Exhibit 99.1
Balchem Corporation Announces 4th Quarter 2007 Results
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New Hampton, NY - March 4, 2008
BALCHEM CORPORATION (NASDAQ: BCPC)
reported as follows (unaudited) for the period ended December 31, 2007
($000 Omitted Except for Net Earnings Per Share)
For the Three Months Ended December 31,
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2007 2006
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Net sales $ 53,733 $ 26,086
Gross profit 12,398 8,311
Operating expenses 5,816 3,469
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Earnings from operations 6,582 4,842
Other income (expense) (206) 23
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Earnings before income tax expense 6,376 4,865
Income tax expense 2,221 1,651
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Net earnings $ 4,155 $ 3,214
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Basic net earnings per common share $ 0.23 $ 0.18
Diluted net earnings per common share $ 0.22 $ 0.17
Shares used in the calculation of diluted net
earnings per common share 18,811 18,390
For the Twelve Months Ended December 31,
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2007 2006
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Net sales $ 176,201 $ 100,905
Gross profit 46,930 34,006
Operating expenses 21,024 14,844
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Earnings from operations 25,906 19,162
Other income (expense) (1,077) (61)
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Earnings before income tax expense 24,829 19,101
Income tax expense 8,711 6,823
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Net earnings $ 16,118 $ 12,278
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Basic net earnings per common share $ 0.91 $ 0.70
Diluted net earnings per common share $ 0.87 $ 0.67
Shares used in the calculation of diluted net
earnings per common share 18,611 18,247
Balchem Corporation (NASDAQ:BCPC) 2
New Record Quarter Results for Sales
Quarterly record net sales of $53.7 million were achieved for the
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period ended December 31, 2007. This is an increase of 106% above the $26.1
million result of the prior year comparable quarter, and was derived from both
organic and acquisition growth. Net earnings for the quarter were $4.2 million,
an increase of $.9 million, or 29.3% as compared with the same period last year.
The $4.2 million in net earnings resulted in an increase in diluted earnings per
share of 29.4%, or $0.22 per share for the fourth quarter of 2007 versus $0.17
per share for the prior year comparable quarter.
Detailing the fourth quarter of 2007, the BCP Ingredients segment
achieved record quarterly sales of $31.6 million. This result reflects sales
derived from the acquisitions of the customer list of Chinook Group Limited
("Chinook") and certain assets of Akzo Nobel Chemicals S.p.A. ("Akzo"), both
completed earlier in 2007. These acquisitions contributed approximately $23.5
million of the revenue increase over the prior year quarter in this segment,
meaning the core portion of this segment grew 13.1%. Earnings from operations
for this segment were a bit soft, improving 36.1% to $1.1 million as compared to
$0.81 million in the prior year comparable quarter. This segment's current
quarterly earnings result includes non-cash amortization expense of $0.7 million
related specifically to the Chinook acquisition. It also was impacted
unfavorably by a significant, rapid increase in the cost of methanol in the
quarter. Sales of the Encapsulated/Nutritional Products segment were $13.8
million, an increase of 26.7% from the prior year comparable quarter. This
segment growth was organic only, as the human sector increased 30% with
particular strength in sales of choline, domestic and international food, as
well as pharma calcium products. Our specialty animal nutrition and health
products, targeted predominantly for ruminant animals, realized approximately
21% growth over the 2006 Q4 results with continued strong sales of Reashure(R),
Nitroshure(TM) and Niashure(TM). Earnings from operations for this segment
improved 127.7% to $2.6 million, as compared to $1.1 million in the prior year
comparable quarter. The ARC Specialty Products segment generated quarterly sales
of $8.4 million, a 3.5% increase over the prior year quarter, principally from
increased volumes of ethylene oxide products. Earnings from operations were flat
due to increases in the cost of petro-chemical raw materials.
Gross profit for the quarter ended December 31, 2007 was $12.4 million,
or an increase of 49.2% compared to $8.3 million for the prior year comparable
period. The consolidated gross margin, as a percent of sales, at 23.1% declined
in direct correlation to the proportional increase of the BCP Ingredient sales
levels. This gross margin was lower than expected, due to certain petro-chemical
raw material cost increases, which negatively affected the BCP Ingredients and
Specialty Products segments that could not be offset with timely price
increases. We had begun to implement price increases, but the rate of raw
material cost increases, and more importantly, the frequency of these increases
did create considerable challenges to mitigating the short term unfavorable
impact. Operating (Selling, R&D, and Administrative) expenses increased 67.7% to
$5.8 million, as compared to $3.5 million for the prior year comparable quarter,
but decreased as a percentage of sales to 10.8%, down from 13.3% in the prior
year quarter. This increase in operating expenses, over the prior year, was
primarily due to the additional amortization and selling expenses associated
with the Chinook and Akzo acquisitions.
