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American Vanguard Reports Fourth Quarter & Full Year 2014 Results

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American Vanguard Corporation (NYSE:AVD) today announced financial results for the fourth quarter and full year ended December 31, 2014.

Fiscal 2014 Fourth Quarter Financial Highlights – versus Fiscal 2013 Fourth Quarter:

  • Net sales were $77.6 million in Q4 2014 compared to $75.5 million in Q4 2013.
  • Net income was $1.8 million in Q4 2014 compared to $0.3 million in Q4 2013.
  • Earnings per diluted share were $0.06 in Q4 2014 versus $0.01 in Q4 2013.

Fiscal 2014 Financial Highlights – versus Fiscal 2013:

  • Net sales were $298.6 million in FY 2014 compared to $381.0 million in FY 2013.
  • Net income was $4.8 million in FY 2014 compared to $34.4 million in FY 2013.
  • Earnings per diluted share were $0.17 in FY 2014 versus $1.19 in FY 2013.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our performance in 2014 was significantly influenced by reduced procurement of our corn products by the Midwest distribution channel. Persistent rainfall during the spring of 2013 led to substantial unplanted acres, significant amounts of unapplied crop protection inputs and a build-up of unused inventories stockpiled at distributors, retailers and growers. Understandably, these large carryover inventories prompted a sharp reduction in restocking orders during 2014, as excess supplies were worked down. Reduced sales of our corn products were the primary drivers of our 2014 revenue decline, offsetting the stability and modest growth of our sales in other crop segments.”

Mr. Wintemute continued: “The prospects for 2015 planting inputs remain uncertain, as lower corn commodity prices and lower corn grower profitability may lead to cautious purchasing in the Midwest. However, the level of inventory of our corn products in the distribution channel has substantially normalized and as a result, more typical procurement patterns may resume in 2015. While such a recovery could be impacted by near-term commodity prices and crop rotation decisions on the farm, we expect demand for our yield enhancing corn products to continue to grow in the long term.”

Mr. Wintemute concluded: “During recent years of outstanding earnings and revenue growth, American Vanguard expanded its infrastructure. In light of current market conditions, however, management has taken significant steps to streamline manufacturing costs and reduce operating expenses through workforce reductions, compensation adjustments and vendor contract renegotiations. These measures will enable us to attain greater operating efficiency while continuing to make progress on product innovation, equipment systems development and international expansion. Also, we continue to strengthen our balance sheet through tightened working capital control, particularly with regard to inventory.”

Conference Call

Eric Wintemute, Chairman & CEO, Bob Trogele, EVP & COO, and David T. Johnson, VP & CFO, will conduct a conference call focusing on the financial results at 4:30 pm ET / 1:30 pm PT on Thursday, February 26, 2015. 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(R) and Russell 3000(R) 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 STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December 31, 2014, 2013 and 2012

(In thousands, except per share data)

2014 2013 2012
Net sales $ 298,634 $ 381,021 $ 366,190
Cost of sales 184,138 209,674 205,065
Gross profit 114,496 171,347 161,125
Operating expenses 107,786 115,612 101,802
Operating income 6,710 55,735 59,323
Interest expense 3,172 2,176 2,872
Interest income (19 ) (1 ) (1 )
Interest capitalized (87 ) (274 ) (400 )
Income before provision for income taxes and loss on equity investment 3,644 53,834 56,852
Income taxes (benefit) expense (451 ) 18,916 20,026
Income before loss on equity investment 4,095 34,918 36,826
Less net loss from equity method investment (29 ) (986 )
Net income 4,066 33,932 36,826
Add back net loss attributable to non-controlling interest 775 517 41
Net income attributable to American Vanguard $ 4,841 $ 34,449 $ 36,867
Change in fair value of interest rate swaps 340 388 158
Foreign currency translation adjustment (1,262 ) 326 330
Comprehensive income $ 3,919 $ 35,163 $ 37,355
Earnings per common share-basic $ .17 $ 1.22 $ 1.32
Earnings per common share-assuming dilution $ .17 $ 1.19 $ 1.28
Weighted average shares outstanding-basic 28,436 28,301 27,914
Weighted average shares outstanding-assuming dilution 28,912 28,899 28,756

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2014 and 2013

(In thousands, except share data)

