Balchem Corporation Reports Fourth Quarter and Full Year 2024 Financial Results

MONTVALE, N.J., Feb. 21, 2025 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ: BCPC) reported today financial results for its 2024 fiscal fourth quarter ended December 31, 2024. For the quarter, the Company reported net sales of $240.0 million, net earnings of $33.6 million, adjusted EBITDA(a) of $62.8 million, and free cash flow(a) of $39.8 million. Ted Harris, Chairman, President, and CEO of Balchem said, “The fourth quarter capped off another very strong year for Balchem. We delivered record fourth quarter net sales and adjusted EBITDA, with top and bottom line year over year growth in each of our three segments.” Fourth Quarter 2024 Financial Highlights: Record net sales of $240.0 million, an increase of $11.3 million, or 4.9%, compared to the prior year quarter.GAAP net earnings were $33.6 million, an increase of 26.0% from the prior year quarter.Record adjusted EBITDA was $62.8 million, an increase of 13.4% from the prior year quarter.GAAP earnings per share of $1.03 compared to $0.82 in the prior year quarter and adjusted earnings per share(a) of $1.13 compared to $0.95 in the prior year quarter.Cash flows from operations were $52.3 million, with free cash flow(a) of $39.8 million. Mr. Harris added, “For the full year 2024, we delivered record net sales and adjusted EBITDA while generating very strong free cash flow, allowing us to increase our dividend once again by double digits and significantly strengthen our balance sheet by paying down $119.6 million of debt.” Full Year 2024 Financial Highlights: Record full year net sales of $953.7 million, an increase of $31.2 million or 3.4%, compared to the prior year with record sales achieved in the Human Nutrition & Health and Specialty Products segments.GAAP net earnings were $128.5 million, an increase of 18.4% from the prior year. These net earnings resulted in GAAP earnings per share of $3.93 compared to $3.35 in the prior year.Record adjusted EBITDA was $250.3 million, an increase of 8.4%, from the prior year.Adjusted net earnings were $143.0 million, an increase of 10.2% from the prior year. These adjusted net earnings resulted in adjusted earnings per share of $4.37 compared to $4.00 in the prior year.Cash flows from operations were $182.0 million for 2024, with free cash flow of $147.2 million. Mr. Harris continued, “As we transition to focusing on 2025 and beyond, I remain excited about the growth opportunities that lie ahead for Balchem and I believe we are well positioned to deliver ongoing growth for our shareholders.” Results for Period Ended December 31, 2024 (unaudited)(Dollars in thousands, except per share data) Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023Net sales$240,004 $228,699 $953,684 $922,439 Gross margin 86,337 74,993 336,206 302,056 Operating expenses 38,893 36,658 153,297 142,863 Earnings from operations 47,444 38,335 182,909 159,193 Interest and other expenses 2,960 5,068 16,456 21,932 Earnings before income tax expense 44,484 33,267 166,453 137,261 Income tax expense 10,901 6,619 37,978 28,718 Net earnings$33,583 $26,648 $128,475 $108,543 Diluted net earnings per common share$1.03 $0.82 $3.93 $3.35 Adjusted EBITDA(a)$62,833 $55,430 $250,348 $230,910 Adjusted net earnings(a)$36,876 $30,901 $142,965 $129,718 Adjusted diluted net earnings per common share(a)$1.13 $0.95 $4.37 $4.00 Shares used in the calculations of diluted and adjusted net earnings per common share 32,548 32,477 32,718 32,448 (a) See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures. Financial Results for the Fourth Quarter of 2024: The Human Nutrition & Health segment generated fourth quarter sales of $147.3 million, an increase of $9.3 million, or 6.8%, compared to the prior year quarter. The increase was driven by higher sales within both the food ingredients and solutions businesses and the nutrients business. Fourth quarter earnings from operations for this segment were $33.8 million, an increase of $8.5 million, or 33.9%, compared to $25.2 million in the prior year quarter, primarily due to the aforementioned higher sales and a favorable mix. 