Close

Form 8-K BALCHEM CORP For: Apr 29

April 29, 2022 7:18 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.
         logo20a.jpg
Exhibit 99.1
Human Nutrition & Health | Animal Nutrition & Health | Specialty Products


Balchem Corporation Reports First Quarter Sales of $228.9 Million, Net Earnings of $28.9 Million, GAAP EPS of $0.89, and Adjusted EPS of $1.03

New Hampton, NY, April 29, 2022 - Balchem Corporation (NASDAQ: BCPC) reported today first quarter net earnings of $28.9 million for 2022, compared to net earnings of $23.4 million for the first quarter 2021. Quarterly adjusted net earnings(a) were $33.4 million, compared to $28.4 million in the prior year quarter. Quarterly adjusted EBITDA(a) was $53.6 million, compared to $45.7 million in the prior year quarter.

First Quarter 2022 Financial Highlights:
Record net sales of $228.9 million, an increase of 23.3% compared to the prior year quarter with quarterly double-digit sales growth in all three segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.
Record adjusted EBITDA was $53.6 million, an increase of 17.2% from the prior year.
GAAP net earnings were $28.9 million, an increase of 23.6% from the prior year. These net earnings resulted in GAAP earnings per share of $0.89.
Record adjusted net earnings of $33.4 million, an increase of 17.3% from the prior year, resulting in record adjusted earnings per share(a) of $1.03.
The effective tax rate of 23.1% was 120 basis points higher than the prior year tax rate of 21.9%.
Cash flows from operations were $7.0 million for the first quarter of 2022, with quarterly free cash flow(a) of $(2.8) million.

Recent Highlights:
On April 22, we released our 2021 Sustainability Report, which captures the Company's commitment to managing our Environmental, Social and Governance (ESG) performance. Balchem’s sustainability initiatives are fully integrated into our business strategy and are critical to our vision of making the world a healthier place. We took meaningful steps toward advancing diversity, inclusion, and belonging at Balchem, and remain committed to fostering a diverse and inclusive culture in which everyone feels welcomed, valued, and appreciated, while inspiring our external stakeholders to share our vision. Our Sustainability Report demonstrates the Company's continuing promise to provide our employees, customers, shareholders and the communities within which we operate with information on Balchem’s sustainability initiatives and includes our progress on our 2030 goals and strategies for both emissions and water usage reduction by 25%.

Ted Harris, Chairman, CEO, and President of Balchem said, “We are very pleased to have continued the strong momentum from 2021 into 2022. In the first quarter of 2022 we delivered all-time record sales, adjusted net earnings, and adjusted EBITDA in a very difficult macro-economic and geo-political environment.”

Mr. Harris added, “The Balchem team once again delivered exceptional performance in a dynamic market environment. We continue to see strong demand for our products and services with double-digit sales growth in all three of our business segments versus the prior year's quarter, as well as sequential growth in all three segments.”

52 Sunrise Park Road
New Hampton, NY 10958

balchem.com
p.845.326.5600
f. 845.326.5702



Balchem Corporation (NASDAQ:BCPC)

Results for Period Ended March 31, 2022 (unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
20222021
Net sales $228,867 $185,656 
Gross margin71,506 58,727 
Operating expenses33,170 28,152 
Earnings from operations38,336 30,575 
Other expense706 592 
Earnings before income tax expense37,630 29,983 
Income tax expense 8,700 6,572 
Net earnings $28,930 $23,411 
Diluted net earnings per common share$0.89 $0.72 
Adjusted EBITDA(a)
$53,574 $45,724 
Adjusted net earnings(a)
$33,357 $28,447 
Diluted adjusted net earnings per common share(a)
$1.03 $0.87 
Shares used in the calculations of diluted net earnings per common share and diluted adjusted net earnings per common share32,475 32,657 
(a)
See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures.

