8-K
AMERICAN VANGUARD CORP (AVD)
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): May 4, 2022
AMERICAN VANGUARD CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-13795 | 95-2588080 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | Commission<br> <br>File Number | (I.R.S. Employer<br> <br>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)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol | Exchanges<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.10 par value | AVD | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b02 of the Securities Exchange Act of 1934 (§240.12b02 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On May 4, 2022, American Vanguard Corporation (“Registrant”) issued a press release announcing its unaudited financial results for the fiscal quarter ended March 31, 2022. The full text of the press release is linked hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 8.01 Other Events
In connection with, and immediately prior to the commencement of, the Registrant’s earnings teleconference conducted on May 4, 2022, the Registrant disclosed a presentation to accompany the Registrant’s discussion of quarterly results of operations, financial condition, and other matters. The full text of the presentation is linked hereto as Exhibit 99.2 and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K, including the Exhibit linked hereto, is being furnished under Items 2.02, 8.01 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.
Important Additional Information and Where to Find It
The Registrant has filed a definitive proxy statement on Schedule 14A and accompanying WHITE proxy card with the Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for its 2022 Annual Meeting of Shareholders. SHAREHOLDERS ARE STRONGLY ADVISED TO READ THE COMPANY’S DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free copy of the proxy statement and accompanying WHITE proxy card, any amendments or supplements to the proxy statement and other documents that the Company files with the SEC from the SEC’s website at www.sec.gov or the Company’s website at http:www.american-vanguard.com as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit 99.1 | Earnings release dated as of May 4, 2022. |
|---|---|
| Exhibit 99.2 | Presentation for Earnings Teleconference May 4, 2022 |
| EXHIBIT 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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: May 4, 2022 | By: | /s/ Timothy J. Donnelly |
| Timothy J. Donnelly | ||
| Chief Administrative Officer, General Counsel & Secretary |
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMERICAN VANGUARD REPORTS FIRST QUARTER 2022 RESULTS
Net Sales up 29% — Net Income up 224% vs. Q1 2021
Newport Beach, CA – May 4, 2022 – American Vanguard Corporation (NYSE: AVD) today announced financial results for the first quarter ended March 31, 2022.
Fiscal 2022 First Quarter Financial Highlights – versus Fiscal 2021 First Quarter:
| ☐ | Net sales were $149.4 million in 2022, compared to $116.2 million in 2021. |
|---|---|
| ☐ | Net income was $9.9 million in 2022, compared to $3.1 million in 2021. |
| --- | --- |
| ☐ | Earnings per diluted share of $0.33 in 2022, compared to $0.10 in 2021. |
| --- | --- |
| ☐ | EBITDA^1^ of $22.9 million in 2022, compared to<br>$13.9 million in 2021. |
| --- | --- |
Eric Wintemute, Chairman and CEO of American Vanguard stated: “We are pleased to report an extremely strong start to 2022 at both the top and bottom lines. We exceeded our first quarter financial targets, growing net sales by 29% and delivering gross profit margin of 41% resulting from a company-wide focus on profitability driven by pricing actions designed to offset inflationary cost escalations. Further, by exercising discipline, we reduced operating expense as a percent of sales to 31% in the first quarter of 2022 from 36% in the first quarter of 2021. These efforts helped more than triple net income for the quarter compared to the prior year period. Additionally, we continue to focus on balance sheet priorities regarding inventory levels, working capital control and debt management.”
Mr. Wintemute continued: “After seven years of relatively stagnant crop prices, during the last year we have seen higher commodity prices, which have helped spur demand for our crop protection solutions. Midwest procurement of our corn soil insecticides and Impact herbicide has eclipsed expectations, while our expanding portfolio of soybean herbicides continued to diversify our market position in row crops. In addition, we experienced steady demand for products in mosquito control, horticulture, and commercial/consumer pest control markets. Internationally, we delivered strong performance in Mexico, Central America, while expanding our position in Australia, Brazil, China and India with Green Solutions products.”
| ^1^ | Earnings before interest, taxes, depreciation, amortization and<br>non-cash stock compensation. 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<br>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. We provide these measures because we<br>believe that they provide helpful comparisons to other companies in our industry and peer group. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release, and reflect an elimination of taxes, interest,<br>depreciation, amortization and the effects of equity compensation. Other companies (including the Company’s competitors) may define EBITDA differently. |
|---|
Mr. Wintemute commented further: “Importantly, we reliably produce solidly profitable results while self-funding the SIMPAS prescription application system, the Ultimus tracing/verification software platform, and the biological alternative Green Solutions portfolio, all three of which are critical investments in the future of American Vanguard that we expect will create long-term value for our shareholders.”