2014 2013
Assets
Current assets:
Cash and cash equivalents $ 4,885 $ 6,680
Receivables:
Trade, net of allowance for doubtful accounts of $166 and $392, respectively 86,027 74,060
Other 2,396 892
88,423 74,952
Inventories 165,631 139,830
Prepaid expenses 13,415 11,435
Income taxes receivable 5,964 10,088
Deferred income tax assets 8,731 6,521
Total current assets 287,049 249,506
Property, plant and equipment, net 50,026 52,468
Intangible assets, net of applicable amortization 100,211 107,007
Other assets 35,885 38,462
$ 473,171 $ 447,443
Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of other notes payable $ 71 $ 69
Current installments of other liabilities 1,357 2,132
Accounts payable 20,411 40,702
Deferred revenue 898 3,788
Accrued program costs 52,546 53,630
Accrued expenses and other payables 5,962 10,178
Total current liabilities 81,245 110,499
Long-term debt and other notes payable, excluding current installments 99,455 51,676
Other liabilities, excluding current installments 3,309 4,143
Deferred income tax liabilities 28,159 23,330
Total liabilities 212,168 189,648
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 31,550,477
shares in 2014 and 31,092,782 shares in 2013

3,156 3,109
Additional paid-in capital 66,232 60,160
Accumulated other comprehensive loss (1,970 ) (1,048 )
Retained earnings 202,488 202,470
269,906 264,691
Less treasury stock at cost, 2,450,634 shares in 2014 and 2,380,634 shares in 2013 (8,269 ) (6,738 )
American Vanguard Corporation stockholders’ equity 261,637 257,953
Non-controlling interest (634 ) (158 )
Total stockholders’ equity 261,003 257,795
$ 473,171 $ 447,443

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2014, 2013 and 2012

(In thousands)

2014 2013 2012
Increase cash
Cash flows from operating activities:
Net income $ 4,066 $ 33,932 $ 36,826

Adjustments to reconcile net income to net cash (used in) provided by
operating activities:

Depreciation and amortization of fixed and intangible assets 16,332 14,845 13,487
Amortization of other long term assets 5,811 4,598 2,925
Amortization of discounted liabilities 324 174 818
Stock-based compensation 4,153 3,819 2,950
Tax benefit from exercise of stock options (300 ) (440 ) (621 )
Increase (decrease) in deferred income taxes 2,619 2,523 (886 )
Operating loss from equity method investment 983 986
Gain from dilution of equity method investment (954 )
Changes in assets and liabilities associated with operations:
(Increase) decrease in net receivables (13,471 ) 2,351 (7,505 )
Increase in inventories (25,801 ) (51,879 ) (16,883 )
Decrease (increase) in income tax receivable/payable, net 4,424 (10,961 ) 2,137
Increase in prepaid expenses and other assets (4,743 ) (19,733 ) (23,725 )
(Decrease) increase in accounts payable (19,951 ) 8,252 9,781
(Decrease) increase in deferred revenue (2,890 ) (16,639 ) 12,856
(Decrease) increase in other payables and accrued expenses (4,697 ) 21,958 8,264
Net cash (used in) provided by operating activities (34,095 ) (6,214 ) 40,424
Cash flows from investing activities:
Capital expenditures (7,180 ) (15,260 ) (17,628 )
Investment (500 ) (3,687 )
Acquisitions of intangible assets (3,473 )
Net cash used in investing activities (7,680 ) (18,947 ) (21,101 )
Cash flows from financing activities:
Net borrowings under line of credit agreement 47,850 51,550
Payments on long-term debt (46,000 ) (8,443 )
Payment on other long-term liabilities (1,756 ) (1,831 ) (6,035 )
Tax benefit from exercise of stock options 300 440 621
Decrease in other notes payable (6,154 ) (51 )
Repurchases of common stock (1,531 ) (1,934 )

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

1,666 1,610 3,227
Non-controlling interest contribution 299 400
Payment of cash dividends (5,672 ) (4,804 ) (6,148 )
Net cash provided by (used in) financing activities 41,156 (7,123 ) (16,429 )
Net (decrease) increase in cash (619 ) (32,284 ) 2,894
Effect of exchange rate changes on cash (1,176 ) 488 497
Cash and cash equivalents at beginning of year 6,680 38,476 35,085
Cash and cash equivalents at end of year $ 4,885 $ 6,680 $ 38,476
Supplemental cash flow information:
Cash paid (received) during the year for:
Interest $ 2,298 $ 1,777 $ 1,891
Income taxes $ (8,206 ) $ 25,271 $ 18,048

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