BCPC - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Balchem Corporation Second Quarter Earnings 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] As a reminder this conference is being recorded. I would now like to turn this conference over to your host Mr. Officer. Financial Chief Bengtsson, Martin Thank you, sir.

You may begin.

Martin Bengtsson

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

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

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

Ted Harris

Welcome Good This revenue quarter earnings Thanks, strong morning with morning. very strong Martin. conference second our we results growth. and both to reported call.

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

second per cash per of our quarter great resulting for the in second business model. basis, XX.X% flows $X.XX from of with $XX.X share on million, Cash million. our share earnings for non-GAAP were strength of second quarterly of net with second resilience a that an Balchem an of a quarter were million XXXX, in a adjusted $XX.X Our income basis. of non-GAAP performance highlights resulted and $XX.X on of basis. increase $X.XX Overall, $XX.X quarter net of an flow earnings the free XX% increase GAAP On earnings million, quarter operations

financial AS Kappa back a results the to about of like Kappa. Martin by segment, simply to comments the would detailed Bioscience to make or cover I acquisition few passing call Before recent our

announced, KX previously nutrition for Kappa, acquired Balchem Oslo leading specialty human vitamin of industry As XX, science-based headquartered Norway. on manufacturer in June the a

of health of and nutrition accelerate strategic company, vision the strengthen and of our invented Aukrust acquisition support Nutrition set a and purpose global segment vitamin They & and the a growing our is building to find we wherever Kappa, health. support the of Human it making a calcium healthy in controls bone at a With stability become microencapsulated our stability provides large to for calcium higher KXVITAL and KX Kappa's that unique really but compared noticed to further on offered time which critical KX a under soft are the either producing available still bones scale is needed double brand who teeth to more Vitamin a leading age. a from Kappa's vitamin two old laid in to building oil products. deposits them vitamin active science-based DELTA, our and efficient product vital for by an nutrition highly tissues. preventing KX life, is of a making transport the also Sandberg. with the company Marcel chemists, the for The today. is distribution bodies and new is world the It KX a the important had place. pregnancy, way competitive Reidun chemical position. at company for gets is both that an maintaining Together under Kappa early a was life in same healthier KXVITAL. in foundation Health KX manufacturer vitamin industry. efficient need is KX enables cost human founded as needed. the Kappa calcium, superior of improved and what to It purity has brand all powder formulations Inger by and out and they quality stages sure sold a cardiovascular the pure leading technology to as vitamin or into new produce with unique the synthesis marketplace brilliant is harmful

immune role KX Additionally, with vitamin vitamin DX. and significant KX, Together vitamin a strengthen protection, support serving and function body's inflammation. synergistic the capacity plays to a the in partner vitamin system immune and DX manage as

the a combination market to sales, Three, penetration expand of legacy portfolio are deep pleased we We for believe will position, acquisition. Kappa's premium and very customer in strategically that Kappa's opportunity the accelerated acquisition Balchem our for increases. There us expertise, branded further and important elements KX. Two, this Europe, our strength patent company's and and as is Kappa's Balchem's products. about this important the both the scientific four for America, Kappa's opportunity Health, as Human Nutrition and KX, provide the critical vitamin products, will market-leading broader company that in products an see & for of both portfolio are science vitamin addition evolves and to growth provides an science-based expands future, One, strength the as fundamentally growth base. to North to of KX foreseeable strong combined well specialty

KX of combined an margin the are with provide few will addition out market-leading this companies, funded business, NOK capital enhanced in some very existing the which to of to the our and a physicians our Kappa approximately between rationale debt We of facility. and strong billion for Kappa profile working to translates And expertise customers. the make the credit to understanding of adjustments. the and and a X.X first evidence of attractive believe already XXX% scientific million, solutions just with aid in of enterprise This subsequently, and interconnectivity approximately growth We of portfolio strategic acquired of value both four, our our Balchem. that existing seeing net That of prior we ability nutrients combination US$XXX for vitamin weeks. we minerals,