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 $36.5 million, compared to $29.9 million in the prior year quarter, an increase of 21.8%. The Animal Nutrition & Health segment generated quarterly sales of $58.3 million, an increase of $0.2 million, or 0.3%, compared to the prior year quarter. The increase was driven by higher sales in the ruminant species markets, partially offset by lower sales in the monogastric species markets. Fourth quarter earnings from operations for this segment were $5.7 million, an increase of $0.4 million, or 7.2%, compared to $5.3 million in the prior year quarter, primarily due to the aforementioned higher sales and 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 $5.9 million, compared to $5.6 million in the prior year quarter, an increase of 6.5%. The Specialty Products segment generated fourth quarter sales of $32.9 million, an increase of $1.8 million, or 6.0%, compared to the prior year quarter, due to higher sales in the performance gases business. Fourth quarter earnings from operations for this segment were $10.0 million, an increase of $1.4 million, or 15.9%, compared to $8.6 million in the prior year quarter, primarily driven by the aforementioned higher sales and 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 $10.9 million, compared to $9.8 million in the prior year quarter, an increase of 11.2%. Consolidated quarterly gross margin of $86.3 million increased by $11.3 million, or 15.1%, compared to $75.0 million for the prior year comparable period. Gross margin as a percentage of sales was 36.0% as compared to 32.8% in the prior year period, an increase of 320 basis points, primarily due to a favorable mix. Operating expenses of $38.9 million for the quarter increased $2.2 million from the prior year comparable quarter, primarily due to an increase in transaction costs, higher compensation-related expenses, and an increase in outside services, partially offset by lower amortization. Excluding non-cash operating expenses associated with amortization of intangible assets of $3.2 million, operating expenses were $35.7 million, or 14.9% of sales. Net interest expense was $2.8 million and $5.3 million in the fourth 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 December 31, 2024 and 2023 were 24.5% and 19.9%, respectively. The increase in the effective tax rate from the prior year was primarily due to an increase in certain foreign taxes. For the quarter ended December 31, 2024, cash flows provided by operating activities were $52.3 million and free cash flow was $39.8 million. The $156.1 million of net working capital on December 31, 2024 included a cash balance of $49.5 million. Significant cash payments during the quarter included repayments on the revolving loan of $37.0 million, cash paid for an acquisition net of cash acquired of $24.2 million, capital expenditures and intangible assets acquired of $12.7 million, and income taxes paid of $11.1 million. Ted Harris, Chairman, President, and CEO of Balchem said, “2024 was another very strong year for Balchem and I would like to thank all of our over 1,300 employees for their contributions to these results and the progress we have made on our strategic growth initiatives. I am excited about our future.” Quarterly Conference Call A quarterly conference call will be held on Friday, February 21, 2025, at 11:00 AM Eastern Time (ET) to review fourth 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, March 7, 2025. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13751680. 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, within the meaning of 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," "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. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These statements are based on the Company's currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties - many of which are beyond the Company’s control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Important factors and other risks that may affect the Company's business or that could cause actual results to differ materially are included in filings the Company makes with the U.S. Securities and Exchange Commission from time to time, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K, and in its 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. The Company undertakes 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) (Dollars in thousands) Business Segment Net Sales: Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023Human Nutrition & Health$147,303 $137,974 $600,258 $550,751 Animal Nutrition & Health 58,326 58,164 214,710 238,326 Specialty Products 32,851 31,004 132,749 125,965 Other and Unallocated (b) 1,524 1,557 5,967 7,397 Total$240,004 $228,699 $953,684 $922,439 Business Segment Earnings Before Income Taxes: Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023 Human Nutrition & Health$33,755 $25,210 $135,957 $102,419 Animal Nutrition & Health 5,731 5,346 14,013 27,576 Specialty Products 9,963 8,595 39,906 34,579 Other and Unallocated(b) (2,005) (816) (6,967) (5,381)Interest