EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

AMERICAN VANGUARD REPORTS SECOND QUARTER & MID-YEAR 2009 RESULTS

Quarterly Performance Reflects Soft Distributor Channel Demand and the Financial Impact of Reduced Manufacturing Output

Newport Beach, CA – August 6, 2009 – American Vanguard Corporation (NYSE:AVD), today announced financial results for the second quarter and six month period ended June 30, 2009.

Fiscal 2009 Second Quarter Financial Highlights – versus Fiscal 2008 Second Quarter:

 

 

Net sales declined 18% to $47.5 million.

 

 

Net income was breakeven compared to $4.3 million.

 

 

Earnings per diluted share were breakeven versus $0.16.

Fiscal 2009 First Half Financial Highlights – versus Fiscal 2008 First Half

 

 

Net sales declined 7% to $92.1 million

 

 

Net income was $0.7 million, compared to $6.1 million

 

 

Earnings per diluted share were $0.03 versus $0.23

Eric Wintemute, President and CEO of American Vanguard, stated: “As previously announced, our financial performance for the second quarter has been severely affected by a very challenging business environment this spring. Growers have delayed and reduced purchases as a result of poor Midwest weather, credit availability concerns, acreage reductions and reduced pest pressure. Such soft demand has led distributors and retailers to invoke strict inventory control procedures and this industry-wide, “buy-only-as-needed”, restocking reluctance has contributed to the performance declines of many suppliers of crop protection chemicals. The current shrinkage of the distribution inventory pipeline is the primary contributing factor to our year-over-year quarterly revenue decline and accounts for approximately 2/3 of our year-over-year quarterly decline in net earnings.”

“Operationally, we reacted to this reduction in market demand by scaling back our production output in order to refrain from building inventories. While we successfully accomplished our goal, we inevitably experienced the burden of fixed cost absorption associated with these reduced operating rates. This overhead absorption, along with some one-time waste disposal expenses, accounted for approximately 1/3 of our year-over-year quarterly decline in net earnings.”

Mr. Wintemute continued: “We feel that our performance this year is unacceptable and we have already begun to undertake corrective actions. These include:

 

   

In Sales & Marketing we are re-staffing key positions and analyzing better approaches to promote our product portfolio.


   

In our Manufacturing operations we are expanding capacity utilization with contract / toll manufacturing arrangements and trimming costs without sacrificing quality or safety standards.

 

   

In our Operating Expense category, we are maintaining tight control over all discretionary costs and have managed to reduce our general & administrative costs as well as our freight expense.”

Mr. Wintemute concluded: “Our organization is focusing its full attention on improving our performance for the balance of 2009 and into the 2010 North American spring planting season. During the second half of the year, we historically capitalize on our leadership strength in soil fumigants, foliar insecticides and mosquito control. We will also be positioning our herbicide and insecticide offerings in corn to gain market share in 2010 with additional university yield enhancement data and other focused promotional initiatives. We will continue our drive for international expansion and introduce additional products in our non-crop segment for professional pest management. We will implement process improvements to better exploit our North American manufacturing capability; we will maintain strict discipline over all spending; and we will continue our focus on strengthening American Vanguard’s 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 EDT / 9:00 am PDT on Thursday, August 6, 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 #22123273). 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 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.

 

CONTACT:    -OR-   

AVD’S INVESTOR RELATIONS FIRM

American Vanguard Corporation      

The Equity Group Inc.

William A. Kuser, Director of Investor Relations      

www.theequitygroup.com

(949) 260-1200      

Lena Cati

williamk@amvac-chemical.com      

Lcati@equityny.com

     

(212) 836-9611


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

(Unaudited)

 

     For the three months
ended June 30
    For the six months
ended June 30
 
     2009     2008     2009     2008  

Net sales (1)

   $ 47,485      $ 57,908      $ 92,122      $ 98,842   

Cost of sales

     31,066        34,296        57,147        57,494   
                                

Gross profit

     16,419        23,612        34,975        41,348   

Operating expenses

     15,537        15,436        32,100        29,382   
                                

Operating income

     882        8,176        2,875        11,966   

Interest expense

     911        1,232        1,797        2,247   

Interest income

     —          (75     —          (75

Interest capitalized

     (5     (58     (26     (108
                                

Income (loss) before income taxes

     (24     7,077        1,104        9,902   

Income tax expense (benefit)