opportunity the payment is now Kappa In the one of the US$XX a vitamin approximately addition margin receive and a This of to value to the strong are profile performance overall to to additional growth in with rapidly XX expected in of million, EBITDA be revenues, Balchem's strong market, the times to where enterprise profile. for growth transaction to enterprise KX has an position an the X% XXXX XXXX, a at fastest an trajectory accretive XXXX represents based an multiple, value, size expanding the vitamin targets calendar other year. and XXXX reflecting over purchase earn-out over rates the five established from have forecast The approximately XX%, last years has strong million next growth XX% over the ranging market growing years. EBITDA, sellers on $XXX based of KX Kappa's we in forecast expect and market vitamins has coming been years. few on exceeding XXXX. approximate reached growing the price,

brand quality, XXXX, accretive to expect rates XXXX. Kappa the XX%, regarded into Balchem the give adjusted to still to the basis through next this They to an KX expect growth The a gets as recognized in I transaction to Kappa's is The per welcome be growth and we exceeding a grow committed. in family. somewhat expected annual market take market, KX communication. basis compounded to moderate percentages vitamin and strong, in the understand is science on most XX plus employees, over on well Balchem's earnings to and to the know the share While the the warm want and rates commitment brand, five transparent market years. have team and market KX made accretive vitamin at larger, we opportunity, experienced KXVITAL GAAP and their the

now We are what turn about with that Martin, our very back that, ahead. achieve results detailed segments. to each the over I we to can financial the go together the call lie And of excited through and for opportunities will

Martin Bengtsson

Thank you, Ted.

second financial we mentioned delivered strong results overall, in the quarter. Ted As

all year. the inflationary distribution & pricing segments: $XXX.X & Animal sales increases second than Specialty across XX% three net of we're portfolio that prior recovering Nutrition Human across quarter were our input Our Health costs. and the seeing delivered strong drove Health, We sales growth the We million, Products. manufacturing continued in performance, and higher Nutrition

portfolio, well negative and as volumes growth impact as volume specialty nutrients growth mixed declines to ruminant by while a sales products our in weaker our nutrition our with were exchange, primarily driven in across portfolio. the we the human businesses, currency our monogastric X.X%. business, minerals our and had Our animal euro, volume foreign and approximately of portfolio food ingredients, from saw Impact

compared year. gross consolidated $XX.X to Our up prior of XX.X% the margin second million, $XX.X dollars million quarter were or

costs will on also expenses second prior GAAP year. $X for debt $XX.X effective on of time, were no up for to and quarter, the overall offset as XX.X% year-over-year were year this prior been XX.X%, We've and to expense earnings the the million, of selling racing XXXX, quarter. the net Interest an this the quarter average far Consolidated gross Adjusted XX.X% costs $XXX.X was million, areas XXXX percent with compensation-related the the demand expenses. compared earnings from higher resulting XXXX. largely The X.X. income fairly $XX and million from morning, closed primarily On million, respectively, advertising the year prices, ratio increase inflation quarter next the in so margin destruction $X.X prices. be sales certain various net million, have basis, offset XX.X% quarter $XX.X at increased $X.X and an or marketing to the change second the a in the pressures, from $XX.X quarters the points how rates second second items Consolidated evolve higher quarter. in significant, in release year company's of basis operations significant EBITDA an was to other. million compared Input million, to to margins. of inflationary few it net XXXX up operations predict was dilutive and were compared quarter up for The as with of as or million, million, of million prior debt was second help $XX.X continues or earnings operating second to each a adjusted leverage over continues We're the hard impact was but increase $XX.X quarter starting compared successful it's non-GAAP XX.X% quarters. this $X.X million, in XX% for were of the XX.X% of to quarter. basis quarter our due Our in of tax XX XXXX. some and see at to to above detailed XX.X% prior from

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

As record growth, we generated by as minerals segment at within of increase for markets, look sales higher Human and an sales a within Health well million, the perspective, nutrients as segment both quarter and business. beverage The from of driven the prior $XXX.X it the quarterly XX.X% our year. from sales increase food Nutrition was &

average million, quarterly delivered $XX.X earnings Our sales, input offset flood year, to – increase partially flash Health primarily aforementioned in by from of a the timing an to operations from the event year, higher manufacturing XX.X% the Human Nutrition the costs record of recovery due with of associated & higher and selling and costs. distribution prices, prior compared also the fact higher costs segment prior