and other expenses (2,960) (5,068) (16,456) (21,932)Total$44,484 $33,267 $166,453 $137,261 (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 totaling $689 and $1,484 for the three and twelve months ended December 31, 2024, respectively, and $17 and $1,617 for the three and twelve months ended December 31, 2023, respectively (refer to Note 4 for descriptions of these charges), and (ii) Unallocated amortization expense of $0 and $0 for the three and twelve months ended December 31, 2024, respectively, and $0 and $312 for the three and twelve months ended December 31, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation. Selected Balance Sheet Items (Dollars in thousands)December 31, December 31, 2024 2023 Cash and Cash Equivalents$49,515 $64,447 Accounts Receivable, net 119,662 125,284 Inventories, net 130,802 109,521 Other Current Assets 13,791 14,990 Total Current Assets 313,770 314,242 Property, Plant & Equipment, net 282,154 276,039 Goodwill 780,030 778,907 Intangible Assets with Finite Lives, net 165,050 191,212 Right of Use Assets 17,050 19,864 Other Assets 17,317 16,947 Total Non-current Assets 1,261,601 1,282,969 Total Assets$1,575,371 $1,597,211 Current Liabilities$157,685 $148,491 Revolving Loan 190,000 309,569 Deferred Income Taxes 43,722 52,046 Long-Term Obligations 34,051 33,121 Total Liabilities 425,458 543,227 Stockholders' Equity 1,149,913 1,053,984 Total Liabilities and Stockholders' Equity$1,575,371 $1,597,211 Balchem CorporationCondensed Consolidated Statements of Cash Flows(Dollars in thousands)(unaudited) Year Ended December 31, 2024 2023Cash flows from operating activities: Net earnings$128,475 $108,543 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 47,973 54,935 Stock compensation expense 16,675 16,052 Other adjustments (5,007) (15,779)Changes in assets and liabilities, net of acquired balances (6,117) 20,010 Net cash provided by operating activities 181,999 183,761 Cash flows from investing activities: Capital expenditures and intangible assets acquired (35,661) (37,892)Cash paid for acquisitions, net of cash acquired (24,164) (1,252)Proceeds from sale of assets 359 1,881 Proceeds from settlement of net investment hedge — 2,740 Investment in affiliates (270) (290)Net cash used in investing activities (59,736) (34,813) Cash flows from financing activities: Proceeds from revolving loan 26,000 18,000 Principal payments on revolving debt (145,569) (149,000)Principal payments on finance lease (216) (222)Proceeds from stock options exercised 17,228 5,242 Dividends paid (25,576) (22,872)Repurchases of common stock (5,682) (4,469)Net cash used in financing activities (133,815) (153,321) Effect of exchange rate changes on cash (3,380) 2,260 Decrease in cash and cash equivalents (14,932) (2,113) Cash and cash equivalents, beginning of period 64,447 66,560 Cash and cash equivalents, end of period$49,515 $64,447 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 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. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain equity compensation, nonqualified deferred compensation plan expense (income), and certain one-time or unusual transactions. Detailed non-GAAP adjustments are described in the reconciliation tables below and also explained in the related footnotes. 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. Investors should not consider non-GAAP measures as alternatives to the related GAAP measures. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Table 1 (unaudited) Reconciliation of Non-GAAP Measures to GAAP(Dollars in thousands, except per share data) Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023 Reconciliation of adjusted gross margin GAAP gross margin$86,337 $74,993 $336,206 $302,056 Inventory valuation adjustment (1) — — — 1,419 Amortization of intangible assets and finance lease (2) 702 665 2,806 2,683 Restructuring costs (3) — 186 — 601 Adjusted gross margin$87,039 $75,844 $339,012 $306,759 Reconciliation of adjusted earnings from operations GAAP earnings from operations$47,444 $38,335 $182,909 $159,193 Inventory valuation adjustment (1) — — — 1,419 Amortization of intangible assets and finance lease (2) 3,917 6,964 19,476 28,274 Restructuring costs (3) — 186 521 8,365 Transaction and integration costs (4) 689 (1,383) 1,393 (9,683)Impairment charge (5) — — 255 — Nonqualified deferred compensation plan (income) expense (6) (14) 523 908 917 Adjusted earnings from operations$52,036 $44,625 $205,462 $188,485 Reconciliation of adjusted net earnings GAAP net earnings$33,583 $26,648 $128,475 $108,543 Inventory valuation adjustment (1) — — — 