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Specialty chemicals maker American Vanguard Corp. (AVD - Snapshot Report) 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.

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 the results.

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 equipment.

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 non-agricultural markets.

American Vanguard is also expected to benefit from its herbicide co-marketing program with Monsanto (MON - Analyst Report). 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 Ferro Corp. (FOE - Snapshot Report) and KMG Chemicals Inc. (KMG - Snapshot Report). While Ferro holds a Zacks Rank #1 (Strong Buy), KMG retains a Zacks Rank #2 (Buy).

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