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

an profitability the the both Health tension ruminant customer operations a generated situation environment million, in related result the In in higher while Increase and Nutrition in increases and markets generated increase sales, in in increase earnings currency we've the has a monogastric solid seen XX.X% segment $X.X in companion the to business demand $XX.X of was animal higher ruminant weaker the the costs in million, aforementioned volatile a the partially as actions changes higher prior Nutrition year, very and farmers foreign companion inflationary quarter, demand for an Animal animal demand Health offset impact as monogastric Animal with US, this environment. currently event offset inflationary associated sales Animal prices, from see a quarter. the in year exchange costs. rates. primarily In our as prior see the Health and picture region demand markets ruminant geopolitical with input struggle of sales by our We're quarterly of and the & continue by from year. timing a in Europe, of distribution some from side we compared of XXX% slowdown and prior dairy business. an Our partially costs business, in flood seeing our markets, animal well to in average & mixed destocking to on Nutrition unfavorable delivered we lower due with and flash & manufacturing to selling monogastric sales sales recovery of

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

segment the third plant of products by sales compared in year see lower increased $X.X this gradual that related operations X.X%, pandemic. by of Specialty in the consecutive prior million, quarter from encouraging aforementioned Specialty and Products foreign Volumes impacted to input the to prior currency in the But the medical market, unfavorable Products the below it's of rates. and million, offset The to negatively medical sales increases an to was partially delivered increase changes sequentially year in quarter. nutrition record of recovery of slightly costs an due the was business device delivered versus into increase was an earnings sales, the by exchange higher offset but quarter, manufacturing due costs. Our $XX.X prior for sterilization market sterilization distribution volumes. device sales, impact primarily X% to the increase partially quarterly higher

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

five closing of due facility Lastly, This lenders revolving for entered remarks, turning like XXXX, before call back credit $XXX this with credit Ted senior the XX, a up of agreement I'm million back now to to turn secured closing ahead. that support share with replaces for revolving the going borrowing million growth in place lies and would to the allows we $XXX credit to I July existing the great on in remarks. over into Ted new form a that facility XXXX. revolving facility provides to us June the agreement credit upcoming new to some call Having July flexibility for for years the XXXX.

Ted Harris

Thanks Martin.

revenue record be earlier We this strong results continues revenues We extremely in reported business difficult all-time market financial XXXX. a with three delivered of our earnings adjusted Balchem's with segments what morning record of in quarter growth to and very environment. second the are pleased and all

extremely acquisition of have the stakeholders. never company, hand pleased will place. world the cautiously the incredible this environment to also job Balchem to the Balchem opportunity to of our once do supply to Kappa the and creative fantastic team Together, of who our the positions finding we thank of challenges extreme and team like I to our of continued back I are for optimistic and strength are employees our will find ways take the to customers year Martin? resilience broad know market with do now inflationary and before. uncertainties, the over call our remain they market global seen join work disruptions of again for healthier We would Despite new all key would open Martin, for solutions chains, within The questions. continues we call I like up model. remainder the business a we the Kappa the to are make a the team. excited facing the our about given to

Martin Bengtsson

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

Operator

be [Operator Bob At question a the session. conducting from this with Instructions] line of Labick time, we CJS Securities. Our question-and-answer comes will first

may You your with proceed question.

Bob Labick

and on the Good strong morning and Kappa quarter congratulations on another acquisition.

Ted Harris

Thanks a lot, Bob.

Bob Labick

Absolutely. Yes. No, exciting. very it's

where from forward? So maybe drivers starting there, maybe maybe the opportunity vitamin and the of into they it's KX potential could you sell sales tell synergies or us growth going more different growth versus about similar choline and for and how choline

Ted Harris

Yes.

Kappa we yes, bone increasingly about support aging the of become essential I comments. And, our These So, behind Balchem. it's vitamin addition with are And KX. again, by important. growth health mean, health needed your thanks science the of really an bodies of to important cardiovascular around an and vitamin are for for the excited drivers really clearly population. factors

