Specialty chemicals maker
American Vanguard Corp.
) saw its first-quarter 2013 profit nearly double on the back of
strong market demand for its corn herbicide and insecticide
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The Newport Beach, Calif.-based company logged earnings of 59
cents a share in the quarter that trounced the Zacks Consensus
Estimate by 19 cents and surpassed the year-ago quarter's
earnings of 31 cents.
American Vanguard posted a profit of $16.9 million in the
reported quarter, a 94% surge from a profit of $8.7 million
recorded a year ago. The bottom line was boosted by healthy
demand for the company's crop protection products. American
Vanguard is leveraging the growing demand for soil insecticides
as the U.S. corn growers contend with pest problems.
Revenues shot up 39% year over year to $121.5 million in the
reported quarter, buoyed by strong adoption of the company's
granular soil insecticides and Impact herbicide in the domestic
corn market. Sales topped the Zacks Consensus Estimate of $108
Crop revenues jumped 45% year over year to $116 million.
Insecticide (including both granular products and foliar
insecticide) sales climbed 41% to $79 million. Revenues from the
herbicides, fungicides and fumigant product group soared 68% to
Gross margin rose to 44% in the reported quarter from 43% a year
ago, aided by higher pricing and better product mix. Operating
expenses climbed 20% year over year to $27.6 million, partly due
to higher selling and administrative expenses. Operating margin
rose to 21.5% in the reported quarter from 16.5% in a year ago as
a healthy rise in sales more than offset higher operating costs.
American Vanguard ended the quarter with cash of around $10
million, down roughly 32% year over year. Total long-term debt
decreased 15% year over year to $49.9 million.
American Vanguard is optimistic about 2013 and feels that it is
well placed to meet the increasing demand for soil insecticides
by maintaining full production of its products and proprietary
equipment systems. The company is also expected to benefit from
its herbicide co-marketing program with
American Vanguard, in April 2013, completed its equity investment
in life sciences company, TyraTech, Inc. The company invested
$3.7 million to clinch a 29.46% stake in TyraTech. The investment
achieves a major goal through the expansion of American
Vanguard's participation in the development of products derived
from natural sources and penetration of such technologies in
American Vanguard also recently received registration from the
Environmental Protection Agency (EPA) for SmartBlock, a
breakthrough technology for preserving potatoes during storage.
American Vanguard makes specialty chemical products for
agricultural and commercial applications. The company develops
and markets an array of chemicals, including insecticides,
fungicides and herbicides, for crops, human and animal health
protection. American Vanguard has the largest assortment of corn
soil insecticides coupled with the most advanced dispensing
American Vanguard currently carries a Zacks Rank #1 (Strong Buy).
Other companies in the specialty chemicals industry with a
favorable Zacks Rank are
American Pacific Corporation
). While American Pacific holds a Zacks Rank #1 (Strong Buy),
Ferro retains a Zacks Rank #2 (Buy).