FOR IMMEDIATE RELEASE
Balchem Corporation Announces Second Quarter 2009 Results
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New Hampton, NY, July 30, 2009 - Balchem Corporation (NASDAQ: BCPC)
reported as follows (unaudited) for the period ended June 30, 2009.
($000 Omitted Except for Net Earnings per Share)
For the Three Months Ended June 30,
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2009 2008
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Net sales $ 52,976 $ 62,901
Gross profit 17,304 12,951
Operating expenses 7,019 5,711
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Earnings from operations 10,285 7,240
Other income (expense) 18 (239)
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Earnings before income tax expense 10,303 7,001
Income tax expense 3,434 2,277
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Net earnings $ 6,869 $ 4,724
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Basic net earnings per common share $ 0.38 $ 0.26
Diluted net earnings per common share $ 0.36 $ 0.25
Shares used in the calculation of diluted net
earnings per common share 19,184 18,995
For the Six Months Ended June 30,
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2009 2008
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Net sales $ 105,962 $ 119,762
Gross profit 33,602 26,434
Operating expenses 14,007 11,790
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Earnings from operations 19,595 14,644
Other expense (126) (452)
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Earnings before income tax expense 19,469 14,192
Income tax expense 6,502 4,827
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Net earnings $ 12,967 $ 9,365
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Basic net earnings per common share $ 0.71 $ 0.52
Diluted net earnings per common share $ 0.68 $ 0.50
Shares used in the calculation of diluted net
earnings per common share 19,107 18,916
Balchem Corporation (NASDAQ:BCPC) 2
Record Results for Earnings
For the second quarter ended June 30, 2009, the company achieved
record net earnings of $6.9 million, an increase of $2.1 million, or 45.4%. The
$6.9 million generated diluted net earnings per common share of $0.36 versus
$0.25 for the prior year comparable period, an increase of 44.0%. Net sales of
$53.0 million were approximately 15.8% below the $62.9 million result of the
prior year comparable quarter; however, equal to the first quarter 2009 sales
results.
Detailing this second quarter of 2009, Animal Nutrition and Health,
including industrial choline and derivative product sales, totaled $34.8
million, a decrease of 22.0%, or $9.8 million from the prior year quarter,
principally from a decline in volume sold into the well-publicized soft U.S.
poultry and dairy industry. We also realized lower export sales from our North
American choline plants, largely due to the stronger U.S. dollar in 2009 versus
2008 and international political factors affecting poultry exports. This U.S.
volume decline was partially offset by increased volumes of choline products
sourced from our Italian operation into the European and international poultry
markets. This geographic mix lowered consolidated feed grade prices in the
quarter, as did lower pricing linked to the decline in raw materials. Sales of
industrial derivatives (both choline and methylamines) were negatively impacted
by softness, principally caused by the general economic downturn. Sales of our
specialty animal nutrition and health products, targeted for ruminant production
animals and companion animals, decreased 14.5% from the prior year comparable
quarter primarily due to the poor dairy market conditions in the U.S. We did
however realize improved sales of chelated mineral products and new sales
generated from AminoShure(TM)-L., our rumen protected lysine. Through all of
these market activities, earnings from operations for the entire Animal
Nutrition and Health segment increased to $5.3 million as compared to $2.9
million in the prior year comparable quarter, largely due to the noted strong
sales from our Italian operation, and reductions in the cost of raw materials
used to manufacture choline and derivatives, in the U.S. and Europe.
Sales of the Food, Pharma and Nutrition segment were $9.1 million, a
decrease of 4.0% from the prior year comparable quarter; however, sales did grow
approximately 9.5% on a sequential basis. Quarterly comparative sales results
for this segment continue to reflect the roller-coaster effect of pipeline
fills, inventory level management, and some effects of the worldwide economic
downturn. The domestic food sector was up, as we continued to see growth from
the launch of Choline into new food applications, as well as growth in the
bakery, tortilla and preservation markets. We also saw strong double digit
increases in our VitaShure(R) products for nutritional enhancement. These
results were offset by slowness in sales of calcium products sold into the
over-the-counter pharmaceutical markets and choline sales into the supplement
market. Earnings from operations for this segment were $1.3 million, as compared
to $1.7 million in the prior year comparable quarter, due to the softness in
sales volume; however, this segment result reflects a 33.8% improvement
sequentially from the first quarter of 2009.
The ARC Specialty Products segment generated record second quarter
sales of $9.1 million, an increase of 3.1% over the comparable prior year
quarter. This growth was consistent with the continued modest growth of hospital
admissions and steady utilization of ethylene oxide for medical device
sterilization. Earnings from operations for this segment, at $3.7 million,
improved 37.8% over the prior year quarter, principally from improved sales and
reductions in the cost of certain petro-chemical raw materials.
Balchem Corporation (NASDAQ:BCPC) 3
Consolidated gross profit for the quarter ended June 30, 2009 was $17.3
million, as compared to $13.0 million for the prior year comparable period. This
increase, from 20.6% of sales to 32.7% of sales, was a result of product mix,
price increases, plant and logistic efficiencies, and declines in certain key
raw material costs. As previously noted, we continue to focus on gross margin
improvement, implementing raw material cost driven pricing models, production
and supply chain improvements, and sales volume generation through new product
launches. Operating (Selling, R&D, and Administrative) expenses at $7.0 million,
increased $1.3 million over the prior year comparable quarter, as we had some
modest increase of employee headcount, and we increased accounts receivable
reserves for international accounts. In addition, second quarter operating
expenses in 2008 were managed to lower levels as compared to 2009, due to the
decline in operating margins that had begun to occur in 2008.
For the six months ended June 30, 2009, net sales have decreased 11.5%
to $106.0 million compared to $119.8 million in the comparable prior year
period. Net earnings have increased 38.5% to $13.0 million, generating $0.68 per
diluted share, versus net earnings of $9.4 million, or $0.50 per diluted share,
in the prior year comparable period.
Balance sheet ratios and cash flow continue to be strong. Early in
2007, we borrowed $39 million, the proceeds of which were used to fund the
Chinook and Akzo acquisitions. At June 30, 2009, our outstanding borrowings were
$8.1 million, but zero net of our cash balance of approximately $27.1 million.
We continue to aggressively manage our working capital. Our accounts receivable
balance was $25.0 million at June 30, 2009 and our inventory levels remain
reduced at $15.7 million, a decrease of 5% from December 31, 2008.
Outlook
Commenting on 2009, Dino A. Rossi, Chairman, President and CEO of
Balchem, said, "The second quarter revenues, while off from the record setting
second quarter of 2008, reflect many aspects of the continuing difficult global
economy. Notably, revenue was sequentially flat with the first quarter results
of 2009, and impressively, we have improved our profitability by initiating
actions to implement new pricing models, leveraging off of multiple
manufacturing capabilities, improving logistics to serve our global customer
base, and we also benefitted from the decline in petro-chemical raw materials.
We have launched a couple of new products, albeit with modest impact, but given
the economically challenged marketplaces we serve, this uptake of new products
is encouraging. In fact, our total volumes increased 9.7% sequentially from the
first quarter, clearly showing real growth in all segments. We continue to focus
on the shifting needs of our customers by developing innovative ideas and lower
cost solutions to help them deal with the challenging global economic
environment. We continue to prudently manage our P&L and Balance Sheet,
generating cash reserves to capitalize on other strategic opportunities. Year
over year, given the continued slowness in the global economy, particularly the
poultry and dairy markets, we now expect to see a single digit sales decline,
but to see double digit improvement in earnings."
Balchem Corporation (NASDAQ:BCPC) 4
Quarterly Conference Call
A quarterly conference call will be held on Thursday, July 30, at 2:00
PM Eastern Time (ET) to review second quarter 2009 results. Dino A. Rossi,
Chairman, President and CEO, and Frank Fitzpatrick, Chief Financial Officer,
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 digital replay through Wednesday, August 5, 2009. To access the
replay of the conference call, dial 1-877-660-6853 (local dial-in
1-201-612-7415), and use account #298 and replay ID #327479. Both account and
replay ID numbers are required for replay access.
Segment Information
Balchem Corporation consists of three business segments: ARC Specialty
Products; Food, Pharma and Nutrition; and Animal Nutrition and Health. Through
ARC Specialty Products, Balchem provides specialty-packaged chemicals for use in
healthcare and other industries. The Food, Pharma and Nutrition segment provides
proprietary microencapsulation, granulation and agglomeration solutions to a
variety of applications in the human food, pharmaceutical and nutrition
marketplaces. The Animal Nutrition and Health segment manufactures and supplies
products to numerous animal health markets and certain derivative products into
industrial applications.
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, 2008. 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, Balchem Corporation
Telephone: 845-326-5635
Balchem Corporation (NASDAQ:BCPC) 5
Selected Financial Data
($ in 000's)
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Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
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Specialty Products $ 9,093 $ 8,816 $ 17,887 $ 17,266
Food, Pharma & Nutrition 9,091 9,471 17,395 18,760
Animal Nutrition & Health 34,792 44,614 70,680 83,736
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Total $ 52,976 $ 62,901 $ 105,962 $ 119,762
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Business Segment Earnings Before Income Taxes:
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Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
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Specialty Products $ 3,749 $ 2,720 $ 7,136 $ 5,318
Food, Pharma & Nutrition 1,283 1,670 2,242 3,198
Animal Nutrition & Health 5,253 2,850 10,217 6,128
Interest and other income
(expense) 18 (239) (126) (452)
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Total $ 10,303 $ 7,001 $ 19,469 $ 14,192
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Selected Balance Sheet Items
June 30, December 31,
2009 2008
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Cash and Cash Equivalents $ 27,092 $ 3,422
Accounts Receivable 25,033 30,250
Inventories 15,738 16,618
Other Current Assets 3,301 4,961
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Total Current Assets 71,164 55,251
Property, Plant, & Equipment (net) 41,681 42,513
Other Assets 54,844 56,710
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Total Assets $ 167,689 $ 154,474
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Current Liabilities $ 28,050 $ 25,685
Long-Term Obligations 6,818 14,283
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Total Liabilities 34,868 39,968
Stockholders' Equity 132,821 114,506
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Total Liabilities and Stockholders' Equity $ 167,689 $ 154,474
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