- Earnings call transcript Q3 2022

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Operator

Greetings and welcome to Balchem Corporation’s Third Quarter Earnings 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. Mr. begin. may you Bengtsson,

Martin Bengtsson

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

our call counsel, in update our to reconciliation that prove these non-GAAP Harris, could statements. commentary cause at factors I call this will expectations, made would and recent like reports. financial results read refer now factors over most Following are forward-looking statements. turn President measures. SEC, X-K in from the not CEO. considered and the the statements and their for risks Form Ted various time We forward-looking to no are the company reflected today’s in advice historical differ XX-Q and assumes obligation facts Please can will to auditors and our earnings details. in forward-looking include The and of assurance Statements our our expectations to release statement. identified Balchem’s further forward-looking correct Today’s I that Chairman, give call no XX-K, including to materially

Ted Harris

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

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

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

financial within Before Martin like The find about passing most environment well. a and would more we pressures, rising labor challenging. make to the interest the detailed operating ourselves an are general the and uncertainties back overall recent comments the I and on efficiencies, picture. on supply impact is Inflationary acquisitions few overall to environment macroeconomic and increasingly geopolitical results, market cover rates, chain current to market demand costs, call very our environment having market as availability,

of are in slowing across volatility our experience demand, segments moderating customer increased as destocking as and well demand activities Europe. result as degrees varying a to to a of starting management reporting three risk particularly We real

We inflationary our all these we are to-date, able of costs. much how pleased raise the challenges offset with able very have prices of and how been to we to to impact maneuver particular, been have on through in

despite that on we a our manufacturer based other had of growth We the the deliver Bergstrom, the challenges with third volatility science-based ongoing in Washington. are to a our year, Vancouver, acquisitions. acquisition eyes of or for our August On spend and completed of continue methylsulfonylmethane, wanted with MSM, a Bergstrom also was from operated QX Inc., to coupled contribution this and I company we will growth XXXX. Bergstrom, model, founding Cardinal enable recent of strength acquisitions leading into privately us business resilience the XX and talking to environment little which our simply, delivered the as was most in recent owned the macroeconomic family or associated with sometime. believe time and about and by increased the that Nutrition investors, also the in the that pleased demand quarter and political Associates

we to both and healthy aging, strong are decided scientific health, its that pet beauty, brand market the U.S. of MSM benefits were MSM only purity evidence quality GRAS the or and Bergstrom’s unit debt the we able and supporting up XXX% Generally once our segment will is We & of highest with within funded prior delivers very & capital Safe out skin adjustments acquire the within value approximately Human enterprise business widely MSM business for on acquired existing with Bergstrom nutrition, and $XX a a pleased our health. the the is minerals Regarded Nutrition the nutrients facility. into Bergstrom and MSM million be segment. unit and joint of credit working Animal MSM Bergstrom for ingredient an and net Health Health brand So to our family as designation. sports used sell. of integrated Nutrition animal to companion

to the have million and performance an additional payment opportunity to to from XX of Balchem XXXX approximately represents established revenues based XXXX take forecast on multiple $XX Bergstrom’s growth addition ranging to EBITDA to the targets price, forecast the value approximately receive this welcome for year. approximately million. XXXX team. employees opportunity an XXXX million calendar $XX the the into sellers on transaction Bergstrom’s $X purchase XXx an In I in other based earn-out are post-synergies. to enterprise EBITDA want This

to forward ahead and We the opportunities join offerings as team. looking of we have portfolio expanded team to expanded our you that our of product are are excited customers. lie the our result nutritional a for And

and the Bioscience. and legacy positive as been customers fit very has into Kappa’s companies now Kappa for Balchem’s opportunity clear they solution are see between our the the both broader two of ownership we The from Additionally, quarter a reaction one offering.