Mr. Wintemute concluded, “As we have previously indicated, looking forward, we believe that our company is situated well in both domestic and international markets. Our performance targets for 2022 include 8-11% revenue growth, profit margins of 38-40% and operating expenses of between 31% and 33% of net sales. On a solid core business foundation, we will continue to develop our key strategic growth initiatives in Green Solutions and SIMPAS/Ultimus technologies. We look forward to providing additional detail on market conditions, profitability, working capital considerations and our innovation initiatives during our upcoming earnings call.”
Conference Call
Eric Wintemute, Chairman & CEO, Bob Trogele, COO and David T. Johnson, CFO, will conduct a conference call focusing on operating performance and financial results at 4:30 pm ET / 1:30 pm PT on Wednesday, May 4, 2022. Interested parties may participate in the call by dialing 888-506-0062 or 973-528-0011 and enter code 481120—please call in 10 minutes before the conference is scheduled to begin and ask for the American Vanguard conference.
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.
Forward-Looking Statements
Certain information set forth in this release may constitute “forward looking statements” within the meaning of federal and applicable state securities laws. All statements herein that are not statements of historical fact are forward looking statements. These statements include statements regarding management’s expectations for future performance, as well as descriptions of plans and strategies and the expected results thereof. These statements reflect the current expectations of American Vanguard’s management based on currently known facts and circumstances, and should not be construed as assurances of performance or as guaranties of the actual outcomes. Actual results may differ from those expressed in forward looking statements, and those differences may be material and adverse. Factors that could cause actual results to differ from expectations include the ongoing effects of the COVID-19 pandemic and government responses and economic conditions resulting therefrom; increasing costs and diversion of management attention associated with our pending activism campaign and the response thereto; the effect of international exchange rates and other local, national and foreign economic conditions; weather and climate conditions; changes in regulatory policy and in specific regulations and permitting processes that affect our products, and other risks as detailed from time-to-time in the Company’s SEC reports and filings. The Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022, filed with the SEC on May 4, 2022, contains a list of risk factors that may cause results to differ from expectations. These risk factors will be updated from time to time in accordance with the requirements of the Securities Exchange Act of 1934, as amended, and the regulations thereunder (“Exchange Act”), or otherwise in our Exchange Act filings. The statements in this release speak only as of the date hereof, and the Company undertakes no duty to update such statements to reflect future events or developments.