     (20     2,735        409        3,827   
                                

Net income (loss)

   $ (4   $ 4,342      $ 695      $ 6,075   
                                

Earnings per common share—basic

   $ —        $ .16      $ .03      $ .23   
                                

Earnings per common share—assuming dilution

   $ —        $ .16      $ .03      $ .22   
                                

Weighted average shares outstanding—basic

     27,081        26,533        27,043        26,499   
                                

Weighted average shares outstanding—assuming dilution

     27,081        27,474        27,701        27,470   
                                

 

(1) Net sales for the three and six month period ended June 30, 2009, includes $1,400 from the settlement of claims against follow-on registrants from whom the Company collected data compensation. The Company included a similar amount in net sales for the comparable period in 2008 arising from the settlement of non-FIFRA litigation.


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands except per share amounts)

 

     June 30,
2009
    Dec. 31,
2008
 
     (Unaudited)     (Note)  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 1,306      $ 1,229   

Receivables:

    

Trade, net of allowance for doubtful accounts of $462 and $472, respectively

     40,496        51,405   

Other

     1,255        563   
                
     41,751        51,968   
                

Inventories 9

     112,434        90,626   

Prepaid expenses

     1,725        1,688   
                

Total current assets

     157,216        145,511   

Property, plant and equipment, net

     40,285        41,241   

Intangible assets

     89,084        91,079   

Other assets

     9,887        9,106   
                
   $ 296,472      $ 286,937   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Current installments of long-term debt

   $ 8,506      $ 6,656   

Accounts payable

     12,114        16,196   

Accrued program costs

     18,931        16,204   

Accrued expenses and other payables

     4,298        6,767   

Income taxes payable

     181        3,332   
                

Total current liabilities

     44,030        49,155   

Long-term debt, excluding current installments

     88,795        75,748   

Deferred income taxes

     6,091        6,091   
                

Total liabilities

     138,916        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 29,365,541 shares at June 30, 2009 and 29,209,863 shares at December 31, 2008

     2,935        2,920   

Additional paid-in capital

     39,676        38,873   

Accumulated other comprehensive income (loss)

     (2,152     (3,593

Retained earnings

     120,250        120,896   
                
     160,709        159,096   

Less treasury stock, at cost, 2,260,996 shares at June 30, 2009 and December 31, 2008

     (3,153     (3,153
                

Total stockholders’ equity

     157,556        155,943   
                
   $ 296,472      $ 286,937   
                

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


AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The Six Months Ended June 30, 2009 and 2008

(Unaudited)

 

Increase (decrease) in cash

   2009     2008  

Cash flows from operating activities:

    

Net income

   $ 695      $ 6,075   

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation and amortization

     6,818        5,694   

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

     580        395   

Changes in assets and liabilities associated with operations:

    

Decrease in receivables

     10,217        3,798   

Increase in inventories

     (21,808     (27,253

Increase in prepaid expenses and other assets

     (2,095     (4,091

(Decrease) Increase in accounts payable

     (3,155     2,364   

(Decrease) Increase in other current liabilities

     (3,443     3,089   
                

Net cash used in operating activities

     (12,191     (9,929
                

Cash flows from investing activities:

    

Capital expenditures

     (2,249     (5,005

Acquisitions of intangible assets

     —          (9,048
                

Net cash used in investing activities

     (2,249     (14,053
                

Cash flows from financing activities:

    

Net borrowings under line of credit agreement

     17,500        28,000   

Principal payments on long-term debt

     (2,053     (2,053

Proceeds from the issuance of common stock (sale of stock under ESPP)

     238        893   

Payment of cash dividends

     (1,341     (1,323
                

Net cash provided by financing activities

     14,344        25,517   
                

Net (decrease) increase in cash

     (96     1,535   

Cash and cash equivalents at beginning of period

     1,229        3,201   

Effect of exchange rate changes on cash

     173        5   
                

Cash and cash equivalents as of June 30,

   $ 1,306      $ 4,741