I together the call the other is Martin vitamin are drive to and demand growth our to product of company, And collaborating over Our some for long-term prospects will the with vital the turn KX KX to detailed go differentiated excited growth. but results. financial The now remain we and additional parts back through the about that, teams offerings. volatility business we destocking opportunities well identifying experiencing are same and as of

Martin Bengtsson

Thank you, Ted.

was As Ted Balchem. third overall, growth another mentioned quarter for of the solid quarter

approximately third Nutrition XX.X% segments: year. sales higher net negative $XXX.X Specialty approximately Products. Health, while growth Organic impact was growth the Health, three primarily prior sales & driven Human were foreign to sales XX% than in exchange the year-over-year, euro all we And growth by our Our had Animal impact weaker quarter million of of currency the delivered X%. from Nutrition and & a

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

sales basis the quarter, XX% basis XXX of quarter purchase gross gross the down impacted of third by was the recent to The XX.X% points rate compared in by quarter was Our in points XX the margin accounting margin approximately acquisitions. related negatively in entries to percent XXXX. our

a inflationary on by also quarter. only to moderating materials, upward of and increase on perspective, the from year-over-year also We relates versus raw see sequentially it category trajectory the it’s second still varies overall spend. is our our an pressure not continued but And while rate to as

dollars. grossing these continue margin to grow impact actions are calls, with discussed efforts some but up and despite As margin gross dilutive the our pleased the of recover on gross a to previous our on have increases pricing revenues costs cost that the with we percentage we through we delay, have fact

primarily up XXXX million XXXX expenses were of non-GAAP by EBITDA or earnings due related XX.X% the increase quarter. increase some $X.X the actions adjusted as or for million were to $XX.X compared year quarter prior a overall leverage to inventory and expenses $XX.X prior the the prior costs. million million respectively. reduction prior an XXXX. closed were of $XX.X the and an year. the the outside million manufacturing The a lower rates third deductions. million, in was and operating was quarter. year to $X.X tax we our operations earnings from rate for basis of and as previously XX%, related expense compared in the the net in levels an morning, mentioned the leading the $X.X ratio Bergstrom increase Consolidated volatility, in was with million, from the with had The was increased to inefficiencies, where amortization partially in The million Interest quarters for the at for acquisitions release quarter offset third Additionally, million X.X% in X.X% and provision were to XXXX from destocking services earnings of primarily third Adjusted was up from of the third detailed million, compared in third the quarter on $XX.X which above operations took Kappa debt effective due our XX.X% certain GAAP company’s third income quarter prior this incremental quarter impact quarter gross adjustment increase or of from negative to effective demand margin of appropriate an XX.X% $X.X an million, a net and tax to return the $XXX.X our decrease XXXX debt X.X. quarter. compensation to year our to basis, tax and $XX.X credits favorable net in Consolidated On year. a $XX.X to

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

to quarter, markets, an approximately segment XX.X% generated acquisitions to contribution growth nutrients partially recent within unfavorable we recent quarterly The of rates. a growth segment the sales the prior look of related Nutrition perspective, The & X from beverage overall changes the points Health foreign an sales from segment. of in year. offset at percentage as the the sales acquisitions $XXX.X increase by it Human was our as two by & impact driven million, minerals Health exchange growth food contributed and Human the business currency and Nutrition within from the for increase well As

manufacturing Our Human in operating and $XX.X offset and and aforementioned acquisitions, higher of segment compared the higher of partially X% an related by insurance amortization an from increase reimbursement primarily the prior higher earnings Nutrition year, prior prices sales of the average quarterly expenses recent timing the higher Health million, & due to input to operations selling to the year. costs, received delivered

intangible the of $XX.X earnings adjusted quarter of acquired from the effect XX.X%. of million fair assets amortization inventory were segment recent of step million, for the $X.X operations up value non-cash third an associated Excluding acquisitions of with and $X.X expense amortization increase of million, of this

