Investment Thesis
American Vanguard is in financial distress with deteriorating fundamentals across profitability, cash flow, and debt servicing capacity. The company posted a net loss of $4.1M with negative operating cash flow of $35.4M despite $123.6M in revenue, while an interest coverage ratio of 0.3x indicates the firm cannot service its $264.4M debt burden from operations. Revenue declined 5.9% YoY and the company is burning through cash reserves at an unsustainable rate.
Strengths
- Gross margin of 31.1% indicates underlying manufacturing efficiency in core operations
- Current ratio of 2.32x provides adequate short-term liquidity cushion
- Positive stockholders' equity of $189.6M provides balance sheet foundation
Risks
- Negative operating cash flow of $35.4M indicates core business is not generating cash
- Interest coverage ratio of 0.3x signals inability to service debt from operating income
- Net loss of $4.1M with negative net margin of -3.4% indicates fundamental unprofitability
- Negative free cash flow of $35.7M at unsustainable depletion rate of $70.9M cash reserves
- Revenue declining 5.9% YoY with no evidence of stabilization or growth
- Leverage ratio of 1.39x Debt/Equity combined with weak cash generation creates refinancing risk
Key Metrics to Watch
- Quarterly operating cash flow and trend toward positive generation
- Interest coverage ratio improvement above 1.0x threshold for debt serviceability
- Revenue stabilization or growth inflection to confirm business stabilization
- Cash balance depletion rate and runway before potential covenant breaches
Financial Metrics
Revenue
123.6M
Net Income
-4.1M
EPS (Diluted)
$-0.14
Free Cash Flow
-35.7M
Total Assets
665.2M
Cash
70.9M
Profitability Ratios
Gross Margin
31.1%
Operating Margin
1.5%
Net Margin
-3.4%
ROE
-2.2%
ROA
-0.6%
FCF Margin
-28.9%
Balance Sheet & Liquidity
Current Ratio
2.32x
Quick Ratio
1.41x
Debt/Equity
1.39x
Debt/Assets
71.5%
Interest Coverage
0.33x
Long-term Debt
264.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T09:13:56.448757 |
Data as of: 2026-03-31 |
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