July 27, 2004
BALCHEM CORPORATION (AMEX: BCP)
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Reported as follows (unaudited) for the Quarter ended June 30, 2004
($000 Omitted Except for Net Earnings Per Share)
For the Three Months Ended June 30,
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2004 2003
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Net sales $16,449 $14,860
Gross profit 6,023 5,488
Operating expenses 2,834 2,725
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Earnings from operations 3,189 2,763
Other expense 22 71
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Earnings before income tax expense 3,167 2,692
Income tax expense 1,166 1,001
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Net earnings $ 2,001 $ 1,691
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Basic net earnings per common share $ 0.40 $ 0.35
Diluted net earnings per common share $ 0.39 $ 0.34
For the Six Months Ended June 30,
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2004 2003
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Net sales $32,093 $29,676
Gross profit 11,636 11,139
Operating expenses 5,519 5,619
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Earnings from operations 6,117 5,520
Other expense 49 144
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Earnings before income tax expense 6,068 5,376
Income tax expense 2,251 2,002
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Net earnings $ 3,817 $ 3,374
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Basic net earnings per common share $ 0.77 $ 0.70
Diluted net earnings per common share $ 0.74 $ 0.68
Balchem Corporation (AMEX:BCP) Page 2
Net sales for the second quarter ended June 30, 2004 were a record $16.4
million, an increase of 10.7%, as compared to $14.9 million for the comparable
prior year period. Net earnings for the second quarter were $2.0 million, an
increase of 18.3% as compared with the same period last year. This resulted in a
diluted net earnings increase of 14.4% to $0.39 per share for the second quarter
of 2004 versus $0.34 per share for the comparable quarter of the prior year.
In this second quarter of 2004, all three segments of the company reported
improved sales and earnings as follows. The ARC Specialty Products segment
generated earnings from operations of approximately $2.5 million on record
second quarter sales of $7.1 million. Net sales were 11.5% higher than the prior
year comparable quarter and earnings from operations were 5.1% higher, driven by
increased sales volume of packaged ethylene oxide and sales of single use
ethylene oxide canisters for use in medical device sterilization. The BCP
Ingredients segment recorded sales of approximately $3.0 million, increasing
8.9% over the prior year comparable quarter, with continued strong sales volumes
in dry and aqueous choline products for the poultry and swine industries.
Earnings from operations for this segment improved 42.3% to approximately $0.20
million as compared to $0.14 million in the prior year comparable quarter. Sales
of the Encapsulated/Nutritional Products segment were $6.4 million in the
period, an increase of 10.7% from the prior year comparable quarter, principally
due to improvements in the domestic and international food markets as well as
increasing dairy industry acceptance of Nitroshure, which was launched in the
first quarter of 2004. Earnings from operations for this segment improved to
$0.47 million in the current quarterly period as compared to $0.23 million in
the prior year comparable quarter.
Consolidated gross profit for the quarter ended June 30, 2004 was $6.0
million compared to $5.5 million for the comparable year-ago period due to the
above noted increase in sales volumes. Operating (Selling, R&D, and
Administrative) expenses were approximately 17.2% of net sales, consistent with
the first quarter results, improving from 18.3% of net sales in the prior year
comparable quarter.
For the six months ended June 30, 2004, net sales increased 8.1% to $32.1
million compared to $29.7 million in the comparable prior year period, while net
earnings increased 13.1% to $3.8 million or $0.74 per diluted share, compared to
net earnings of $3.4 million, or $0.68 per diluted share in the prior year
comparable period.
Our balance sheet ratios and cash flow continue to be strong. During the
quarter ended June 30, 2004, the Company reduced long term debt, as scheduled,
by $0.4 million from $7.4 million to $7.0 million. Our cash balance closed the
quarter at $13.6 million, an increase of $4.4 million over the year end balance
of $9.2 million and approximately $11.1 million over the previous year's June 30
level.
Outlook
Commenting on the outlook for 2004, Dino A. Rossi, President and CEO of
Balchem, said "Strength in the ARC Specialty Products and BCP Ingredients
Unencapsulated Feed Supplements segments should continue. Sales in our
Encapsulated/Nutritional Products segment, increased 12.9% sequentially from the
quarter ending March 31, 2004 and we continue to see signs of volume improvement
in the human food and nutrition market as well as animal nutrition. This segment
should continue to improve through 2004. We have also added additional personnel
talent to this segment in the marketing, sales and application R&D areas to
improve our ability to serve our markets and exploit our technology. Based on
the foregoing, we expect modest consolidated sales and earnings growth for the
balance of 2004 over the first six months of this year, and double digit growth
in earnings for the balance of 2004 over 2003 second half results.
Balchem Corporation (AMEX:BCP) Page 3
Quarterly Conference Call
A quarterly conference call will be conducted on Tuesday, July 27, 2004, at
2:00 PM Eastern Time (ET) to review second quarter 2004 results (for the period
ending June 30, 2004). Dino A. Rossi, President and CEO, and Frank Fitzpatrick,
Chief Financial Officer, will host the call. We invite you to listen to the call
by dialing 800-475-2151 five minutes prior to the scheduled start time of the
conference call. The conference call will be available for digital replay
through July 29, 2004. To access the replay of the conference call, dial
877-519-4471, Pin #4965065. This press release, and its accompanying financial
exhibits, will also be available on the Company website, www.balchem.com, prior
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to the conference call.
Segment Information
Balchem Corporation consists primarily of three business segments: ARC
Specialty Products, Encapsulated/Nutritional Products, and BCP Ingredients.
Through ARC Specialty Products, Balchem provides specialty-packaged chemicals
for use in healthcare and other industries. The Encapsulated/Nutritional
Products segment provides proprietary microencapsulation solutions to a variety
of applications in the food and human nutrition marketplaces. BCP Ingredients
manufactures and supplies choline chloride and derivatives used primarily in the
poultry and swine industries.
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, 2003. 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: Jackie Powell, Investor Relations Coordinator, Telephone: 845-326-5600
Balchem Corporation (AMEX:BCP) Page 4
Selected Financial Data
($ in 000's)
Business Segment Net Sales:
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Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
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Specialty Products $ 7,116 $ 6,384 $ 14,144 $ 12,322
Encap/Nutritional Products 6,377 5,761 12,023 11,904
BCP Ingredients 2,956 2,715 5,926 5,450
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Total $ 16,449 $ 14,860 $ 32,093 $ 29,676
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Business Segment Earnings (Loss):
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Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
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Specialty Products $ 2,522 $ 2,399 $ 5,098 $ 4,448
Encap/Nutritional Products 472 227 556 776
BCP Ingredients 195 137 463 296
Other expense (22) (71) (49) (144)
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Earnings before income taxes $ 3,167 $ 2,692 $ 6,068 $ 5,376
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Selected Balance Sheet Items
June 30, December 31,
2004 2003
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Cash $ 13,563 $ 9,239
Accounts Receivable 7,517 7,233
Inventories 6,993 5,961
Other Current Assets 1,470 1,197
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Current Assets 29,543 23,630
Property, Plant, & Equipment (net) 24,818 25,636
Other Assets 7,156 7,640
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Total Assets $ 61,517 $ 56,906
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Current Liabilities $ 5,955 $ 6,075
Long-Term Debt 6,968 7,839
Other Long-Term Obligations 3,223 3,211
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Total Liabilities 16,146 17,125
Stockholders' Equity 45,371 40,285
Less: Treasury Stock @ Cost -- (504)
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Net Stockholders Equity 45,371 39,781
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Total Liability and Stockholders' Equity $ 61,517 $ 56,906
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