American Vanguard's sales increased by 8% in 2016

Date:03-09-2017

American Vanguard's sales increased by 4.4% to $87.5 million in the fourth quarter of 2016. Net income advanced by 30% to $3.9 million in this quarter.

For the full year of 2016, American Vanguard's sales were up by 7.8% to $312.1 million,and net income improved 94% to $12.8 million.

Eric Wintemute, Chairman and CEO of American Vanguard, stated: “Our improved performance in 2016 reflects a solid base business and disciplined management in spite of industry conditions, as low crop commodity prices continue to cause cautious purchasing of all crop inputs, including crop protection products. In 2016 our industry posted revenues that, on average, were about 7% below those of the prior year. In contrast, by following a practice of systematically reducing inventory to meet true demand, maintaining brand value, and optimizing our cost structures, this past year American Vanguard has been able to generate a sequential revenue increase of 8% and earnings growth of 94%.”

Mr. Wintemute continued: “We continue to see stable demand for many of our products both at home and abroad. Revenue growth in 2016 was driven mainly by our herbicide products and by our valuable non-crop portfolio. In addition, we have expanded domestic market access with our YES-Retail program and have promoted several new products in international regions and the US soybean market. Further, our operations team has continued to control manufacturing costs, and we have exceeded our inventory reduction target with a year-end level of $121 million. Improved sales, operating earnings and working capital management have enabled us to generate $125 million in cash over the last 2 years. Our improved cash flow has allowed us to reduce our debt to $41 million, increased our borrowing capacity and, as a result, positioned the Company for product acquisitions that we expect will likely emerge from the current round of industry consolidation.”

Mr. Wintemute concluded: “Our outlook for 2017 is positive. We anticipate a long planting season this Spring, following relatively temperate winter weather conditions, that often stimulate heavier pest pressure. We expect relative stability in the Midwest corn markets; this should drive sales of our corn soil insecticides and herbicides, given that channel inventory levels are now at close to historically normal levels. An expected 10% increase in U.S. cotton acreage favors our foliar insecticide and harvest aid products. Internationally, we are poised for modest growth driven by the market penetration of several newly acquired products. In our non-crop business, we also expect to experience continued expansion. We will, of course, continue to manage working capital and operational costs closely. However, given the shift to precision agriculture, it is important that we continue to invest in technology innovation, such as SIMPAS, as we did in 2016. Finally, we will continue to expand our international footprint through product acquisitions and strategic alliances such as our Hong Kong joint venture. In short, we will continue to do the things that have enabled us to improve our financial performance and balance sheet, while positioning ourselves for the future.”