increased experience Human this demand, Nutrition of volatility a to customer starting hard are slowing we magnitude will positions result At in point well deliver time, our enable as Europe, we that in earlier, demand across to and these the and QX to mentioned to segment but and as activities in duration Ted broad Nutrition evolving As destocking as market the & of of into U.S. also Health & remain in our management Human risk market particularly in us continue XXXX. confident challenges, growth strong but it’s Health predict some

partially sales Nutrition XX.X% result a Animal species by sales Animal increase sales approximately exchange from to of Animal Nutrition percentage increase acquisition rates. small point markets. delivered of million, an an of The both prices quarter higher of prior related sales contributed included to selling Health in & costs the and operations by which in segment. earnings ruminant Nutrition X an input in and offset acquisition X% quarterly higher the overall the The the unfavorable from the & higher prior the foreign offset Health distribution Health to costs. changes $X of The increase business, year. currency recent contribution manufacturing due & primarily increases from growth aforementioned average the Our year of and partially monogastric compared $XX.X animal generated segment in impact nutrition recent million, to of was Bergstrom,

starting the expense million with intangible this and expenses event, the excluding confident associated broad management third of Excluding Animal prior remain operations segment, the our & experience continue are as Health, of Animal million, Within we Similar and market a magnitude also Nutrition increase as as growth across Health what volatility well our & enable also demand, we demand adjusted challenges, evolving deliver QX activities to in these for of Nutrition the amortization quarter duration of and flood effect particularly were experiencing slowing $X.X to Health will that us earnings in strong segment, to & & result predict customer Nutrition but X.X%. related flash assets into some XXXX. destocking risk market difficult in to year an in Human we of Health, of non-cash positions Nutrition and to from $X.X of to increased are it’s Animal Europe.

Our of million, to rates. plant X.X% Specialty Gases changes partially $XX.X in offset products an was the in increases increase aforementioned the Specialty versus of an foreign XX.X% primarily partially prior and Products Performance of due by sales earnings segment increase manufacturing sales nutrition million, delivered quarter quarter. to offset year business from costs. input currency The higher exchange the delivered by quarterly Products of prior $X.X operations increase compared unfavorable related impact sales to higher due the lower to year in an of sales

and XXXX for closing and going I impact back to amortization growth Excluding expenses the operations the related and third our to during X.X%. the the prior Gases continues $X turn million, we of earnings intangible and events, U.S. million $X.X in in continue now expense of stabilize both into some with flash effect were segment to Europe, see following pandemic. the COVID-XX quarter from an expect Specialty Performance recover as negative Products, experienced call assets for to Ted associated fully remarks. year-over-year year this of QX of to the Within in we the excluding over increase adjusted to flood non-cash am that business

Ted Harris

solid earnings model ability for results and manage business Thanks, continue to quarter our market the of to the challenging Martin. morning third through resilience business and reported this with growth earlier in XXXX of all environments. revenue three of our and financial show our Balchem’s dynamic segments

here to two Bioscience pleased and in our We Kappa science-based we added innovative two passion the family second in great to family third have Nutrition to offerings nutrition health are to companies portfolio and Balchem in the quarter, the product and Bergstrom creative company, markets. Balchem of our welcome the team great opportunity would Bergstrom solutions trusted, to through our they And The the now in acquisition continues a Balchem great and existing that quarter the share for employees work solutions nutrition call delivering the customers I’d to quarter, with very do the environment. to to back third take of challenging hand this finding to over manage job our the of thank I again questions. incredible do to geopolitical and who like of like all our macro our for open a and Martin stakeholders. all Martin? to will up call for once the

Martin Bengtsson

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

Operator

Thank with question first of you. proceed from coming line [Operator Instructions] Please Our Sidoti. the Ramgopal your is with question. Mitra

Mitra Ramgopal

Yes, Thanks questions. taking good morning. for the

price increases nice sense, are on raw First success material etcetera. implementing seeing to to distribution had the impact you’ve you a costs help trying obviously get just mitigate

much on think from front increased you have that room you pushback how and see are starting more curious to you clients? Just

