Exhibit 99.1
BALCHEM CORPORATION (AMEX: BCP)
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Reported as follows (unaudited) for the quarter ended September 30, 2005
($000 Omitted Except for Net Earnings Per Share)
All per share information has been adjusted to reflect the three for two stock
split effected in the form of a 50% stock dividend declared on
December 16, 2004 and paid on January 20, 2005.
For the Three Months Ended September 30,
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2005 2004
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Net sales $ 21,145 $ 17,356
Gross profit 7,649 6,219
Operating expenses 2,918 2,789
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Earnings from operations 4,731 3,430
Other (income) expense (126) 39
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Earnings before income tax expense 4,857 3,391
Income tax expense 1,833 1,231
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Net earnings $ 3,024 $ 2,160
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Basic net earnings per common share $ 0.39 $ 0.29
Diluted net earnings per common share $ 0.37 $ 0.28
For the Nine Months Ended September 30,
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2005 2004
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Net sales $ 59,969 $ 49,449
Gross profit 21,943 17,855
Operating expenses 8,902 8,308
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Earnings from operations 13,041 9,547
Other (income) expense (231) 88
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Earnings before income tax expense 13,272 9,459
Income tax expense 4,950 3,482
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Net earnings $ 8,322 $ 5,977
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Basic net earnings per common share $ 1.08 $ 0.80
Diluted net earnings per common share $ 1.04 $ 0.78
New All Time Quarterly Records In Net Sales And Net Earnings
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Net sales of $21.1 million and net earnings of $3.0 million set new
quarterly records for the period ending September 30, 2005, and reflect
increases of 21.8% and 40% respectively over the prior year comparable quarter.
These strong results were achieved by continued growth in the core segments of
Balchem combined with the recent acquisition of certain assets of Loders
Croklaan. These results generated a diluted earnings per share increase of
32.1%, or $0.37 per share, for this third quarter of 2005 versus $0.28 per share
for the comparable quarter of the prior year, also setting a new all time
quarterly record.
In the third quarter of 2005, all three segments of the company reported
improved sales and earnings. The ARC Specialty Products segment generated
earnings from operations of $2.8 million on third quarter sales of $7.4 million.
Net sales were 2.5% higher than the prior year comparable quarter and earnings
from operations were 5.5% higher, driven principally by increased sales volume
of packaged ethylene oxide and propylene oxide. The BCP Ingredients segment
realized record sales of $5.3 million, increasing 43.7% 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 142.3% to $0.94 million as compared to $0.39 million
in the prior year comparable quarter. Sales of the Encapsulated/Nutritional
Products segment were $8.5 million in the period, an increase of 30.7% from the
prior year comparable quarter, including $1.8 million of sales from the Loders
Croklaan acquisition noted above. The domestic food market in the
Encapsulated/Nutritional Products segment was quite strong; however, this growth
was offset partially by some slowness in the nutritional supplement area.
Earnings from operations for this segment improved to $0.95 million in the
current quarterly period as compared to $0.35 million in the comparable quarter
of the prior year.
Consolidated gross profit for the quarter ended September 30, 2005 was
$7.6 million, an increase of 23.0% compared to $6.2 million for the prior year
comparable period, due largely to the above noted increase in sales. Gross
profit, as a percentage of sales, improved to 36.2% from 35.8% due to improved
manufacturing efficiencies and favorable product mix. Operating (Selling, R&D,
and Administrative) expenses were $2.9 million, as compared to $2.8 million for
the prior year comparable quarter, declining to approximately 13.8% of net sales
from 16.1% of net sales in the comparable quarter of the prior year.
For the nine months ended September 30, 2005, net sales have increased
21.3% to $60.0 million compared to $49.5 million in the comparable prior year
period. Net earnings have increased 39.2% to $8.3 million, or $1.04 per diluted
share, compared to net earnings of $6.0 million, or $0.78 per diluted share, in
the prior year comparable period.
Balance sheet ratios and cash flow continue to be strong. Our September
30, 2005 balance sheet reflects total net cash and investments of $10.7 million
after recognition of the previously noted acquisition of certain assets of
Loders Croklaan. The company has no long-term debt and shareholder equity
increased to $60.1 million.
Outlook
Commenting on the outlook for 2005, Dino A. Rossi, President and CEO of
Balchem, said "We are very pleased with the overall growth of all segments of
the business, and are especially pleased with the integration and the immediate
accretive results of the select Loders Croklaan assets acquired. We are now
being confronted with higher raw material costs due to the well publicized
effects of natural gas and other petrochemical derivative products. We will
continue to aggressively position ourselves with our supply chain providers to
keep these costs as low as possible and introduce price increases with our
customers prudently. However, new product introductions, volume improvements,
continued manufacturing efficiencies and the ability to leverage off of our
existing operating structure should help us to achieve comparable double-digit
growth in the fourth quarter versus the prior year comparable quarter. We will
continue to build on our enhanced technology capabilities in the food,
pharmaceutical and nutritional markets, as well as seeking more strategic
alliances, joint ventures or acquisitions for each of the segments to complement
our growth objectives."
Quarterly Conference Call
A quarterly conference call will be conducted on Wednesday, October 26,
2005 at 2:00 PM Eastern Time (ET) to review third quarter 2005 results (for the
period ending September 30, 2005). 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 toll-free (877) 407-8289, or local (201) 689-8341,
five minutes prior to the scheduled start time of the conference call. The
conference call will be available for digital replay through November 4, 2005,
by dialing toll-free (877)660-6853, or local (201) 612-7415, and using account
#298 and conference ID #172472. This press release, and its accompanying
financial exhibits, will also be available on the company website,
www.balchem.com, prior to the conference call.
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Segment Information
Balchem Corporation consists 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 and agglomeration solutions to a variety
of applications in the food, pharmaceutical 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, 2004. 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: Karin McCaffery, Telephone: 845-326-5635
Selected Financial Data
($ in 000's)
Business Segment Net Sales:
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Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
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Specialty Products $ 7,352 $ 7,171 $22,088 $21,315
Encap/Nutritional Products 8,503 6,504 23,131 18,527
BCP Ingredients 5,290 3,681 14,750 9,607
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Total $21,145 $17,356 $59,969 $49,449
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Business Segment Earnings (Loss):
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Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
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Specialty Products $ 2,846 $ 2,697 $ 8,377 $ 7,795
Encap/Nutritional Products 945 345 2,431 901
BCP Ingredients 940 388 2,233 851
Other income (expense) 126 (39) 231 (88)
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Earnings bef. income taxes $ 4,857 $ 3,391 $13,272 $ 9,459
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Selected Balance Sheet Items
September 30, December 31,
2005 2004
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Cash $ 10,723 $ 12,734
Accounts Receivable 10,311 7,996
Inventories 8,761 6,319
Other Current Assets 1,036 2,163
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Current Assets 30,831 29,212
Property, Plant, & Equipment (net) 24,499 24,188
Other Assets 15,482 7,005
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Total Assets $ 70,812 $ 60,405
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Current Liabilities $ 6,063 $ 5,707
Other Long-Term Obligations 4,627 4,464
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Total Liabilities 10,690 10,171
Stockholders' Equity 60,122 50,234
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Total Liability and Stockholders' Equity $ 70,812 $ 60,405
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