So, I around science itself. I about in prepared driver important of mean, But unto It's remarks just effectiveness an just importance is the overall knowledge the population. important of talked between KX on a vitamin aware really the building another synergy and KX and focused effects the that's also increased given KX. immunity, aging its And important KX synergistic particularly immune world more systems immunity the role and and becomes DX. DX. plays building with to the relative vitamin and your vitamin driver as

which is of desire continue important and I awareness are I science population; key say, And So driver. number I guess, overall behind systems. think just a kind to of people immunity I then, evolving, is aging on thirdly, for around growth. immune overall and would two One think, is the their building those drivers focus two the the is really to KX,

mean, ultimate choline. the think addressable evolve as larger awareness continues thing is choline similar those And science I same far relative to market We vitamin existing with KX. market things penetration choline choline. the science ultimately exactly of relative are happens, builds, the evolves, so, to to than

there similarity well. while one life, KX part our choline stages is role really and Balchem important through that's early really early strong cognition and around KX for And who our old of The life. early proposition. plays really and whether around we aspects a a well. age, of choline, is life, is role that, as value plays other and in company as in in role think choline strengths at it's we all excited in really choline life of of all We're the our life prenatal a pregnancy, a are --

So I life think that, prenatal bring to we expertise to and add bring our KX we're early our really excited that to customers. take to our that customers,

And we touches to so I to bit bit and the our take is really the we're access in customers perspective. talked our their Europe. the to we're that Europe. has of that leads to so, really include Kappa's element also we really choline and excited forth They're Kappa little penetrated and mineral the years synergy and a in portfolio over is us bring haven't And about strength to little a Europe. some existing a necessarily strength of technology. excited in Kappa our relationships but synergies about all presence and have that and on Like bring obvious U.S. KX similarly the from regional just Asia and present customers.

U.S. strength our in presence the is but really in have Asia We

we accelerate think believe also mineral the the really so for can strength through that in accelerate penetration that us in KX we team our Europe their Kappa choline strength. can and And with we growth Europe. in And U.S.

different it's the don't find touches as sure will perspective a feel very, synergies cost on market of more So necessarily synergies we like from those that described. we I some We it. materials but there lot ours. synergies to about go really really raw are and cost I'm synergies very even procurement a are

Bob Labick

get is beyond That's million size take cap behind you really to choline choline What helpful. it's level I the human higher to $XXX for I that you Great. that And the right we think market KX. can relative, globally, for about size Okay. does gave it think now now. choline? And then size talk the and right

Ted Harris

Yeah.

choline also that today. when in big at So the look about is role choline one very, is you very difference has significant a that animal choline nutrition

a think choline. opportunity of probably that's the far we an some the as think overall $XX human $XXX We be primarily for like there more do size not probably may market choline is vitamin. is that million less of elements So from The KX but nutrition human part market that today lot may It's a in market million. about make sense, than today. choline being nutrition animal of that. really

So gives comparison. kind size that a hopefully you of

Bob Labick

position Okay. little several put well. rising Great. raw jump or I'll on I'll changing And costs your bit. last ask raise just I queue, more a over the subjects based prices in you've to one material guess and been Obviously material in prices back as quarters a

so mentioned prices ahead the think to modest -- when, material kind You normalize? what prices where raw leadership given the how under-priced out about an or the when see were raw for if your back? have and in that, you be some do of destruction. pricing some maybe do in about environment But demand learned position price bit playing or elasticity discovered of the you ultimately you've some Might raw maybe areas little hold or time looking elasticity you first curve. inputs talk a pull that many material there you markets? if opportunity mean, niche I goes certain prices material And

Ted Harris

good our the us but the have and recover see And We're complicated majority really large by we a It's Bob. really that and of that allowed margin input We're raise pleased to with degradation. positions still question costs. we behind. market still have prices

We're to go. one to in We're ways raise prices raising a August continuing areas. selectively. certain prices have we So

bringing come ability what positions obviously to to down a we and say our out we In we that us strong and We positions market were environment way products past. very behind agreement by job we've is the lagging have have based that see give been to market margin market do that recognized raise likely, So quarter we markets, but see in on a believe forces of prices. there's interesting to margin a to is because materials are And this things It our ahead of we'll in offset be how no increases contracts. high evolves the the Why I as we're as a will we've get those some differentiated doing and into think been increases substantiated we to certain behind, that I of of as cost and the that pricing poor price customers because of we compression that be lag. and we large and down. that out, we to behind raw in under-pricing as typically back we're of anywhere that have we But were do lag have because there's we're have question. of wouldn't some going market. the period able and expansion contractual flatten the a raw flatten materials likelihood that

Bob Labick

it. Super. Got

Okay. Thank Thanks. back queue. I'll you. in hop

Ted Harris

Thanks.