Ted Harris

our increases costs. all cost usually, – the us fully and quarter are you, delay little Yes, calls, to you terms business. to to-date from it Thank by to of happy sort and ability discussed in a seeing as have it recovering bit of we pretty Mitra. our us the customers dollar I price tend two of between our of for a recover previous for our takes to on with right, we dollar, But be increases those quarters with recover one to mean, a are suppliers actions varies

been have pretty I there. In terms recovering are and effective we much say would we of it,

sequential that think did would seen increase for here. I We that QX. really to it the more further end raise through starting of to you it environment and just turnaround as increases, be it and still some but pass raise terms will in you prices. In pace, But a just it’s and the QX to impact we some continue over say through is we have is of see that you to cost us demand what becoming that to inflationary that pass we think are see eventually It’s moderating to expect challenging customers able also overall. fair slightly,

Martin Bengtsson

Yes.

and that’s There line, up, today, go is that as think given harder those position, able customers I we to harder? it in pass customers. and we our costs is continue doing fatigue that to be their around, it bottom our think are your do need comment kind we inflation. have do – question more that on but of we those the to no to we need price the marketplace, there term on and to increase should certainly, experience as costs we costs using pass able been And market to that out

Mitra Ramgopal

Okay, cost no, things, an the operation already curious follow-up I at on leaner it’s you But some room maybe as relates anymore pretty running feel that’s like lean. you just great. even you And on etcetera, just to as side, a it if that just flexibility cost wondering internally have if front? know, have you G&A look

Ted Harris

is answer that short absolutely. the Yes, Mitra to

have say, would for We certain our company way, adding the growth markets our way. but that costs very in a staff, outlook different and for opportunity have as and been a to a changes, in we manage disciplined I

it depends market is recognizing conditions the I this certainly, today opportunity So, volatility on how there but if it. deep period here warrant a of sit goes, demand lot long think that how we exists, cost a

Mitra Ramgopal

distribution own their add? Okay, adding need thanks. the sure an you might I area personnel acquisition, for relates to if as is that Bergstrom internal not And to sales on had it or where then force they am

Ted Harris

organization. Bergstrom more between both is really than there its will additional has Kappa and Yes, do of three for Bergstrom need believe own Yes, I organization. sales the companies and I think together, course opportunity sales sales more be own had companies Kappa as add there opportunities own Balchem the efficient. its And will to be we bring is we people. its our three to speak organization. answer had these consolidation to

are to feeling staff we of here add acquisitions. like additional not those we need sitting So, because today

can the organization looking be the growth our are the are We effectively long-term today we about company the it’s Kappa. be sitting – for have we most customers the and here we because bring opposite Bergstrom together while ensuring as at and right do growth, servicing efficient legacy bullish we how three companies of as quite to well the

Mitra Ramgopal

thanks. with And Europe Okay, some next Ted, year potential demand, mentioned of are you all starting to softening the you see signs U.S. pointing in especially to recession in

Just how us of downturn? can up an economic periods in curious remind if you held Balchem

Ted Harris

the you we don’t folks the the really describe to kind I whether getting and Mitra, inflationary Yes, of word times, this hearing tired probably of am it’s the on same is When word a times. ever in it environment unusual. know environment right unprecedented recessionary the – seen it’s I other at little time, call, but have

done we recessionary well, So, have I quite historically, would say, during times.