For the twelve months ended December 31, 2007, net sales have increased
74.6% to $176.2 million compared to $100.9 million in the comparable prior year
period. Net earnings
Balchem Corporation (NASDAQ:BCPC) 3
have increased 31.3% to $16.1 million, generating $0.87 per diluted share,
versus net earnings of $12.3 million, or $0.67 per diluted share, in the prior
year comparable period.
Balance sheet ratios and our cash flow continue to be strong. Late in
the first quarter of 2007, we borrowed $39 million; the proceeds of which were
used to complete the funding of the Chinook and Akzo acquisitions. At December
31, 2007, our outstanding borrowings were $28.0 million reflecting accelerated
payments of $9.0 million. We have quality accounts receivable of $29.6 million
and are well positioned to continue with an aggressive debt reduction program.
Outlook
Commenting on 2007, Dino A. Rossi, President and CEO of Balchem said,
"The integrations of the Chinook and Akzo acquisitions have gone well. This
fourth quarter result does not reflect our expectations of the impact from the
acquisitions due to raw material increases, nor are all of the synergies
achieved for our choline platforms, but we have made significant progress. The
acquisitions continue to contribute accretively to our earnings even with the
earlier noted raw material cost increases and the high level of amortization
expense associated with acquisition accounting. We have improved the results of
our calcium products for the pharmaceutical and OTC markets as we discussed last
quarter and expect this result to continue.
Raw material costs have been, and will continue to be a challenge in
the near term. We are taking pricing actions, as appropriate, to lessen the
impact of these raw material cost increases; however, actions taken by the
Company in the fourth quarter, due largely to their timing, did not offset these
cost increases , but will have more impact on 2008. With that said, 2007 results
were very strong with sales up 75% and net earnings up 31%. We have implemented
additional price increases effective January 1, 2008, to pass on the raw
material increases noted earlier. With this action and our continued growth
plans, we expect 2008 to be another year of continuing quality double digit
improvements in sales and earnings, pending global economic issues."
Quarterly Conference Call
A quarterly conference call will be held on Tuesday, March 4, 2008 at
2:00 PM Eastern Time (ET) to review fourth quarter 2007 results. Dino A. Rossi,
President and CEO, and Frank Fitzpatrick, CFO, will host the call. We invite you
to listen to the call by dialing toll-free (877) 407-8289 five minutes prior to
the scheduled start time of the conference call. The conference call will be
available for digital replay through Friday, March 7. To access the replay of
the conference call, dial (877) 660-6853, use account #298 and conference
ID#275712. This press release, and its accompanying financial exhibits, will
also be available on the company website, www.balchem.com, prior to the
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conference call.
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, human and
Balchem Corporation (NASDAQ:BCPC) 4
animal 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, 2006. 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
Balchem Corporation (NASDAQ:BCPC) 5
Selected Financial Data
($ in 000's)
Business Segment Net Sales:
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Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
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Specialty Products $ 8,380 $ 8,099 $ 33,057 $ 32,026
Encap/Nutritional Products 13,793 10,889 49,919 41,565
BCP Ingredients 31,560 7,098 93,225 27,314
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Total $ 53,733 $ 26,086 $ 176,201 $ 100,905
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Business Segment Earnings (Loss):
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Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
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Specialty Products $ 2,932 $ 2,915 $ 11,824 $ 11,315
Encap/Nutritional Products 2,553 1,121 7,194 4,200
BCP Ingredients 1,097 806 6,888 3,647
Other income (expense) (206) 23 (1,077) (61)
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Earnings bef. income taxes $ 6,376 $ 4,865 $ 24,829 $ 19,101
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Selected Balance Sheet Items
December 31, December 31,
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2007 2006
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Cash $ 2,307 $ 5,189
Accounts Receivable 29,640 11,578
Inventories 15,680 9,918
Other Current Assets 4,842 2,170
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Total Current Assets 52,469 28,855
Property, Plant, & Equipment (net) 42,080 31,313
Other Assets 59,875 32,165
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Total Assets $ 154,424 $ 92,333
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Current Liabilities $ 36,330 $ 9,560
Long-Term Obligations 25,014 7,411
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Total Liabilities 61,344 16,971
Stockholders' Equity 93,080 75,362
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Total Liabilities and Stockholders' Equity $ 154,424 $ 92,333
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