Financial Results for the First Quarter of 2022:
The Human Nutrition & Health segment generated record quarterly sales of $122.4 million, an increase of $17.9 million or 17.2% compared to the prior year quarter. The increase was primarily driven by strong sales growth within food and beverage markets and higher sales of chelated minerals. Record quarterly earnings from operations for this segment of $20.3 million increased $0.6 million or 3.1% compared to $19.7 million in the prior year quarter, primarily due to the aforementioned higher sales and higher average selling prices, partially offset by higher manufacturing input costs and distribution costs, along with increased compensation-related costs within operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of $4.0 million and $4.4 million for the first quarter of 2022 and 2021, respectively, adjusted earnings from operations(a) for this segment were $24.3 million, compared to $24.0 million in the prior year quarter.
The Animal Nutrition & Health segment generated record quarterly sales of $69.3 million, an increase of $18.2 million or 35.6% compared to the prior year quarter. The increase was primarily the result of higher sales in both the monogastric and ruminant species markets, partially offset by an unfavorable impact related to changes in foreign currency exchange rates. Record quarterly earnings from operations for this segment of $11.3 million increased $6.3 million or 123.9% compared to $5.1 million in the prior year quarter, primarily due to the aforementioned higher sales and higher average selling prices, partially offset by increases in manufacturing input costs and distribution costs, and higher compensation-related costs within operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of $0.1 million and $0.2 million in the first quarters of 2022 and 2021, record adjusted earnings from operations for this segment were $11.5 million, compared to $5.2 million in the prior year quarter.

logo6a08a.jpg
                                Page | 2


Balchem Corporation (NASDAQ:BCPC)
The Specialty Products segment generated sales of $33.3 million for the first quarter of 2022, an increase of $5.3 million or 19.0% compared to the prior year quarter. The increase was primarily due to higher sales of products in both the plant nutrition business and the medical device sterilization market, partially offset by an unfavorable impact related to changes in foreign currency exchange rates. First quarter earnings from operations for this segment were $7.8 million versus $7.2 million in the prior year comparable quarter, an increase of $0.6 million or 8.0%, primarily due to the aforementioned higher sales, partially offset by increases in manufacturing input costs and distribution costs and higher compensation-related costs within operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for the first quarter of 2022 and 2021 of $1.1 million and $1.4 million, respectively, adjusted earnings from operations for this segment were $8.9 million compared to $8.6 million in the prior year quarter.
Record consolidated gross margin for the first quarter of 2022 of $71.5 million increased by $12.8 million or 21.8% compared to $58.7 million for the prior year comparable period. Gross margin as a percentage of sales was 31.2% as compared to 31.6% in the prior year period, a decrease of 39 basis points, primarily due to an increase in certain manufacturing input costs and distribution costs, partially offset by higher average selling prices. Operating expenses of $33.2 million for the quarter increased $5.0 million from the prior year comparable quarter, principally due to certain higher compensation-related costs and an increase in outside services. Excluding non-cash operating expenses associated with amortization of intangible assets of $5.6 million, operating expenses were $27.5 million or 12.0% of sales.
Interest expense was $0.5 million in the first quarter of 2022. Our effective tax rates for the three months ended March 31, 2022 and 2021 were 23.1% and 21.9%, respectively. The increase in the effective tax rate from the prior year was primarily due to a reduction in certain tax credits and increased international income subject to higher foreign tax rates.
For the quarter ended March 31, 2022, cash flows provided by operating activities were $7.0 million compared with $40.6 million in the prior year comparable period. The $196.3 million of net working capital on March 31, 2022 included a cash balance of $64.5 million, which reflects first quarter repurchases of common stock of $34.6 million, dividend payments of $20.7 million, and capital expenditures and intangible assets acquired of $10.3 million. The cash balance also reflects proceeds from the revolving loan of $20.0 million. The decrease in cash flows from operating activities was primarily driven by changes in working capital and the timing of increased sales, restocking of inventory, and payments to suppliers.

Ted Harris said, “Our first quarter 2022 results were excellent. We continued to show our resilience and ability to deliver strong results, even in challenging times, while also advancing our strategic priorities and further progressing our sustainability efforts. We are excited about our future and our ability to provide solutions for the health and nutritional needs of the world while acting as strong stewards of all of our stakeholders.”


