American Vanguard Corp. (NYSE:AVD) Q3 2017 Earnings Conference Call Transcript

Nov 02, 2017 • 04:30 pm ET


American Vanguard Corp. (NYSE:AVD) Q3 2017 Earnings Conference Call Transcript


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Greetings, and welcome to the American Vanguard Corporation's Third Quarter 2017 Conference Call and Webcast. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your presenter, Bill Kuser, Director of IR. Thank you, please begin.

Bill Kuser

Thank you very much, Leah, and welcome, everyone, to American Vanguard's Third Quarter and Nine-Month Earnings Review. Our speakers today will be Mr. Eric Wintemute, the Chairman and CEO of American Vanguard; Mr. David Johnson, the Company's CFO; and also assisting in answering any of your questions, Mr. Bob Trogele, the Company's COO.

This afternoon, American Vanguard filed our Form 10-Q with the SEC, providing additional details to the results that we will be discussing in this call.

(Forward-Looking Cautionary Statements)

With that said, we'll turn the call over to Eric.

Eric Wintemute

Thank you, Bill. Hello, everyone, and welcome to our third quarter earnings call. We thank you for your support and continued interest in American Vanguard.

Let me start with a 10,000-foot view of our overall performance, and then I will focus on sales by market. David will follow with his analysis on financial metrics for the reporting periods. I will then return with a view into the short and midterm and close with comments on our strategic investments.

As you will have read in our earnings release, we recorded healthy top and bottom line performance for the third quarter and first nine months of 2017. Sales were up 9% for the quarter and 6% year-to-date, while earnings were up 42% for the quarter and 34% for the first nine months. This marks a continuation of our upward trajectory over several quarters for both the top and bottom line.

During the quarter, we enjoyed strong performance by a number of existing products, particularly in cotton and public health markets, and began to record sales of products from new acquisitions. While the 42% increase in net income generated EPS of $0.14 per share, that result was hindered by higher operating expenses, which were up about $3.3 million for the quarter.

This roughly estimates about $0.07 per share. We believe that this money was well spent, as about half of that increase arose from two things. First, we incurred one-time charges for audit and legal services related to due diligence and negotiation of four recent significant acquisitions. Acquisitions have historically been a key to our growth, and we expect to benefit from improved market access while building upon $100-plus million in total sales that our four newly acquired businesses have generated in recent years. Second, we increased our investment in SIMPAS technology, particularly GPS integration, and further refinement as we draw closer to commercialization.

Before turning the presentation over to David, I wanted to give additional color on market conditions that supported our Q3 and year-to-date results. Our top line performance resulted from a combination of existing and new products. While we recorded strong sales of Dibrom, our mosquito adulticide, as domestic customers responded to FEMA's requirement