| Company Contact: | Investor Representative |
|---|---|
| American Vanguard Corporation | the Equity Group Inc. |
| William A. Kuser, Director of Investor Relations (949) 260-1200 | www.theequitygroup.com Lena Cati |
| williamk@amvac-chemical.com | Lcati@equityny.com |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
ASSETS
| December 31,<br>2021 | |||||
|---|---|---|---|---|---|
| Current assets: | |||||
| Cash and cash equivalents | 17,841 | $ | 16,285 | ||
| Receivables: | |||||
| Trade, net of allowance for doubtful accounts of 4,446 and 3,938, respectively | 183,505 | 149,326 | |||
| Other | 11,073 | 9,595 | |||
| Total receivables, net | 194,578 | 158,921 | |||
| Inventories | 168,049 | 154,306 | |||
| Prepaid expenses | 13,644 | 12,488 | |||
| Total current assets | 394,112 | 342,000 | |||
| Property, plant and equipment, net | 67,440 | 66,111 | |||
| Operating lease<br>right-of-use assets | 24,950 | 25,386 | |||
| Intangible assets, net of applicable amortization | 196,365 | 197,841 | |||
| Goodwill | 49,077 | 46,260 | |||
| Other assets | 15,500 | 16,292 | |||
| Deferred income tax assets, net | 17 | 270 | |||
| Total assets | 747,461 | $ | 694,160 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | **** | ||||
| Current liabilities: | |||||
| Current installments of other liabilities | 1,437 | $ | 802 | ||
| Accounts payable | 77,704 | 67,140 | |||
| Customer prepayments | 18,542 | 63,064 | |||
| Accrued program costs | 87,962 | 63,245 | |||
| Accrued expenses and other payables | 23,412 | 20,745 | |||
| Income taxes payable | 6,050 | 3,006 | |||
| Operating lease liabilities, current | 5,035 | 5,059 | |||
| Total current liabilities | 220,142 | 223,061 | |||
| Long-term debt, net | 98,309 | 52,240 | |||
| Operating lease liabilities, long term | 20,301 | 20,780 | |||
| Other liabilities, net of current installments | 6,011 | 5,335 | |||
| Deferred income tax liabilities, net | 20,075 | 20,006 | |||
| Total liabilities | 364,838 | 321,422 | |||
| 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 34,091,876 shares at<br>March 31, 2022 and 34,248,218 shares at December 31, 2021 | 3,410 | 3,426 | |||
| Additional paid-in capital | 101,291 | 101,450 | |||
| Accumulated other comprehensive loss | (6,704 | ) | (13,784 | ) | |
| Retained earnings | 313,584 | 304,385 | |||
| Less treasury stock at cost, 3,693,444 shares at March 31, 2022 and 3,361,040 shares at<br>December 31, 2021 | (28,958 | ) | (22,739 | ) | |
| Total stockholders’ equity | 382,623 | 372,738 | |||
| Total liabilities and stockholders’ equity | 747,461 | $ | 694,160 |
All values are in US Dollars.
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| For the three months<br>ended March 31 | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net sales | $ | 149,435 | $ | 116,155 | ||
| Cost of sales | (88,242 | ) | (71,024 | ) | ||
| Gross profit | 61,193 | 45,131 | ||||
| Operating expenses | (46,444 | ) | (41,444 | ) | ||
| Adjustment to bargain purchase gain on business acquisition | — | (33 | ) | |||
| Operating income | 14,749 | 3,654 | ||||
| Change in fair value of an equity investment | 83 | 1,066 | ||||
| Other income | — | 672 | ||||
| Interest expense, net | (398 | ) | (946 | ) | ||
| Income before provision for income taxes and loss on equity method investment | 14,434 | 4,446 | ||||
| Income tax expense | (4,499 | ) | (1,362 | ) | ||
| Income before loss from equity method investment | 9,935 | 3,084 | ||||
| Loss from equity method investment | — | (13 | ) | |||
| Net income | $ | 9,935 | $ | 3,071 | ||
| Earnings per common share—basic | $ | 0.33 | $ | 0.10 | ||
| Earnings per common share—assuming dilution | $ | 0.33 | $ | 0.10 | ||
| Weighted average shares outstanding—basic | 29,677 | 29,737 | ||||
| Weighted average shares outstanding—assuming dilution | 30,349 | 30,523 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
ANALYSIS OF SALES
(Inthousands)
(Unaudited)
| For the three Months Ended<br>March 31 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | %Change | |||||||||
| Net sales: | ||||||||||||
| U.S. crop | $ | 88,193 | $ | 54,755 | $ | 33,438 | 61 | % | ||||
| U.S. non-crop | 13,396 | 17,453 | (4,057 | ) | -23 | % | ||||||
| Total U.S. | 101,589 | 72,208 | 29,381 | 41 | % | |||||||
| International | 47,846 | 43,947 | 3,899 | 9 | % | |||||||
| Total net sales: | $ | 149,435 | $ | 116,155 | $ | 33,280 | 29 | % | ||||
| Gross profit: | ||||||||||||
| U.S. crop | $ | 40,345 | $ | 21,271 | $ | 19,074 | 90 | % | ||||
| U.S. non-crop | 5,965 | 9,383 | (3,418 | ) | -36 | % | ||||||