logo6a08a.jpg
                                Page | 3


Balchem Corporation (NASDAQ:BCPC)
Quarterly Conference Call
A quarterly conference call will be held on Friday, April 29, 2022, at 11:00 AM Eastern Time (ET) to review first quarter 2022 results. Ted Harris, Chairman of the Board, CEO and President, 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 two hours after the conclusion of the call through end of day Friday, May 13, 2022. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13729002.
Segment Information
Balchem Corporation reports three business segments: Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products. The Human Nutrition & 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 & 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, which reflect Balchem’s expectation or belief concerning future events that involve risks and uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem’s expectations, including risks and factors identified in Balchem’s annual report on Form 10-K for the year ended December 31, 2021. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date.
Contact: Danielle Polanco, Balchem Corporation (Telephone: 845-326-5600)
logo6a08a.jpg
                                Page | 4


Balchem Corporation (NASDAQ:BCPC)

Selected Financial Data (unaudited)
($ in 000’s)
Business Segment Net Sales:Three Months Ended
March 31,
20222021
Human Nutrition & Health$122,445 $104,516 
Animal Nutrition & Health69,342 51,148 
Specialty Products33,334 28,008 
Other and Unallocated (b)
3,746 1,984 
Total$228,867 $185,656 

Business Segment Earnings Before Income Taxes:Three Months Ended
March 31,
20222021
Human Nutrition & Health$20,303 $19,690 
Animal Nutrition & Health11,321 5,056 
Specialty Products7,761 7,189 
Other and Unallocated (b)
(1,049)(1,360)
Interest and other expense(706)(592)
Total$37,630 $29,983 
(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, ERP implementation costs, and unallocated legal fees totaling $304 and $234 for the three months ended March 31, 2022 and 2021 (refer to note 2 for descriptions of these charges), respectively, and (ii) Unallocated amortization expense of $738 and $604 for the three months ended March 31, 2022 and 2021, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

logo6a08a.jpg
                                Page | 5


Balchem Corporation (NASDAQ:BCPC)
Selected Balance Sheet Items
(Dollars in thousands)(unaudited)
March 31, 2022December 31, 2021
Cash and Cash Equivalents$64,466 $103,239 
Accounts Receivable, net 136,974 117,408 
Inventories 108,411 91,058 
Other Current Assets9,953 10,527 
Total Current Assets 319,804 322,232 
Property, Plant & Equipment, net 240,419 237,517 
Goodwill522,587 523,949 
Intangible Assets with Finite Lives, net88,525 94,665 
Right of Use Assets9,209 9,288 
Derivative Assets882 — 
Other Assets 13,482 11,674 
Total Assets $1,194,908 $1,199,325 
Current Liabilities$123,529 $143,802 
Revolving Loan128,569 108,569 
Deferred Income Taxes47,033 46,455 
Derivative Liabilities— 2,658 
Long-Term Obligations22,095 20,826 
Total Liabilities321,226 322,310 
Stockholders' Equity873,682 877,015 
Total Liabilities and Stockholders' Equity$1,194,908 $1,199,325 
logo6a08a.jpg
                                Page | 6


Balchem Corporation (NASDAQ:BCPC)
Balchem Corporation
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
   Net earnings $28,930 $23,411 
Adjustments to reconcile net earnings to net cash provided by operating activities:
        Depreciation and amortization11,928 12,364 
        Stock compensation expense 3,077 2,622 
        Other adjustments 336 (161)
        Changes in assets and liabilities(37,250)2,371 
  Net cash provided by operating activities7,021 40,607 
 
Cash flows from investing activities:
   Capital expenditures and intangible assets acquired(10,256)(6,312)
   Proceeds from insurance and sale of assets184 86 
  Net cash used in investing activities(10,072)(6,226)
Cash flows from financing activities:
   Proceeds from revolving loan20,000 5,000 
   Principal payments on revolving loan— (15,000)
 Principal payments on finance lease(41)(39)
   Proceeds from stock options exercised498 2,402 
   Dividends paid(20,703)(18,700)
   Repurchase of common stock(34,599)(1,596)
  Net cash used in financing activities(34,845)(27,933)
   Effect of exchange rate changes on cash(877)(2,484)
(Decrease) increase in cash and cash equivalents(38,773)3,964 
Cash and cash equivalents, beginning of period103,239 84,571 
Cash and cash equivalents, end of period$64,466 $88,535 

logo6a08a.jpg
                                Page | 7


Balchem Corporation (NASDAQ:BCPC)
Non-GAAP Financial Information

In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain unallocated equity compensation, and certain one-time or unusual transactions. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. The non-GAAP financial measures in this press release include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, and free cash flow. EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation, amortization, stock-based compensation, transaction and integration costs, legal settlements, ERP implementation costs, and unallocated legal fees. Adjusted income tax expense is defined as income tax expense adjusted for the impact of ASU 2016-09. Free cash flow is defined as net cash provided by operating activities less capital expenditures and capitalized ERP implementation costs.
logo6a08a.jpg
                                Page | 8


