BCPC - Earnings call transcript Q2 2021

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Operator

Greetings. Welcome to Balchem Corporation's Second Quarter 2021 Financial Results Conference Call. At this time all participants are in a listen-only- mode. A question-and-answer session will follow the formal presentation [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Martin Bengtsson, Chief Financial Officer. you. Thank

begin. may You

Martin Bengtsson

My Good is this Thank results morning the and this XX, Corporation Sherry. Financial Bengtsson, our and President. Harris Officer; of for our conference for hosting XXXX. June ending call to with quarter is morning, you, Martin you, Chief me everyone. call joining Balchem name Ted Thank discuss CEO the Chairman,

involve forward-looking statement. results at This advice materially from will expectation our events does assurance which read counsel, in this SEC, statements time, no of the will and to give our statements, expectations, I the prove to differ including that likely various Following We identified XX-K. and our cause or or and Form forward-looking release risks risks contain in correct, Balchem's forward-looking future will like would auditors can belief contain concerning could reflected that the factors Balchem's expectations and uncertainties. factors reflect

in this Forward-looking over Chairman, President. and are turn cautionary CEO to Ted entirety call now will qualified the statements I Harris, statement. their by

Ted Harris

and consolidated morning strong cash with all welcome record flow. of in our segments This morning conference Good and we quarter reported sales Martin. Thanks, three business our results earnings call. growth strong solid second to free

up year quarter. Our from revenues were up prior the of $XXX.X adjusted XX.X% earnings our million and versus million operations were XX.X% $XX.X

to million, flows. flows a in earnings second quarterly XX.X%, resulting of for quarter $XX.X $X.XX XXXX adjusted cash of $XX.X were net from of non-GAAP operations an non-GAAP in deliver increase increase earnings share we income on of X.X%, $XX.X per million. $XX.X of quarter an continue of Cash flow share the free earnings second with quarter were basis cash resulted strong on an million, per net and Our second basis. a million, $X.XX our basis On GAAP of

on I of the a passing update would plant to All down a in the as southwest provide as In storms May, and our state. results, Verona localized financial our Missouri Verona the cover you activities. like equipment, result a we and Martin, restarted three of the Before part services very few to to plant several experienced detailed out flood was segments the cleaned of call site. items. flash for the repaired safely products Missouri business of weeks The site affected shut back

varying due of So associated the each was quarter degree. negative for of damaged cleanup site write-off affected efforts. service financial to the was providers direct to and a the shutdown inventory the by the primarily used million segments $X.X temporary impact external the costs to The approximately with

manufacturing approximately redundant largely spend operational were and expect all also and normally. of satisfied and quarter. the by our capabilities third site hand are now chain. supply $X.X activities leveraging across an We The manufacturing alternate Customer through to impact functioning additional on inventory is requirements million fully

such our risk coverage of insurance help plan, extensive have event. mitigate we part As the of impact management enterprise an to

remaining the is this this insurance of in quarters our particular fully subsequent $X case from believe million we point should costs Our at deductible and all be in recovered coverage.

event an implemented flood in plan the get in redundant but enabled insurance customers. time amount once would running disruption our like up supply chain and While the management of minimal of coverage of the short and to highlighted network. such back risk manufacturing also for the flash a services our of as teamwork our our incredible the have our enterprise for and preparedness and a mitigation strategies event, I the us the risk many of as across very unfortunate to after their we safely Balchem that value thank with was such again benefits team as capabilities it advance for event the well global during to products relatively event

that and to the Balchem's Moving Innovation Board. the Board Research position recently within am and with governance her retired Chief excited increasing on to Ms. experience in I direct-to-consumer international we development global Over at the business Fish, important her Kathy of Gamble and growth Kathy the Officer committee in on addition XXXX. will P&G acumen corporate career product roles and a June, brings very before expertise serve responsibility Directors, Directors. very fill topic. to are Procter our from at leading to Board a on Kathy, driving Fish, Kathy different to the the function vacancy new Balchem & XXXX along function research nominating Company. Board from to various Development and a a of long share with elected and of the development Ms. of culture. held pleased

we on April, our in mentioned As last call our report. released earnings third sustainability

emissions We while our by and water of of world. operate that important reduce needs usage both innovative solutions our gas stewards have and time providing significant are XX%. excellence for further the the commitment to to the nutritional stakeholders first our and These with greenhouse for goals strong XXXX published as goals health

highlights to challenges despite at at our manufacturing strength resilience discrete the of Missouri facility, flash solid second the our challenges manage business macroeconomic the achieved in numerous moment which quarter results, Lastly, and model. to environment the in Verona flood quarter the overall and we related event

also differentially As are raw the on freight higher was we and our earnings costs while Balchem. significantly not always -- are material as call facing impacting last mentioned was

We to to results our business financial Martin, to I'm dedicate resources to call the for results the manage to of significant each mitigating over back through and significant the detailed challenges. company the going consolidated go activities various very for to segments. turn effectively continue through now these

Martin Bengtsson

you, Thank Ted.

strong a As Ted financial we environment. mentioned, delivered overall challenging in results

million delivered Human year Our the prior a positive all our We sales Health Animal of second of quarter. impact to sales to $X.X Health Nutrition & primarily impact or XX.X% Nutrition in than exchange our foreign stronger three $XXX.X sales higher due quarter comparable positive contributing The a year-over-year sales Products. net Specialty euro was X.X% growth. and record to the million segments: and

dollars of quarter $XX.X the million compared for consolidated in with year. period gross X.X% $XX.X Second were up million or $X.X prior the million same margin

$XX.X or for operations recovery with offset Our compared rate basis by adjusted efficiencies. quarter percent certain The earnings tax year point for of in in $X.X costs, costs XX.X% quarter with favorable XX.X% prior up of partially to Consolidated of release rates our the The basis and X.X respectively. primarily XX.X% debt million was the the tax our the reduction slight partially and Interest million XX.X% The year to from down goodwill prior from increase basis, to million year the compared XXXX $XX.X distribution the event, significant On manufacturing second second the was raw EBITDA primarily from XXXX XXXX at $XX.X by expenses was year. being million morning, points compared tax the to due Adjusted flood material ratio impairment $XX.X of up in and impacted detailed a offset as income $X.X and prior negatively were XX.X% the higher an million, expense compensation-related earnings $XX.X business in and XXXX. XXXX of a increase million the net million in non-GAAP quarter gross from $XX.X $X.X flash primarily of this in quarter. the X.X% effective margin related decrease compared basis were on Industrial quarter sales second the and leverage and stock-based the million company's or were quarter million. credits and were Products prior prior quarter the the costs operations due mix segment overall as was integration the overall $X.X an XXX effective benefits XXXX. Consolidated quarter. to year tax million compensation. a an by $ to to formally was of in closed increase second operating $XX.X for quarters above charge GAAP of net the net associated million second debt to the was earnings transaction from of quarter. for XXX quarter, a second in was of or XX.X% The decrease a included in costs. certain due million, XX.X% lower increase and

million $XX.X or the per of flow cash diluted translated million share comparable quarter. We earnings quarter net share, balance million prior $XX.X and an closed of the or $X.XX cash or generated net basis, quarterly $X.X million were per quarter. This adjusted we year up of XX.X% compared $X.XX diluted free $XX.X on sheet. with with quarter into of income last from quarterly $X.X our adjusted second increase On net earnings year's X% an

quarterly and As Health and a XX.X% side million, sequential sales were beverage generated on our continued The Minerals the We strong as very was prior we within Nutrition year-over-year driven pleased Choline our the and significant businesses. from Human look sales markets business. or as at year. growth to well it perspective, as million sales ingredient of sales for business as nutrients food segment well by strong within increase growth within minerals food Nutrients higher increase an and from see of the & the $XXX.X quarter, sales both our of $XX segment

material higher to flood from associated an delivered partially segment $X.X of increase Nutrition we and to and offset by million, or quarterly million compared our manufacturing manufacturing quarter, costs aforementioned & raw that Health the prior Missouri operations distribution recovery site. sales event year with Human higher Verona, Our overall the from at and due efficiencies, the experienced flash primarily earnings the XX.X% costs of the $XX

direct of an the and effect of from XX.X%. flood expenses this for event, to assets quarter adjusted earnings amortization increase associated $X the excluding million segment the intangible million, were of $XX.X second or $X.X noncash Excluding of million operations flash related with Verona expense

changes was & $XX.X increase sales compared XX.X% The of Nutrition Animal rates, increase result an Monogastric which currency growth of million Ruminant a animal the or and sales Health or the to the of segment. impact to contributed markets and year. in sales quarterly million in to favorable prior foreign segment X.X% of in $X.X higher million generated $X.X primarily both Our related exchange

market. volumes of and penetration successfully rumen drive XX.X% capsulated and Ruminant to grew continue Our we the our business products in protected

down strong come but milk quarter, proposition. In have healthy a products have and still prices bit terms protein of economics are second the our levels during where at dairy value relatively milk a

for side, due demand to overall down volumes slightly lower Monogastric the On European choline. were

material choline, animal and earnings quarterly However, from products. was of by Animal in minerals decrease chelated sales grade the volumes higher financial average higher this raw US and feed increase down $X.X and an costs costs Health companion selling & of impact prior prices manufacturing at year from operations the of of volume Nutrition were fully from flood offset million facility. and $X.X or the primarily distribution recovery XX.X% the in flash Missouri the to due with million Verona, quarter, associated event our increases

with Excluding of of this million, the operations event million, assets quarter second non-cash excluding million of associated million segment related flash of effect earnings expenses were and amortization a or Verona of to adjusted $X.X the expense direct XX.X%. $X.X $X.X the blood intangible for decrease $X.X from

have through As we in our and Nutrition mechanism progress we're the raw expecting Health customer escalations as material majority Animal of vast this in will XXXX. business we slows into margins second & of and that improve place the year in half the contracts, pricing given the segment currently

million, XX.X% increase quarter, The an or device to Our or million to to prior Specialty sales Products and costs. an million, Products sold by quarter higher increases the increase segment nutrition $XX delivered quarter. prior Specialty of the increase for the second raw of both aforementioned of sales products $X.X year due XX.X% $X.X material to sales partially earnings primarily year in plant sterilization due million The segment higher medical $X.X the from quarterly and had was primarily versus compared offset markets. distribution of operations the

from segment the of expenses million flash for $X.X the were operations to turn XX.X%. second increase amortization closing earnings for remarks. related some of an I'm quarter the event, million, direct and Ted Verona $X.X Excluding effect non-cash to of million to excluding of this the with flood expense now intangible call back going assets or associated $XX.X adjusted over

Ted Harris

Martin. Thanks,

record all-time from three our with flows adjusted record results quarter in second morning revenues and segments. We are earnings, operations. strong record achieved adjusted business delivering very net earnings, this quarterly GAAP reported pleased consolidated Balchem's all financial We EBITDA of non-GAAP net earlier record cash

attractive These flood logistics the strong All results Verona of flash facing successful that to and to higher raw up while the the event into are have only capabilities we and I call be costs, turn related to future. back this Martin? manufacturing but continue challenges continued leadership questions. now well-positioned also inventory open the material to not loss and our will today, over global reported it at plant. Martin show and disruption in markets to distribution we where today for

Martin Bengtsson

concludes now questions. This conference. At this will conference Ted. you, call formal the open of Thank portion point, the for we the

Operator

Thank Mark proceed. Connelly is you. from [Operator Our question Stephens. Instructions] first Please with

Mark Connelly

reversing my probably Ted premature. hospital normalization Thank surgeries retrenchment in last of was normalization? early question you. about seeing at that and, quarter Are of you suspending hospitals activity sort of, any terms elective

Ted Harris

to to all of question, be pandemic Thanks is answer variant. the the as Mark and not changing the Delta on few environment it's But short a relative reflect the no last days for the are continues yet. obviously news we the we rapidly -- and can maybe

we're we're pleased and to are would up also it watching the business a I be sequentially. seeing in returning. little bit not But been continues been we're that closely. say sterilization it lumpy slowly while lumpy. that So has bit a and both today, return would with has I it Volumes year-over-year say

were closely. real be not as again think need surgeries, supply seeing a But short But so -- of with the that also yet. is we but that pandemic. possibility answer I see that watch selective replenishment no we're demand forward could during obviously return the the increased going that to chains we depleted

Mark Connelly

the surge a wellness in with for supplements that in nutrient number does the some cases has of big companies push human Switching rest that health for year last the affect of the gears. and We're year? vitamin reversed. How slowed your from hearing expectations part of the

Ted Harris

focus Certainly, last the immunity the pandemic and year boosting minerals so. has or on business the vitamins nutrients over benefited and our

in slowdown not We a yet seen have demand.

slower for We the than growth is year-over-year example. quarter it are last seeing was

we're quarters we're year. changing growth the in slowing partly saw this remains that believe consumer wane QX. and that year-over-year a behavior benefit our to And certainly seeing continue. strong. the the to So some we these we demand products time, in because the in in But for relative But types still saw last as we're to increased products. demand at year-over-year will very attention point very growth with now comparing to strong of But will supplementation continue pleased

Mark Connelly

last continue I And hope buck trend. question. to you that one just

animal What a And are year-over-year market Your share nice boost a on to to challenges penetration aggressively biggest a that go market saw how in quarter. the choline you of basis? how the driving this after in sort rates? do you decide

Ted Harris

market So well includes and swine certainly business our aspects again the the two for monogastric as different market. you're choline aware One primarily. to are very that animal, poultry is animal companion there

and We strong We market much have share the very market US Europe. have strong in in share really presence Asia in America. don't South

There be usage opportunity We've is gained. But and driving European say. past. would more the I There North are with the of So I our to share is And business about some primarily around think business really American a in business. increased grow choline. alternatives. the talked our tends betaine market there is to

usage betaine would the than of demand for overall choline us also higher Using is. that show for choline replacement should it our grows and market increased be to would So grow drive levels That business. fed that science dose at higher currently which choline.

of in and is really So the showing the in growth feed the market obviously are is growing monogastric certainly animal with those overall quickly our drivers more choline, the business results. grade very up companion the that

we're swine companion include include diets, those perspective, how markets. Most penetrated choline. choline; growth highly animal is poultry penetration driving products, there. really that's most choline So in a From very

still of X%. that So in Europe, It's choline so where point the much at in though And say, very encapsulated engineered we our it's industry, let's penetrating market. sell dairy different sort to it's highly the not North time. choline we only this than penetrated, is into America XX% in as less feel

customers So developing our new nutritionists important that convincing about a that choline. a have addresses than to more maybe a product recently for feeding and as again, choline liver And originally shows and it science help broaden liver. study bringing very choline that payback in we're opportunity and just proposition the a aggressive And different learning may be done choline could penetration new that therefore positioned to cows. by We've that's significant and driving value benefit very really really fatty choline. of And that of it's we penetration. use to is through science, where that old beneficial fatty to very a be bring there's we lot an heat studies stress

the drive that both our and salespeople penetration that it on be matters and through Europe increased really we're I We're through science. doing and and where So on really is more our very ground for where opportunity focused. is in that's US we're here, think more on ground, focus doing the the to aggressive the boots nutritionists staff,

Mark Connelly

Super helpful. Ted Thank you,

Ted Harris

Thanks, Mark.

Operator

is question proceed. Bob CJS Securities. with Labick from next Our Please

Bob Labick

on Good morning. and quarter nice Congratulations execution.

Ted Harris

Bob. Thanks,

Bob Labick

I wanted characterize what yet? you food Are you're levels the and beverage, to pre-COVID here? How focused growth on and flavors the human powder from are back the drivers they on that would nutrition And to start side. the sales?

Ted Harris

aggregate ahead and growing been of We've are sales back certainly pre-COVID levels. nicely. our So in

you fundamental you think And I growth serve. a solid quarter. just look markets we exclude up that's about nutrients, the that in If at in we just result as so food really the of business XX% the were good

demand associated of there's our I that a the fruition return were But with is happening. bit of growth of chain those replenishment of to parts the some think depressed, market also of of because supply is certainly that not coming which is the there. to initiatives the from in a benefited a aggregate are somewhat certainly And back that close. getting pre-pandemic real the pandemic. foodservice, We've seen of think decline the it would levels, we lastly, nicely. probably I in but back come specifically say quite no also pandemic business aspects There

some So, that levels. business have our haven't don't we But bit. higher that to the seen we they and believe down little it's we're certainly really fairly benefits are don't all yet. a broad-based and sales We there that also a kind fully levels of experiencing, and pre-pandemic fully growth slow we that is back, than believe we they're waned still our that foodservice believe of expect the of

good health in business the continue we and quarter can the nutrition the the overall that nice in So, drive about rest growth for human to of in year. feel expect we the growth

Bob Labick

Okay. adjusted yes, how an margin margins I'm Is or Great. that very prior about nutrition thinking And the the going sticking are The basis above kind of in H&H and profile benefit remain with human as from well you on mix, strong health. levels. a forward?

Ted Harris

that is start recall bit many and also in certain inefficiencies we're But nutrition and me. in margin in really business. good or to talked teams addressing human a me perspective of some done playing teams the supply about business chain can manufacturing of and Let mix efficiency operations those if But really an a from inefficiencies. seeing of health in we we add fair XXXX, role plants. were XXXX, our Martin then probably certainly have job our the performance struggling areas a correct our And a of you

of by manufacturing eliminating some that some prepared the partly higher efficiencies we inefficiencies were by driven we're but volumes, those just in favorable seeing driven saw you as so And experiencing. partly remarks, also

by animal addressing offset, while significantly way. higher So human material part the impacting our business those sure that a also of also raw clearly a is costs are for nutrition of nutrition in material part it, inefficiencies big somewhat of mix impacting it very is some

it color. any I'll pass Martin, to So you with other back

Martin Bengtsson

add is best No been maybe business to that to pass-through are I enabled the would increases thing to-date customers. ones only also raw our human material the there their have that the

there. seen an So they've of less impact

and therefore up in the the to been show shine able through Ted have P&L. So that efficiencies mentioned

So that's would I there. maybe what add

Bob Labick

last then And one jump me, the queue. it. for can in Great. back I Got

that and any doing spending now? call, On outcomes examples you're your way reallocating of dollars. still the results you you're the with there's if you're relatively any or marketing the Can it's talked happy about or update what any I give if us pivot initiative? how to far, on new so last we quantify know

Ted Harris

it's to Yes. really We say have do relatively -- have all new. still happy. are I say, I to

lot our we've labor So fruits we're but necessarily with point the at that time, of we're in seeing team not a really this from pleased built.

campaign a for for We of product, minerals. VitaCholine for as our call quarter beverages ice attention Albion encapsulates pretty our but and that -- also we and in a an put getting our so are seeing branded business as inclusions getting are of like -- pieces are we And We've and use that said well indulgent that frozen things are bit this choline and within the which introduced had you varigates of kind treats cool. some some cream glimmer like that I desserts attention that glimmering basically into and can forth. example

based on So excited the types can market. that the well we're we our to things expertise as the about that doing now we're right in-house and that customers do research are as market bringing we market of

the excited our And that their Nutrition a to So and And beverage early about. more a in just come products in we're are for new them. various launches there's out but have consumer launched very new, choline positive. segment. the a I SKU all just continue a are protein protein to launching includes our leading be think And there launches really about there that products brand beverage. that because are Premier we is new that other this signs is example lot that customers excited

and perspective really in for that in overall So from the missing right we're us. was past direction marketing headed I think something really the a

Mark Connelly

Thank Sounds you much very superb.

Ted Harris

Thanks.

Operator

Please is with Company. Mitra Ramgopal Our proceed. next question from & Sidoti

Mitra Ramgopal

and taking thanks for the Yes. Hi, questions. good morning

to mentioned I as curious seeing as want improvement margin we costs. of half off as to at sense the plays still second just too higher raw should maybe distribution out. I to material clearly get that sense look out gross early get and a anticipate if was it's you First, And XQ, some or year, to the a as -- some look pressure just how you of the from we

Martin Bengtsson

that away. not of all gross of Yeah. it, from, that terms Mitra. think end saw where call one big it million about we passed obviously It's I of We coming is tell raw don't Martin. now. -- go -- is we down. just is Good the you million still of it's The and above the think to pressure materials it and what extent, We away almost If will it this. going the the with through significant. I it when When hard start morning, This think coming is pricing $X million items couple go inflation margin lot think in will of to And know in huge on which of we've quarter nothing ever up through past. when in the passed prices second year-over-year, go you a to it seen about a about when will number away, like-for-like about raw, the we've right that and of $X a is pressure.

around For pretty is around around it's price some significant. increases buy proteins where et we're It's we chemicals, just us, that are it that oils. primarily seeing commodity cetera

be think it's develops. curve of that matter I a to So going how

and say. our recovering the almost happen getting around XXXX, on Will quarter, this. in costs third it the So to meanwhile, impossible focused we're will it in the really in market it's quarter? the be pricing right And in fourth

competition. of but well. a and running easier apart event impacted been the our we out here, that's out us our But all pointed makes last have had really not a control. these recover plants our for network, same from boat go necessarily which also in an the you discrete efficiency costs. running to quarters very little versus before, unique flood plants some and to in well in Ted of anticipate that From can't supply chain few that As and event, We continue. more been our a We're the we're bit have that production standpoint it differentially

wrong are it prices significant when just costs et all in basis on distribution which and seen was raws, -- like going points with the the impact that not year-over-year for profitability to from It's And just at and containers a that. up and the XX, a look have more the the is mentioned like You think the it cetera. suddenly us But places being XX wrong balance disruptions not increases you normalized call at basis supply demand working down would and some to in that containers will prices you well. the gone. level are will our And they're all come the to and then moment places at system point.