| Total U.S. | 46,310 | 30,654 | 15,656 | 51 | % | |||||||
| International | 14,883 | 14,477 | 406 | 3 | % | |||||||
| Total gross profit: | $ | 61,193 | $ | 45,131 | $ | 16,062 | 36 | % | ||||
| Gross margin: | ||||||||||||
| U.S. crop | 46 | % | 39 | % | ||||||||
| U.S. non-crop | 45 | % | 54 | % | ||||||||
| Total U.S. | 46 | % | 42 | % | ||||||||
| International | 31 | % | 33 | % | ||||||||
| Gross margin: | 41 | % | 39 | % |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the three months<br>ended March 31 | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 9,935 | $ | 3,071 | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||
| Depreciation and amortization of fixed and intangible assets | 5,230 | 5,403 | ||||
| Amortization of other long-term assets | 1,173 | 1,200 | ||||
| Loss on disposal of property, plant and equipment | 77 | — | ||||
| Accretion of discounted liabilities and deferred loan fees | 75 | 99 | ||||
| Provision for bad debts | 494 | 682 | ||||
| Loan principal and interest forgiveness | — | (672 | ) | |||
| Fair value adjustment of contingent consideration | 599 | — | ||||
| Stock-based compensation | 1,563 | 1,792 | ||||
| Decrease in deferred income taxes | 207 | (269 | ) | |||
| Change in fair value of an equity investment | (83 | ) | (1,066 | ) | ||
| Other | — | 46 | ||||
| Net foreign currency adjustment | (261 | ) | 194 | |||
| Changes in assets and liabilities associated with operations: | ||||||
| Increase in net receivables | (33,660 | ) | (30,482 | ) | ||
| Increase in inventories | (11,738 | ) | (9,615 | ) | ||
| Increase in prepaid expenses and other assets | (800 | ) | (1,052 | ) | ||
| Decrease in income tax receivable/payable, net | 3,046 | 638 | ||||
| Decrease in net operating lease liability | (67 | ) | (18 | ) | ||
| Increase in accounts payable | 9,677 | 2,223 | ||||
| Decrease in customer prepayments | (44,528 | ) | (11,293 | ) | ||
| Increase in accrued program costs | 24,601 | 7,770 | ||||
| Increase (decrease) in other payables and accrued expenses | 2,145 | (1,187 | ) | |||
| Net cash used in operating activities | (32,315 | ) | (32,536 | ) | ||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (3,294 | ) | (2,904 | ) | ||
| Proceeds from disposal of property, plant and equipment | 54 | — | ||||
| Intangible assets | (1,010 | ) | (41 | ) | ||
| Net cash used in investing activities | (4,250 | ) | (2,945 | ) | ||
| Cash flows from financing activities: | ||||||
| Net borrowings under line of credit agreement | 46,000 | 35,900 | ||||
| Net receipt from the issuance of common stock under ESPP | 436 | 340 | ||||
| Net receipt from the exercise of stock options | — | 67 | ||||
| Payment for tax withholding on stock-based compensation awards | (2,174 | ) | (2,861 | ) | ||
| Repurchase of common stock | (6,219 | ) | — | |||
| Payment of cash dividends | (594 | ) | (592 | ) | ||
| Net cash provided by financing activities | 37,449 | 32,854 | ||||
| Net increase (decrease) in cash and cash equivalents | 884 | (2,627 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 672 | 469 | ||||
| Cash and cash equivalents at beginning of period | 16,285 | 15,923 | ||||
| Cash and cash equivalents at end of period | $ | 17,841 | $ | 13,765 |
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
For the three months March 31, 2022 and 2021
(Unaudited)
| Unaudited Reconciliation of Net Income to EBITDA (in thousands of dollars) | March 31, 2022 | March 31, 2021 | ||
|---|---|---|---|---|
| Net income, as reported | $ | 9,935 | $ | 3,071 |
| Provision for income taxes | 4,499 | 1,362 | ||
| Interest expense, net | 398 | 946 | ||
| Depreciation and amortization | 6,472 | 6,684 | ||
| Stock compensation | 1,563 | 1,792 | ||
| Adjusted EBITDA^2^ | $ | 22,867 | $ | 13,855 |
| ^2^ | Earnings before interest, taxes, depreciation, amortization and<br>non-cash stock compensation. 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<br>alternative to net income (loss), operating income (loss) or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. We provide these measures because we<br>believe that they provide helpful comparisons to other companies in our industry and peer group. The items excluded from Adjusted EBITDA are detailed in the reconciliation attached to this news release. Other companies (including the Company’s<br>competitors) may define EBITDA differently. | |||
| --- | --- |
EX-99.2
Q1 2022 Earnings Presentation May 4, 2022 ® Exhibit 99.2
Safe Harbor 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.