Balchem Corporation (NASDAQ:BCPC)

Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Table 1
Reconciliation of Non-GAAP Measures to GAAP
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
20222021
Reconciliation of adjusted gross margin
GAAP gross margin$71,506 $58,727 
Amortization of intangible assets and finance lease (1)
329 489 
Adjusted gross margin$71,835 $59,216 
Reconciliation of adjusted earnings from operations
GAAP earnings from operations$38,336 $30,575 
Amortization of intangible assets and finance lease (1)
5,961 6,536 
Transaction and integration costs, ERP implementation costs, and unallocated legal fees (2)
304 234 
Adjusted earnings from operations$44,601 $37,345 
Reconciliation of adjusted net earnings
GAAP net earnings$28,930 $23,411 
Amortization of intangible assets and finance lease (1)
6,032 6,607 
Transaction and integration costs, ERP implementation costs, and unallocated legal fees (2)
304 234 
Income tax adjustment (3)
(1,909)(1,805)
Adjusted net earnings$33,357 $28,447 
Adjusted net earnings per common share - diluted$1.03 $0.87 

logo6a08a.jpg
                                Page | 9


Balchem Corporation (NASDAQ:BCPC)
The following table sets forth a reconciliation of Net Earnings calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the three months ended March 31, 2022 and 2021.

Table 2
(unaudited)
Three Months Ended
March 31,
20222021
Net earnings - as reported$28,930 $23,411 
Add back:
Provision for income taxes 8,700 6,572 
Other expense 706 592 
Depreciation and amortization 11,857 12,293 
EBITDA 50,193 42,868 
Add back certain items:
Non-cash compensation expense related to equity awards3,077 2,622 
Transaction and integration costs, ERP implementation costs, and unallocated legal fees (2)
304 234 
Adjusted EBITDA$53,574 $45,724 

The following table sets forth a reconciliation of our GAAP effective income tax rate to our non-GAAP effective income tax rate for the three months ended March 31, 2022 and 2021.

Table 3
(unaudited)
Three Months Ended
March 31,
2022Effective Tax Rate2021Effective Tax Rate
GAAP Income Tax Expense$8,700 23.1 %$6,572 21.9 %
Impact of ASU 2016-09 (4)
380 249 
Adjusted Income Tax Expense $9,080 24.1 %$6,821 22.7 %
The following table sets forth a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2022 and 2021.

Table 4
(unaudited)
Three Months Ended
March 31,
20222021
Net cash provided by operating activities$7,021 $40,607 
Capital expenditures and capitalized ERP implementation costs(9,774)(6,175)
Free cash flow$(2,753)$34,432 

logo6a08a.jpg
                                Page | 10


Balchem Corporation (NASDAQ:BCPC)
(1) Amortization of intangible assets and finance lease: Amortization of intangible assets and finance lease consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, capitalized loan issuance costs, other intangibles acquired primarily in connection with business combinations, an intangible asset in connection with a company-wide ERP system implementation, and one finance lease. We record expense relating to the amortization of these intangibles and finance lease in our GAAP financial statements. Amortization expenses for our intangible assets and finance lease are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
(2) Transaction and integration costs, ERP implementation costs and unallocated legal fees: Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. ERP implementation costs related to a company-wide ERP system implementation are expensed in our GAAP financial statements. Unallocated legal fees for transaction-related non-compete agreement disputes are expensed in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with each transaction and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult.
(3) Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the taxable and deductible non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” and uses our non-GAAP effective rate applied to both our GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3 for the calculation of our non-GAAP effective tax rate.
(4) Impact of ASU 2016-09: The primary impact of ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), was the recognition during the three months ended March 31, 2022 and 2021, of excess tax benefits as a reduction to the provision for income taxes and the classification of these excess tax benefits in operating activities in the consolidated statement of cash flows instead of financing activities.

logo6a08a.jpg
                                Page | 11


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings