Balchem Corporation Reports Third Quarter 2024 Financial Results
MONTVALE, N.J., Oct. 25, 2024 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) reported today financial results for its 2024 fiscal third quarter ended September 30, 2024. For the quarter, the Company reported net sales of $239.9 million, net earnings of $33.8 million, adjusted EBITDA(a) of $64.4 million, and free cash flow(a) of $42.2 million.
Ted Harris, Chairman, President and CEO of Balchem said, "We delivered strong third quarter financials with solid revenue growth and record earnings from operations and adjusted EBITDA. We continue to see excellent performance in our Human Nutrition and Health and Specialty Products segments, both delivering strong sales and earnings growth."
Third Quarter 2024 Financial Highlights:
Net sales were $239.9 million, an increase of 4.3% compared to the prior year quarter.
Adjusted EBITDA was a record $64.4 million, an increase of 7.6% from the prior year quarter.
GAAP net earnings were $33.8 million, an increase of 16.4% from the prior year quarter.
GAAP earnings per share of $1.03 compared to $0.90 in the prior year quarter and record adjusted earnings per share(a) of $1.13 compared to $1.04 in the prior year quarter.
Cash flows from operations were $51.3 million for the third quarter of 2024, with quarterly free cash flow(a) of $42.2 million.
Strong sales growth and earnings from operations in both our Human Nutrition and Health and Specialty Products segments.
Recent Highlights:
Balchem's Human Nutrition and Health segment continued to bring innovative new products to its minerals and nutrients portfolio with two new solutions, K2Vital® Delta Fermented and VitaCholine® Pro-Flo. K2Vital® Delta Fermented is a vitamin K2 from fermentation in a patented microencapsulated form, and VitaCholine® Pro-Flo is an enhanced formulation designed for inclusion in multivitamins.
Balchem's Animal Nutrition and Health segment launched a newly developed product, AminoShure®-XL, which is a next generation rumen protected precision release lysine solution designed to consistently, reliably, and economically meet the lysine amino acid dietary requirements of lactating dairy cattle. AminoShure®-XL offers leading performance when considering feed stability, lysine content, and bioavailability compared to other products in the market and is a great addition to the Animal Nutrition and Health segment's portfolio of high performing encapsulated products focused on optimizing dairy cow productivity and sustainability.
Strong cash flows in the third quarter enabled us to make repayments on our revolving debt of $39.6 million, bringing our net debt to $153.3 million, with an overall leverage ratio on a net debt basis of 0.6 times.
Mr. Harris said, "I am excited about the recent product launches in both our Human and Animal Nutrition and Health segments which add to the previously announced launch of Optifolin+® earlier this year, as we continue to focus on bringing innovative solutions for the health and nutritional needs of the world."
Mr. Harris continued, "I am very pleased with our year-to-date 2024 financial performance as well as the progress we continue to make on our strategic growth initiatives which will help fuel our longer term growth."
Results for Period Ended September 30, 2024 (unaudited) (Dollars in thousands, except per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net sales
$
239,940
$
229,948
$
713,680
$
693,740
Gross margin
85,361
76,544
249,869
227,063
Operating expenses
37,369
32,930
114,404
106,205
Earnings from operations
47,992
43,614
135,465
120,858
Interest and other expenses
4,099
7,139
13,496
16,864
Earnings before income tax expense
43,893
36,475
121,969
103,994
Income tax expense
10,056
7,400
27,077
22,099
Net earnings
$
33,837
$
29,075
$
94,892
$
81,895
Diluted net earnings per common share
$
1.03
$
0.90
$
2.90
$
2.52
Adjusted EBITDA(a)
$
64,379
$
59,807
$
187,515
$
175,481
Adjusted net earnings(a)
$
36,928
$
33,795
$
106,089
$
98,817
Adjusted net earnings per common share(a)
$
1.13
$
1.04
$
3.25
$
3.05
Shares used in the calculations of diluted and adjusted net earnings per common share
32,783
32,476
32,686
32,440
(a)
See "Non-GAAP Financial Information" for a reconciliations of GAAP and non-GAAP financial measures.
Financial Results for the Third Quarter of 2024:
The Human Nutrition and Health segment generated sales of $152.3 million, an increase of $7.8 million, or 5.4%, compared to the prior year quarter. The increase was primarily driven by higher sales within both the minerals and nutrients business and the food and beverage markets. Record earnings from operations for this segment of $35.6 million increased $4.3 million, or 13.8%, compared to $31.3 million in the prior year quarter, primarily due to the aforementioned higher sales and a favorable mix, partially offset by higher operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations(a) for this segment were $39.0 million, compared to $35.5 million in the prior year quarter, an increase of 9.7%.