third that's say So normalizing would whether start can't quarter going will but that fourth just XXXX, I happen, think at point. to quarter, it to or you have some

trying managing we're little raws, a that through we is It's very our efficient at efficiently that's the how in terms run just is the our attention own ensuring to kind and So moment. pricing market, on getting of living the that's where plants and at while side, bit of what the be the running in the passing through obviously backyard moment. distribution the that

Mitra Ramgopal

was believe the of And platform, almost implementation. the some terms I I appreciate great. definitely early on there, if that's there. I starting efficiencies in on us the or is it wondering yet? see a to that's color No ERP little then you're too

Martin Bengtsson

No, I XX% it done. seeing -- to call we're efficiencies. mean XX% we're definitely

that implementation go and We plan. have we international the to locations in two smaller

implementation. to if one, in systems proud case we ERP being said, acquisitions as I done important. out take do as business On systems because I That's in to this very well. XXXX. do For not the in we continuity a with that budget that getting on But we're pretty of down and why be was step we that. So grow right? plan and from this should us a into five the first back place, it seven just point year

that and other just security systems around that good It and enhanced life controls. And around one a end like and were the the very it having on which And feel situation. then than a modern of trying of all to many. to the we the about scalability. and in lot we're system system and attention willing lot cybersecurity of top visibility to us have just at in of stay then also, Some It's the a managing these to moment the from controls closer terms manage that place. was for growth and a easier

grown two also here areas made to did As actually that We're primary incentive some lastly the trying years. controls, take changes business. continuity add out a needing would growing the doing of that platform from and the I not efficiencies be prohibited. with And that perspective, our some some It's just resources of business, organizational But there. lot a build terms D this big we're as not we in key which proper the enable on to was smaller call of a we've a one over have resources platform efficiencies. as driver And as to seeing terms cost not us our supports growth, in and why cost growing the last XXX, more to do we in the more of we've not out. we're

Mitra Ramgopal

curious, the little in it I with and finally, And probably you with That's I front? of levels might on activity you acquisitions. to this makes – assume seeing a guess just easier the digest update had time acquisition a be it new I'm great. then ERP of And little any terms if

Ted Harris

Yeah.

at would said, I've XXXX market things with reasonably as last activity we do We again, say, calls remote through that are in market, as and in Balchem. entered probably well. and busy think that down slow struggling active as a did a were much transaction really in environment. are And also but the very the the we complete few I and is how we we're I high, levels

continue there about we out So good opportunities that pipeline are to we feel of opportunities the active. the that see and specific

back spending, we're are resources is on of of focused growth. So a on growth organic time pre-pandemic focus amount the levels inorganic would we primary resources of Obviously, spending but I and fair company, driving the say, our opportunities. to amount inorganic our

Mitra Ramgopal

questions. Okay. great. taking That's for Thanks the

Ted Harris

Thanks, Mitra.

Martin Bengtsson

Thanks, Mitra.

Operator

H.C. proceed. Our Wainwright. is next from with Ram question Please Selvaraju

Ram Selvaraju

my taking for much very Thanks questions.

ones. housekeeping minor Just a of couple

are Can like you're to event comment show to can in flash you time these comment Verona, recovery to And of – mean flow does for P&L from whatever half talk the partial recovery Missouri? what for able Martin. accounting at treatment the when from in wake probably cash going How how and going a look on, potentially accomplish flood you is this that perspective is think insurance perspective? about just I up you a on also approximately? XX% that the

Martin Bengtsson

Yeah.

