Specialty chemicals maker
American Vanguard Corp.
) saw its second-quarter 2013 profit decline as unfavorable
weather conditions and weak farmer demand weighed on its top line
in the quarter. Wet weather across Midwest and Southeast led to a
reduction in the number of cotton acres planted in the U.S.
AMER VANGUARD (AVD): Free Stock Analysis
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The Newport Beach, Calif.-based company posted earnings of 29
cents a share in the quarter that missed the Zacks Consensus
Estimate by 6 cents and trailed the year-ago quarter's earnings
by a penny.
American Vanguard recorded a profit of $8.4 million in the
reported quarter, down 4% from a profit of $8.7 million recorded
a year ago. The impact of bad weather and higher costs affected
Revenues rose just 2% year over year to $86.8 million in the
reported quarter as rainfall delayed and compressed normal
planting practices, causing farmers to make fewer crop protection
applications. Healthy sales of corn products were masked by a
decline in cotton and peanut products revenues which was affected
by reduced planted acres of those crops. Sales missed the the
Zacks Consensus Estimate of $95 million.
Gross margin rose to 48% in the reported quarter from 45% a year
ago, aided by favorable product mix. Operating expenses climbed
21% year over year to $29.2 million, partly due to higher selling
and administrative expenses. Operating margin fell to 14.9% in
the reported quarter from 16.8% in a year ago as a modest rise in
sales was more than offset by higher operating costs.
American Vanguard ended the quarter with cash of around $32.4
million, down roughly 33% year over year. Total long-term debt
decreased 27% year over year to roughly $41 million.
Moving ahead, American Vanguard sees strong demand for its
diversified product lines across several crops and geographies in
the second half. Certain factors that are expected to affect its
results in the third and fourth quarters include the successful
promotion and sales of its market leading post-harvest Metam soil
fumigants, normal late-summer pest pressure to support its Bidrin
foliar cotton insecticide and favorable weather conditions to
support its Folex cotton harvest defoliant.
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, 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 is also expected to benefit from its herbicide
co-marketing program with
). During the second quarter, the company expanded its agreement
with Monsanto to co-market its Impact herbicide with the latter's
market leading Roundup brands.
American Vanguard currently carries a Zacks Rank #3 (Hold).
Other companies in the specialty chemical space with favorabe
Zacks Rank are
KMG Chemicals Inc.
). While Ferro holds a Zacks Rank #1 (Strong Buy), KMG retains a
Zacks Rank #2 (Buy).