Operator

comes of H.C. Ram with question Selvaraju Our line the next from Wainwright.

your may question. You proceed with

Ram Selvaraju

Hi. Thanks question. taking much for very my

from talk do about trends property indicative products? seeing in be the I what if a human little especially in an space bit I going acquisition upon. health bit portfolio, developing you to to And potentially look you broader as Balchem should to particularly you could potentially in Kappa the with choices into capitalize Kappa the may plan about more an was perspective do the advantageously to based you're some we that intend HNH co-formulated ask foods? also positioned on new long-term be Kappa only like about you And not what the to intellectual what that expect little that of you if thinking a nutrition strategic relative you're hoping medical to specifically, exploring the but to have, as entry emerging acquisition, example, So, also other for at strategy you and space prescription wanted

Ted Harris

Ram. A for thanks questions there. lot your So, again, in

is of Kappa margin of the kind relative of the this behind of the our that there On I of nutrient we bull's screen. to the a think radar I the in and Kappa our adds relative of the the that And middle the our profile, fact say acquisition future relative bit acquisition eye -- the of is more would essential to think science the really it as strength -- growth, indicative to as focus. it, right pipeline nutrition brand, of is that the it, specialty relative relative brand to health the an nature to -- to and a

in very those I that in think it on side we only of forth. have they that to has ingredients, food broader it's are clearly the are do of think just acquisitions medical you in technology in may and may and eye the it's that -- think middle what of certainly so human plenty I a So, the include bull's don't investments kinds of pipeline want And that there to bull's we various do. continue eye so animal as foods, to nutrition, nutrients well. include the But

keep decisions forth. in filed very -- to company So, patents. a in with it the really to quite From There their we're a secret bit it the deliberate is protection as it Kappa I made when is acquisitions our but existing up this of firmly pleased to strengthen of file broad wrapped not relative eye is that technology of whole, and patent And of around is when the are at a business is looking think noting array a accurate proprietary portfolio what science all bull's worth the going exists it's to that so to and patent the just think a of I Kappa. do. I their and quite and worth trade we patent -- say as probably think we're know-how to portfolio that

at to look that as in And broader of KX KX describe have potentially of specific talked and to as variant like health. and the that them have around other And them -- we I products when describe synthetic application leader or forth? key them. it's lengths So, world handful see microencapsulation. a quite three We so can some one existing Absolutely. mean I question, microencapsulation. patents broadening I about products a that. in would holistically, we the maybe strong are of that synergistic or I'll around our then health a like your four, feel to there products good real strengths at with we've others approach human of look inclusion the and manufacturing some of immune we various this But ourselves

products our microencapsulated. is of One

think microencapsulation I in role there's for a KX. here

are bring might there So and can whether technology synergistic there. that zinc group Kappa's we forth with also to to something find opportunities there. we we -- or it's really minerals, what our magnesium various see excited together with choline we're some will we feel And get like so

So part first that that the really as And it nutrition is specialty question can think to will a to do think are around from -- food we the long-term science-based solve growth it company and perfectly Kappa that global, that was strategy perspective. hopefully, growth And to of platforms do both our is just nutrients strategy broad lot that our fits health is us ingredients a technology-based and a human we that a that going ability broad, platforms that answers company overall on allow your think a broaden nutrition our have again that. your think we HNH. our I differentiated of build I question. that -- I mimics in forward. I And And really of problems have and array and talk customers' about based

Ram Selvaraju

to do Kappa expire? when the principal clarify, from to patents expect Just you

Ted Harris

-- time of in through you in some when of kind have some XXXX that a all we XXXX like have patents, Again, multitude and expire that frame.

feel of protection. the There's on we proprietary it's any good And So I information. trade about length lot patent not we're not really again, reliant secret one patent. -- as of said, a

synthetic there's years deliberately the protection that's feel come. many not for to path recently give to to fact, will that very In been that work we optimize decided been patent done has