$X yet, do it So since I'll would our gone that exception of we expect deductible, that can't of it, deductible. So, insurance with company first. with haven't be to the recovery, recover a expect reasonable insurance costs answer right? would million I We there's it we through but guarantee in the it terms

it impact $X costs recover. less our the what call We in had So, million is second about $X.X expect to million quarter. we of the

We of expect the million quarter. another $X.X show third costs up in

the would right and moment $X we two that's get expect where million those is the in accounting see at take From quarter what it an So you you deduct our perspective, exclusively adjusted second it to million. out sold, COGS $X.X adjustment. in it the the in has an goods negative terms see cost We for adjusted impact of hit as earnings of where in almost back.

As we recoveries. and have insurance forward, go

those to Our out recoveries. adjust intention also is

So is now. adjusted out apples-for-apples, We that a negative impact right? an

perspective, We not that's this will Ram But we negative additional forward. through a will we're flow any it be where your insurance flowing the out if since we've we as most outlays having here expenses. COGS as period. moment, receive I that color. this when of know, our answers cash or positive happy insurance add is question obviously, recoveries to the in at cash adjust had the go From recoveries cash flow don't

Ram Selvaraju

that's – helpful. very no That's No.

positive the line? be, impact both is whatever and the impact the negative the to going is majority of impact, going COGS the to be on So vast it

Martin Bengtsson

Correct. Correct.

Ram Selvaraju

Yes.

this you year. that that; going before be after Is Okay. will this further proceeds quarter there's not of over; the that impact reasonable? insurance the And A, is any B, to would end anticipate negative you and get

Martin Bengtsson

clarify in We second million third to negative I would had just have quarter impact. $X.X expect we of that in quarter. million the do saying $X.X the

quickly. We insurance don't because it another quarter relatively that to impact. we in moves sometimes want get of comment negative expect million recoveries? the will on $X.X third the I When

whether the when quarter XXXX. longer early Sometimes process. third will process will know to any conclude. as whether I the fourth see quarter come have just don't come whether in it's a will it in that we will I it don't the knowledge in exactly

on depend will it So the process there.

Ram Selvaraju

No that's fair.

pandemic I normalization in is tailwinds Secondly, if And a activity be now domain, demand, there that expect a level which further in that current arena that forward or of sense to general if state to you that. level wanted ask about status steady with are medical in of the we the commensurate seeing business. sterilization a of some you around the given going demand believe

where on to think wanted that stand sense you get of a things Just front?

Ted Harris

Yes.

here. surgeries. seen room choosing do And surgeries three think would not to four do really allowing are are concern while I for quarters elective the certainly, I or hospitals and people surgery to driver not we've for people elective now for And elective I that back say, still steady quarter-on-quarter state surgeries level. an we're while that going pre-pandemic still about improvement hospital. have So, there's elective some are to the just and a think

hearing But still is customers, our recovery from our said orders to has and business that regress. significant say that pandemic or that we but been not slow stall I the we the we're as I quarter-on-quarter. slow in feel that steady recovery. to of would the seeing think elective are progress in levels could any relative around we've very change surgeries that that today we it's cause quarters it will mandates We improved making or subsequent not pre-pandemic of that any to the improvement sort in do that back about there and kind see more earlier, that seeing good So barring

Ram Selvaraju

percentage Okay, thanks. second effective I your What more. And sure missed if regarding half to Martin then revert the this. tax just XXXX? for of back Not is rate guidance to once

Martin Bengtsson

around bit minus little XX% a or XXXX. about I plus think XX.X% year-to-date. at we're their So And for is the estimate right

Ram Selvaraju

congrats the quarter And challenges flood. with an flash despite Great. excellent on these

Ted Harris

Thanks Ram.

Operator

closing question-and-answer end We have turn like remarks. reached would Harris back over our for the session. I Mr. to conference the to of

Ted Harris

again ongoing for pleased released with progress, very really the on We Sherry. that second joining you much our we Thanks very results are key today. we're call thank initiatives. the Once today quarter growth strategic the and making XXXX

appreciate Annual And in conference there look I'm meantime, up your the year attend the Investment week. conference the the you Stephens time. In we one. in Baird But see for And some sure November the we'll results So, be we’ve in Conference XXXX we'll the Conference other at not later forward at We if signed presenting of the virtual one October. hopefully, Jefferies will conferences. we and other Jefferies really the ones. December. some to Industrials reporting next in of Industrials out week and next QX

today. So, thanks again a for weekend. Have great joining

Operator

does This conclude conference. you. Thank today's

You and this may at you disconnect for your your time lines thank participation.

Balchem (BCPC) 1 Aug 212021 Q2 Earnings call transcript