The Animal Nutrition and Health segment generated quarterly sales of $52.9 million, a decrease of $1.0 million, or 1.9%, compared to the prior year quarter. The decrease was driven by lower sales in the monogastric species markets, partially offset by higher sales in the ruminant species markets. Third quarter earnings from operations for this segment of $3.5 million decreased $1.5 million, or 30.4%, compared to $5.1 million in the prior year quarter, primarily due to the aforementioned lower sales and higher operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations for this segment were $4.0 million compared to $5.1 million in the prior year quarter, a decrease of 21.2%.
The Specialty Products segment generated quarterly sales of $33.2 million, an increase of $3.2 million, or 10.6%, compared to the prior year quarter, due to higher sales in both the performance gases business and the plant nutrition business. Earnings from operations for this segment were $10.5 million, compared to $8.7 million in the prior year comparable quarter, an increase of $1.8 million, or 20.3%, primarily driven by the aforementioned higher sales and a favorable mix, partially offset by higher operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations for this segment were $11.7 million, compared to $9.8 million in the prior year quarter, an increase of 18.9%.
Record quarterly consolidated gross margin of $85.4 million increased by $8.8 million, or 11.5%, compared to $76.5 million for the prior year comparable period. Gross margin as a percentage of sales was 35.6% as compared to 33.3% in the prior year period, an increase of 230 basis points, primarily due to a favorable mix. Operating expenses of $37.4 million for the quarter increased $4.4 million from the prior year comparable quarter, primarily due to higher compensation-related costs and transaction costs, partially offset by lower amortization.
Net interest expense was $4.1 million and $6.6 million in the third quarters of 2024 and 2023, respectively. The decrease in interest expense was primarily due to lower outstanding borrowings. Our effective tax rates for the three months ended September 30, 2024 and 2023 were 22.9% and 20.3%, respectively. The higher effective tax rate was primarily due to lower tax benefits from stock-based compensation and certain higher U.S. state taxes.
Third quarter cash flows provided by operating activities were $51.3 million and free cash flow was $42.2 million. The $216.5 million of net working capital on September 30, 2024 included a cash balance of $73.7 million. Significant cash payments during the quarter included repayments on the revolving loan of $39.6 million, income taxes paid of $12.4 million, and capital expenditures and intangible assets acquired of $9.1 million.
Ted Harris said, "The Balchem team delivered another strong quarter, once again highlighting the resilience of our business model in what continues to be a challenging market environment. We remain confident in the long-term growth outlook for our company as we continue to focus on progressing our strategic growth initiatives over the course of the remainder of 2024 and beyond."
Quarterly Conference Call
A quarterly conference call will be held on Friday, October 25, 2024, at 11:00 AM Eastern Time (ET) to review third quarter 2024 results. Ted Harris, Chairman, President and CEO and Martin Bengtsson, CFO will host the call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay three hours after the conclusion of the call through end of day Friday, November 8, 2024. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13749359.
Segment Information
Balchem Corporation reports three business segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. The Human Nutrition and Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition and Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated".
Forward-Looking Statements
This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our expectation or belief concerning future events that involve risks and uncertainties. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "likely," "estimate," "forecast," "outlook," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Actions and performance could differ materially from what is contemplated by the forward-looking statements contained in this release. Factors that might cause differences from the forward-looking statements include those referred to or identified in Balchem's Annual Report on Form 10-K for the year ended December 31, 2023 and other factors that may be identified elsewhere in this release or in our other SEC filings. Reference should be made to such factors and all forward-looking statements are qualified in their entirety by the above cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact: Jacqueline Yarmolowicz, Balchem Corporation (Telephone: 845-326-5600)
Selected Financial Data (unaudited) ($ in 000's)
Business Segment Net Sales:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Human Nutrition and Health
$
152,283
$
144,455
$
452,955
$
412,777
Animal Nutrition and Health
52,906
53,944
156,384
180,162
Specialty Products
33,191
30,004
99,898
94,961
Other and Unallocated (b)
1,560
1,545
4,443
5,840
Total
$
239,940
$
229,948
$
713,680
$
693,740
Business Segment Earnings Before Income Taxes:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Human Nutrition and Health
$
35,578
$
31,275
$
102,202
$
77,209
Animal Nutrition and Health
3,529
5,070
8,282
22,230
Specialty Products
10,516
8,740
29,943
25,984
Other and Unallocated (b)
(1,631
)
(1,471
)
(4,962
)
(4,565
)
Interest and other expenses
(4,099
)
(7,139
)
(13,496
)
(16,864
)
Total
$
43,893
$
36,475
$
121,969
$
103,994
(b) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of: (i) Transaction and integration costs of $223 and $795 for the three and nine months ended September 30, 2024, respectively, and $384 and $1,600 for the three and nine months ended September 30, 2023, respectively, and (ii) Unallocated amortization expense of $0 and $0 for the three and nine months ended September 30, 2024, respectively, and $0 and $312 for the three and nine months ended September 30, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.
Selected Balance Sheet Items
(Dollars in thousands)
September 30, 2024
December 31, 2023