Ram Selvaraju

that if did to you represents servicing on refinance us the And looking or you debt I just in whether as the And of extent if component go then question you're side. overall of feel you. could it some debt to acquisition very position of overall the and quick it's any to company just at the specifically point? Thank acquire transaction. debts debt picture forward wanted or what usual. see Martin the a snapshot conjunction of debt And Okay. the that that quick to the meaningful really of you a restructure okay give current Kappa understand for this Kappa a

Martin Bengtsson

terms in at Kappa numbers $XX of acquired round them at it that -- paid we debt Yes. was closing. time about carried which the the The down in we million

entities. as any increased Obviously, in transaction. Kappa So longer funded we the no the found debt Kappa our has debt we --

the prepared will balance overall revolver. mentioned million as at you our right of refinanced part $XXX that days revolving So if just look a million. debt new five-year we $XXX credit of ago And now, million show is facility, period sheet was in with remarks, two normal or for so previously Balchem's it $XXX about a just which which outstanding

$XXX million in position debt, the $XXX of of feel so facility, good have currently that out credit there. million we're we we So a

improved, over leverage going cash interest the of before. you spreads LIBOR, plus it's at that now slightly spread a quick. the margin we on we the do that much math, actually our But simple million there, generating. the we're X.X depending the to the used cash backdrop what's net that we that we the we free what rate and we'll expectation flow will refinanced in we carry. follow percent attractive you that margin we on obviously If pay million. can every environment times every had the of that delever how to on the what down $X the at debt expect take that is is a here And with is year, generate on leverage SOFR moment We But quick -- be pretty that $X.XX against debt very have debt that little pretty terms

Ram Selvaraju

versus but the US indeed be on meaningfully especially little that's example, your comment what the stronger the to Kappa the an to know for for that's case, the on And offset to your on to Thank relative mean growth what you I markets don't forward impact you If currency was the in have that? would any you. of achieve. for expect, strength originally just if it whether clarify ongoing for to And continued dollar? helpful able a able US you going being negative businesses dollar Kappa potential businesses? implications greater Europe Can just you lastly, picture. to in bit going expect

Ted Harris

Yeah.

-- the dollar the on That's XXX, has right? it last range. translationary translate business our XXX on a XX% back. think it the when business almost the sort a average I perspective, impact our with strong impact of a where from we translationary currency Obviously, European euro European is in year of XXX, now, if

of businesses. In and fundamental locally We extent. a would a terms impacting to business our underlying not our of say, the sales itself, do sourcing our regional I lot great for

the European it a lesser obviously business locally. a of So we're plus a and sold and where and so is of for locally, our lot our that sourced XX% impact based business locally sold and therefore, same is US sourced thing US lot has locally

underlying FX shouldn't actual are to but driver change impact business translationary the a things changes much. an overall, somewhere, than exception us performance. So it a find can of too of always We small more

Martin Bengtsson

not with to in competition -- to relative relative the we're made just And European of market. is competitive And, in and strength product in production therefore, Kappa, in or market the position of the either a Asia. all necessarily or Europe, US

impact So that something arbitrage really we see differentially Kappa. will as this opportunity don't

Ram Selvaraju

Thank you.

Martin Bengtsson

Ram. Thanks,

Operator

Sidoti. Ramgopal question line Mitra from of next the comes with Our

You may with proceed your question.

Mitra Ramgopal

taking morning. Good for Yes. Thanks questions.

third quarter, know expectations of a as the and year for can the you're your First, and the relative into rest I on what input that but give manufacturing only XQ the front? maybe on to a seeing us you we're to sense month distribution costs maybe

Martin Bengtsson

of an on Yes. it perspective, upward trend. an has inflationary continued and input cost that, first highlight Thanks, I kind From would Mitra.

it here, look continued As tick through bit back month we the year, for has the we've little to first up every gone half year. of a as the

So, on what raw say significantly see. you started to materials to or I that it which I picture. would has depending here at, that plateaued decrease. different say and on for see based a you Obviously, sit hard it look materially be and cannot me

but slight spend, turned a our and around with seeing trend in have still materials, you sort And deflation are others Some month-over-month, overall similar inflation And has we're overall, of quarter-over-quarter. it see for some in for July. inflationary environment. continued

we've It's still so no how dramatic compared seen any of in steep an change terms curve steep, terms as say trend is. but it not in to as the last indicating aggressive it's unfortunately far a would pointing I of It's change what upwards. quarters. So, few not of line the

