,695				29,576
Total assets		$	463,109			$	443,539
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current installments of other notes payable		$	—			$	55
Current installments of other liabilities			74				514
Accounts payable			23,268				15,343
Deferred revenue			41				8,888
Accrued program costs			74,907				44,371
Accrued expenses and other payables			10,209				7,111
Income taxes payable			1,269				—
Total current liabilities			109,768				76,282
Long-term debt and other notes payable, excluding current installments			44,488				68,321
Other liabilities, excluding current installments			3,036				3,054
Deferred income tax liabilities			27,556				27,556
Total liabilities			184,848				175,213
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 31,807,223 shares at September 30, 2016 and 31,638,225 shares at December 31, 2015			3,182				3,164
Additional paid-in capital			70,458				68,534
Accumulated other comprehensive loss			(4,429	)			(3,541	)
Retained earnings			217,135				208,507
			286,346				276,664
Less treasury stock, at cost, 2,450,634 shares at September 30, 2016 and December 31, 2015			(8,269	)			(8,269	)
American Vanguard Corporation stockholders’ equity			278,077				268,395
Non-controlling interest			184				(69	)
Total stockholders’ equity			278,261				268,326
Total liabilities and stockholders’ equity		$	463,109			$	443,539

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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The Nine Months Ended September 30, 2016 and 2015

(Unaudited)

 

Increase (decrease) in cash			2016				2015
Cash flows from operating activities:
Net income		$	9,170			$	3,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed and intangible assets			12,367				12,190
Amortization of other long term assets			3,935				3,992
Amortization of discounted liabilities			28				118
Stock-based compensation			1,656				2,943
Tax benefit from exercise of stock options			(82	)			(8	)
Operating loss from equity method investment			309				580
Changes in assets and liabilities associated with operations:
Increase in net receivables			(19,202	)			(6,172	)
(Increase) decrease in inventories			(5,201	)			4,135
(Increase) decrease in prepaid expenses and other assets			(1,011	)			1,143
Decrease in income tax receivable/payable, net			1,519				4,739
Increase in accounts payable			7,925				3,010
Decrease in deferred revenue			(8,847	)			(860	)
Increase in program payables			30,536				20,982
Increase in other payables and accrued expenses			3,098				1,615
Net cash provided by operating activities			36,200				51,807
Cash flows from investing activities:
Capital expenditures			(6,122	)			(5,196	)
Investments			(3,283	)			(125	)
Acquisitions of product lines and other intangible assets			(224	)			(36,435	)
Net cash used in investing activities			(9,629	)			(41,756	)
Cash flows from financing activities:
Net payments under line of credit agreement			(24,000	)			(16,120	)
Increase in other notes payable			—				10,000
Payments on other long-term liabilities			(541	)			(1,252	)
Tax benefit from exercise of stock options			82				8
Payment of cash dividends			(289	)			(1,141	)
Net proceeds from the issuance of common stock (sale of stock under ESPP and exercise of stock options)			204				254
Net cash used in financing activities			(24,544	)			(8,251	)
Net increase in cash and cash equivalents			2,027				1,800
Cash and cash equivalents at beginning of period			5,524				4,885
Effect of exchange rate changes on cash and cash equivalents			(957	)			(1,256	)
Cash and cash equivalents at end of period		$	6,594			$	5,429

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