Pending Proxy Solicitation Certain Information Regarding Participants to Our Pending Proxy Solicitation Part of the information set forth in this presentation refers to our Annual Meeting of Shareholders, which is scheduled to occur on June 1, 2022, using a virtual meeting facility. The Company and its directors, executive officers and certain employees and other persons may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the business to be conducted at the Annual Meeting. Stockholders may obtain information regarding the names, affiliations and interests of the Company’s directors and executive officers included in or incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on March 14, 2022, or from the Company’s definitive proxy statement filed with the SEC on April 29, 2022. To the extent the holdings of the Company’s securities by the Company’s directors and executive officers have changed since the numbers set forth in the Company’s definitive proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.
Agenda Opening RemarksEric Wintemute Chairman and CEO Financial ReviewDavid Johnson - CFO Strategic Growth Initiatives Eric Wintemute Core Business Programs Green Solutions Expansion SIMPAS/Ultimus Commercialization Concluding RemarksEric Wintemute
2022 Performance Targets Net Income . . .. . . . . . . . 60 - 70% Increase Revenue Growth . . . . . . . . 8% - 11% Gross Profit Margin . . . . . . 38-40% Operating Expenses . . . . . . OPEX as % of Sales (31-33%) Interest Expense . . . . . . . . . Similar to 2021 Tax Rate . . . . . . . . . .. . . . . . Expected Mid 20% Range Debt-to-EBITDA* Target . . . <1.0X with out Acquisitions <2.5X with Acquisitions Q1 2022 +29% +41% 31% $400K vs $950k (Down 58%) 31% 1.25X EBITDA* . . . . . . . . . . . . Grow faster than Revenue 224% +65% *Non GAAP adjusted as per earnings released dated 5-4-2022
Add New Sources for Critical Raw Materials Place Orders Well in Advance Forecast COG’s on Rolling 12 Month Period Constant Communication with Global Marketing to Maintain Gross Margins Weekly (or more) Meetings with Our 6 North American Factories to Maximize Production and Meet Growing Demands AMVAC Supply Chain Response Appear to be covered for balance of the year Orders being placed through 12-31-22 Working well Led to Q1 margin increase. Combination of price increases and freight surcharge Factory output increasing. So far succeeding in meeting extraordinary demand
Financial Review
Q1 2022 Sales Overall sales Q1 2022 $149m vs $116m in 2021 (up 29%) International 32% of total in 2022 vs 38% of total in 2021 $ 000’s US Crop up 61% US Non-crop down 23% International up 9%
Q1 2022 Gross Profit Performance ($000’s)
Q1 2022 Operating Expenses $46,444 $41,444 $ 000’s Operating expenses are 31% of sales in 2022 vs 36% in 2021
Q1 2022 Statements of Operations $ 000’s
Q1 2022 Cash Generation and Uses $ 000’s
Inventory as a Percentage of Sales Percentage
Debt & Borrowing Capacity $ Millions 168 143 98 $70 Million Reduction since Q1 2020
Overall Financial Performance of Operations Overall, the first quarter of 2022 represented a very strong start to what is shaping up to be an exciting year for the Company. Sales and gross margins are up. Operating Expenses reduced as compared to sales, Operating Income and net income both increased strongly. Finally, average debt is down and availability on our credit facility has improved dramatically.
