American Vanguard AVD saw higher profit in fourth-quarter 2014 on increased sales, but its results missed expectations. The Newport Beach, CA-based company registered a profit of $1.8 million in the reported quarter, a six-fold year over year rise from $0.3 million recorded a year ago.
Earnings per share for the quarter also rose to 6 cents per share from a penny per share a year ago. That, however, missed the Zacks Consensus Estimate by a nickel.
Revenues went up around 3% year over year to $77.6 million in the reported quarter. However, sales also missed the Zacks Consensus Estimate of $84 million.
For full-year 2014, profit slid roughly 86% year over year to $4.8 million on a double-digit decline in revenues. Earnings per share of 17 cents per share trailed the Zacks Consensus Estimate of 20 cents.
Revenues for the full year tumbled roughly 22% year over year to $298.6 million on lower sales of corn products, and missed the Zacks Consensus Estimate of $305 million.
The company’s results in 2014 were affected by lower procurement of its corn products by the Midwest distribution channel, significant unplanted acres and large amounts of unapplied crop protection inputs. Moreover, large unused inventories at distributors, retailers and farmers led to a considerable fall in restocking orders during the year.
American Vanguard ended 2014 with cash of around $4.9 million, down roughly 27% year over year. Long-term debt jumped 92% year over year to roughly $99.5 million.
American Vanguard’s shares fell 1.2% to close at $11.27 last Friday. The stock is down around 49% over a year.
Moving ahead, American Vanguard expects prospects for planting inputs to remain uncertain in 2015 as lower corn commodity pricing coupled with reduced grower profitability may lead to cautious buying in the Midwest. Nevertheless, the company sees more typical procure patterns to resume this year as the level of corn inventories in the distribution channel has been normalized. The company expects demand for its yield boosting corn products to rise in the long haul.
American Vanguard has taken up steps to streamline manufacturing expenses and cut operating costs through headcount reductions, compensation adjustments and vendor contract renegotiations, which would allow it achieve enhanced operating efficiency while making progress on product innovation and overseas expansion.
American Vanguard’s agreement with Monsanto MON to co-market its Impact herbicide with the latter’s market-leading Roundup brands also represents a positive for the company.
American Vanguard currently retains a Zacks Rank #3 (Hold).
Other companies in the specialty chemical space with favorabe Zacks Rank are Axalta Coating Systems Ltd. AXTA and Penford Corp. PENX with both retaining a Zacks Rank #1 (Strong Buy).
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