Mitra Ramgopal

Thanks. Ted, were there the you in nutrition. I on of of a helpful. very that ruminant sales lower little know that's and No, terms couple areas plant highlighted are Okay. And also soft had a

Just curious in your remainder expectations year of terms the there? outlook longer-term for of and the

Ted Harris

to into et year-to-date meal products costs most go see where been to little just down what input actually Yes. saw still in they're cetera. little I bit earlier. but bit seasonal previous as the not last your up willingness the see going the calls, seeing than on season, input And that about had think to mean we're up, it speculate for for dairy few I the that started of were an and normal QX. there, we've despite little of supply order in they that spend. they season. because planting years. soybean nutrition cash opportunity have and And that securing forward, They bit what exceptionally going a of costs in inflationary and where softness a their they decline, maybe talked and I'm a Plant bit little our bit little over high business and seen disruptions is lead is the QX How tend the put in, clearly dairy have, to in chain softer given the ruminant environment. our to a had the and portfolio basis, we depends times some took the going cetera, longer a This our value they sensitivity has will bit the the the for little proposition corn, et this farmers our where a that in season which given more needed we out sort earlier we've your don't all customers that they a on we farmers strong the QX, on play

the saw bump of we year-over-year. QX bit a look and that sort So, little made lower earlier

to doing obviously demand think many keep cautious businesses, of, and are with pricing and forward. here other still at books of point strong very, at order books the as that's in terms order pretty have the sort that are would look outlooks. some Inevitably, on looking having the seeing increased up. we're go them well In we strong costs we you impact as we as of and demand very we prices the But higher But moment. keep very healthy as an will we're, start why cautious

Mitra Ramgopal

was you can is et or in then there, need No, curious acquisition, to that to just terms the to coming just hire something Kappa existing your the workforce? great. cetera I And you Okay. support just back sales growth personnel given additional lever that's if immediately of

Ted Harris

Maybe no, I I'll Mitra. is, the simple one, really. take not Yes, that answer think, to that

entire We remains are engaged. the part team that Balchem hopeful as and really Kappa of

Kappa so believe really to be And that far case. the growing we rapidly. was

been And certainly so to trajectory. plan a have they And hiring our continue on is that.

be point synergies. they be But had little of existing Kappa will have early executing we don't So on hire as several see that hiring time clearly in people need augment it's salespeople adding There necessarily a and the will that. and some obviously you mentioned at some this planned. -- to we part we as in we the plan be regions plan, and to salespeople, will a

the we've But we the have North got same continue believe that et America the execute time the think broader in order plan they felt Kappa good plan. a to they in really Now needed cetera. that to access because we to also people organization at we'll sales add Balchem do

Mitra Ramgopal

on just finally again. then And Thanks. Kappa Okay.

US million now market numbers. or $XXX U.S. Is had the global? potential you that for Ted mentioned that I think, is -- the

Ted Harris

believe Kappa share market That's the market of market. we for of had that approximately KX. XX% a the estimate our global global And

Mitra Ramgopal

given environment. nice quarter a up. Okay. that again, Thanks And for the congrats clearing on really

Ted Harris

Thanks, Right. Mitra.

Ram Selvaraju

you, Thank Mitra.

Operator

question Our the comes Tony with from Polak last line of Aegis.

proceed may question. with you You

Operator

question-and-answer reached Mr. of we Ted Ladies session. back like comments. I'd today's turn have the over to and for closing call to this end gentlemen, Harris

Ted Harris

us sure Not Tony any to questions happened to there. talk you to a like Okay. might call if But have. give we're Tony happy what you'd answer

few joining for your results call time. as much November. and very you will look in Baird the your XX meantime, support Sidoti We Fall QX September or presenting the to and our a on on conferences late our be we today. in forward out we XXXX And XX reporting the thank again, X, November October X Chicago. once in well Industrial So really and appreciate Conference early In Global XX, as Conference

and So the have great Thanks. And in meantime, a we for hope to some see you of there. today again joining thanks day.

Operator

conference. This concludes today's

time. for this rest participation. at lines of your the your Enjoy your disconnect may you You day. Thank

Balchem (BCPC) 29 Jul 222022 Q2 Earnings call transcript