Product revenues up 42% vs. Q1 2021 Strong performance by several groups – LATAM, China, Mexico, Brazil, India, Australia US business very strong year over year with 143% growth over Q1 2021 Full Year budget of $52M on track (30% over 2021) Q1 2022 Gross Margins at 42% Includes distribution products Green Solutions Business Update Q1 2022
SIMPAS – Highlights 2022 Commercial SIMPAS Technology Sales On target to achieve 70 system sales to growers Sales outpaced supply for 2022 2023 SIMPAS Technology Outlook Our target of 125 systems are on track Commercial Agreements for 2022 Verdisian – MycroSync® IronClad, IDC Azotic – Envita® (Plant N fixing solution) AMVAC – iNvigorate® Now 80 Systems Added Resources to Meet Increased Demand Will Provide an Update on Q2 Call Added BASF Inoculant for Soybean Rhizo-Flo®
U.S. Ag Update Farm Net Income $110 now $120 Billion Rain Delays Good for MidWest Inputs YTD Corn 14% planted vs 42% in 2021 More Cotton and Soybeans in South Corn 89-90 Million Acres Soybean 91-92 Million Acres Cotton 9.5-10 Million Acres Harvested MAX YIELD KEY Farmers are investing in at plant inputs
Strategic Growth Targets $ Millions $947 $695 $805 Performance EBITDA Target 2025 $155 Million
Concluding Remarks
Total Shareholder Return Since May 2015 (i.e. last 7 years) AVD has delivered strong returns relative to the market… Note: Market date as of 5/3/2022; TSR from 5/3/2015 – 5/3/2022 Source: Market data
Despite the down-turn post-2013, AVD has meaningfully expanded the top-line and out-grown the industry Net Revenue Performance Since 2012A Source: Market data, AgBioInvestor 2012A – 2021A net revenue CAGR: 4.8% Management net revenue growth guidance: 8-11% Global crop protection industry has only grown 1.3% p.a. since 2012
TEV / NTM EBITDA Since May 2015 (i.e. last 7 years) Sizeable and persistent valuation premium to other agrochemical producers L7Y L5Y LTM American Vanguard 10.5x 10.5x 10.1x Off-patent agrochemicals 9.4x 9.4x 9.1x Note: Market date as of 5/3/2022; TEV / NTM EBITDA 5/3/2015 – 5/3/2022; Off-patent agrochemicals includes FMC, UPL and Nufarm Source: Company filings, press releases, Market data 1.4x premium American Vanguard Agrochemical Producers
Consistent dividend payments AVD Quarterly Dividend History Since 2016 Note: Market date as of 5/3/2022; AVD began paying a regular quarterly dividend in June of 2016 Source: Market data Suspended dividend to preserve liquidity during uncertainty cause by COVID-19 pandemic
Existing Board embodies all of the key competencies to lead AVD forward Board of Directors Essential Competencies Diversity Sustainable Agriculture Marketing in agricultural space Regulatory expertise Strategy Mergers & Acquisitions Precision application ESG Intellectual Property Supply Chain Manufacturing Audit Eric Wintemute Chairman ü ü ü ü ü ü ü ü ü ü Alfred Ingulli Finance Chair ü ü ü ü ü ü ü ü ü ü Debra Edwards Compensation Chair ü ü ü ü ü ü ü Emer Gunter ESG Liaison ü ü ü ü ü ü ü ü ü Esmail Zirakparvar Nom & Gov Chair ü ü ü ü ü ü ü ü ü John Killmer Lead Director ü ü ü ü ü ü ü ü ü Marisol Angelini ü ü ü ü ü ü ü ü ü Morton Erlich Audit Chair ü ü ü ü ü Scott Baskin Risk Chair ü ü ü ü ü ü ü
American Vanguard (“AVD”) has delivered strong performance over the long-term Attractive returns over a sustained period TSR +77% vs. Russell 2000 index 68% since May 2015 Clear and persistent valuation premium (>1x EBITDA) to other agrochemical producers Meaningful top-line growth and consistent dividend payments over the last decade despite pro-longed agricultural down-cycle Prudent balance sheet management and capital allocation with ample headroom to pursue value-accretive M&A Improved cost structure with further scope for refinement Management targeting 100 bps reduction in operating expenses relative to sales every year AVD is optimally positioned for the future with a compelling investor thesis Executive summary
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