1,419 Amortization of intangible assets and finance lease (2) 3,988 7,035 19,763 28,561 Restructuring costs (3) — 186 521 8,365 Transaction and integration costs (4) 689 (1,383) 1,393 (9,683)Impairment charge (5) — — 255 — Income tax adjustment (7) (1,384) (1,585) (7,442) (7,487)Adjusted net earnings$36,876 $30,901 $142,965 $129,718 Adjusted net earnings per common share - diluted$1.13 $0.95 $4.37 $4.00 Table 2 (unaudited) Reconciliation of GAAP Net Earnings to EBITDA and to Adjusted EBITDA(Dollars in thousands) Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023Net earnings - as reported$33,583 $26,648 $128,475 $108,543 Add back: Provision for income taxes 10,901 6,619 37,978 28,718 Interest and other expenses 2,960 5,068 16,456 21,932 Depreciation and amortization 10,825 13,984 47,686 54,647 EBITDA 58,269 52,319 230,595 213,840 Add back: Non-cash compensation expense related to equity awards 3,889 3,785 16,676 16,052 Inventory valuation adjustment (1) — — — 1,419 Restructuring costs (3) — 186 521 8,365 Transaction and integration costs (4) 689 (1,383) 1,393 (9,683)Impairment charge (5) — — 255 — Nonqualified deferred compensation plan (income) expense (6) (14)- 523 - 908 - 917 Adjusted EBITDA$62,833 $55,430 $250,348 $230,910 Table 3 (unaudited) Reconciliation of GAAP Effective Income Tax Rate to Non-GAAP Effective Income Tax Rate(Dollars in thousands) Three Months EndedDecember 31, Effective Tax Effective Tax 2024 Rate 2023 RateGAAP Income Tax Expense$10,901 24.5 % $6,619 19.9 %Impact of ASU 2016-09 (8) 202 369 Adjusted Income Tax Expense$11,103 25.0 % $6,988 21.0 % Year EndedDecember 31, Effective Tax Effective Tax 2024 Rate 2023 RateGAAP Income Tax Expense$37,978 22.8 % $28,718 20.9 %Impact of ASU 2016-09 (8) 2,154 1,232 Adjusted Income Tax Expense$40,132 24.1 % $29,950 21.8 % Table 4 (unaudited) Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow(Dollars in thousands) Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023 Net cash provided by operating activities$52,317 $67,406 $181,999 $183,761 Capital expenditures, proceeds from the sale of assets, and settlement of net investment hedge (12,549) (11,441) (34,789) (32,653)Free cash flow$39,768 $55,965 $147,210 $151,108 (1) Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. (2) 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. (3) Restructuring costs: Expenses related to a reorganization of the business. The restructuring costs are included 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 they are inconsistent in amounts and frequency causing comparison of current and historical financial results to be difficult. (4) Transaction and integration costs: Transaction and integration costs related to acquisitions and divestitures 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 transactions that are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. (5) Impairment charge: An asset impairment charge in 2024 was related to the write off of an equity method investment. The impairment charge is included in our GAAP financial statements. Management excludes this item for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding this item from our non-GAAP financial measures is useful to investors because it is inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. (6) Nonqualified deferred compensation plan (income) expense: Gains and losses on rabbi trust assets related to our nonqualified deferred compensation plan are recorded in other (income) expense while the offsetting increases or decreases to the deferred compensation liability are recorded within earnings from operations. The increases and decreases in the deferred compensation liability are driven by market volatility and are not a true reflection of company performance. We believe excluding these amounts from our non-GAAP financial measures is useful to investors because these items are inconsistent in amount based on market conditions causing comparison of current and historical financial results to be difficult. (7) 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. (8) 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 and twelve months ended December 31, 2024 and 2023, 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. Management excludes this item for the purpose of calculating Adjusted Income Tax Expense. We believe that excluding the item in our non-GAAP financial measures is useful to investors because it is inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult.

Balchem Corporation Reports Fourth Quarter and Full Year 2024 Financial Results

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