American Vanguard Corporation (AVD) has reported a 3.79 percent rise in profit for the quarter ended Sep. 30, 2016. The company has earned $2.88 million, or $0.10 a share in the quarter, compared with $2.77 million, or $0.09 a share for the same period last year.
Revenue during the quarter grew 13.74 percent to $82.45 million from $72.49 million in the previous year period. Gross margin for the quarter contracted 336 basis points over the previous year period to 40.01 percent. Total expenses were 94.26 percent of quarterly revenues, up from 92.59 percent for the same period last year. That has resulted in a contraction of 168 basis points in operating margin to 5.74 percent.
Operating income for the quarter was $4.73 million, compared with $5.37 million in the previous year period.
Eric Wintemute, chairman and chief executive officer of American Vanguard stated: "Our third quarter and nine month financial results reflect management initiatives to expand our revenue base while maintaining strong operational control. In the face of a variety of Ag Industry headwinds during the quarter, we have remained focused on driving growth in our core products, expanding existing US market share positions and controlling our manufacturing costs while continuing to invest in the future of our business both domestically and internationally. In addition, during the nine month period we have focused on driving our newest products to market both in the US with Scepter, our first Soybean herbicide, and internationally with Nemacur and Bromacil, acquired in early 2015."
Operating cash flow drops significantly
American Vanguard Corporation has generated cash of $36.20 million from operating activities during the nine month period, down 30.13 percent or $15.61 million, when compared with the last year period.
The company has spent $9.63 million cash to meet investing activities during the nine month period as against cash outgo of $41.76 million in the last year period.
The company has spent $24.54 million cash to carry out financing activities during the nine month period as against cash outgo of $8.25 million in the last year period.
Cash and cash equivalents stood at $6.59 million as on Sep. 30, 2016, up 21.46 percent or $1.16 million from $5.43 million on Sep. 30, 2015.
Working capital declines
American Vanguard Corporation has witnessed a decline in the working capital over the last year. It stood at $153.47 million as at Sep. 30, 2016, down 9.18 percent or $15.50 million from $168.97 million on Sep. 30, 2015. Current ratio was at 2.40 as on Sep. 30, 2016, down from 2.47 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 192 days for the quarter from 433 days for the last year period. Days sales outstanding went down to 101 days for the quarter compared with 116 days for the same period last year.
Days inventory outstanding has decreased to 132 days for the quarter compared with 366 days for the previous year period. At the same time, days payable outstanding went down to 40 days for the quarter from 49 for the same period last year.
Debt comes down significantly
American Vanguard Corporation has recorded a decline in total debt over the last one year. It stood at $44.49 million as on Sep. 30, 2016, down 52.02 percent or $48.24 million from $92.73 million on Sep. 30, 2015. Total debt was 9.61 percent of total assets as on Sep. 30, 2016, compared with 18.77 percent on Sep. 30, 2015. Debt to equity ratio was at 0.16 as on Sep. 30, 2016, down from 0.35 as on Sep. 30, 2015. Interest coverage ratio improved to 15.72 for the quarter from 8.42 for the same period last year.
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