And very say new see be or the well significant they don’t think any third a last I forward, and have quarter. better But that expect add markets highly to But recessionary you we our as significant continue reasonably the have tend we of by three caution impacted during that to escalate Martin certainly inflation and that, four we to mean be will, if and that we this to adds seen factor, around to different. Our kind quarters a looking are immune inflation not doesn’t That market to mix. done tend the because in is commented, to to average to not than be the inflation cyclical, recessions. factors.

in inflation And this caution but past, just does around that recessionary think add impacted unknown, a another have markets. lot these the kind mix. seen be that an protein, factor food, factors to speaking, than the word bit of kind by that will a we of animal but overall the nutrition So, generally of adds markets the little other you of would the less of

Martin Bengtsson

to I if that, it but time you Balchem for year, grew in and add decline that sales that a earnings, go Yes. there small ‘XX/XX comment, X Mitra, was X% to would the but lower input look at due period, experienced back costs. a actually

an costs lower So input in now yet where not are at seeing we environment are least. we necessarily

on it actually reduction of but the of sort greatly the but the It continued inflationary will depend trajectory line, a last line. growth top how time. pressures, little bottom a the that’s we of was of a So fared bit on

Ted Harris

And that’s Thanks point, great that. think making Martin. a for I

we our I would make point is customers. last we inventory our is our this where in some other tightly, comments in going would does there we of all about prudent of activities The and customers Customers more of demand on impact destocking are how much period impact to are in made real activity this with demand. a environment, clearly more time managing of really destocking longer-term uncertain the it associated and sort be is maybe mask shorter-term, what versus on even a

living So uncertain growth it in overall clearly QX we’re the of environment pleased in. an but feel will the be year, of deliver and is to really uncertainty, market able growth it’s company overall period and next to that confident into with again, QX continue results in a

Mitra Ramgopal

And Okay, still you acquisitions. the no, also front, notice the you’ve there. some reduction third made quarter. the those. And I me, color integrating for finally, two in then M&A had appreciate of really the process just in nice on debt

should reduction, on a the expect front little we interest especially just now if shifting higher forward, going in a environment? curious just and M&A So debt the priority rate pause to

Ted Harris

pause, is I That’s do in a question that this saying, a at overall good really question. Yes, our thought time, that me simply And would I point by answer think short the in the likelihood the rising come and of interest just that somewhat and the we with multiples also rates, honestly, asset everything talked given combination about down uncertainties really market environment. this will too.

healthy organization the and we sense to to our the continue make short message we continue want feed to to Having said to arise. take to have that So pipeline, to is that, that does I a internally, think a pipeline. want it acquisition If perfect were ourselves pause.

a it’s to ideal difficult very sheet, balance Of in an capability would are we have we and would have it, do acquisitions quite move to arise, we borrowing world, conservative If brief of further But like view recent integrate these prepared little always it perfect with take and is a move acquisition to on short acquisitions that be bit course, still pause, were just pipeline make vibrant, to to the fully pay thinking acquisitions, a that. certainly time. two down after pause. within sure about That’s our debt, a into and forward how Balchem. are robust transparent a very we

Mitra Ramgopal

No, that. questions. all And I again for really taking the appreciate thanks

Ted Harris

Yes. it. Thanks, Mitra. Appreciate

Martin Bengtsson

Thanks, Mitra.

Operator

the Bob line Our next Securities. proceed Please from comes with question CJS your Labick questions. with of

Bob Labick

morning. taking questions. Good my Thanks for

Ted Harris

Bob. Hey,

Bob Labick

– hard for as there also to give And to is as generally this to I a do a how obviously, start well. with of you year? volume destocking price – I and year but versus are about price to volume speaking, this you and niche in factors leadership But trended be is has those sense us that us Hi. can general component positions well? next given give understand wanted your thinking that, versus going of how

Ted Harris

that can So, I take at chime then will and stab maybe a in. Martin

volume look majority associated we was and price within – the versus mix, growth of QX, vast the With at with the when price.

volume up wise. look certain food business, you If at our was of

was & in Nutrition wise the volume business Health quarter. Human up Our

but volume certainly wise. were offset volume, that. business in was price But some declines there sterilants Our up

was in vast than was So, volumes stronger balanced. in overall. QX, of would QX, in I it growth the volume. more was price more And it majority And say related the QX,

are into because our have carry to volume. QX necessarily we But related. latter margin, something back a price, think these and of the majority growth of of, the expect on get and environment type of QX, say sort on after as overall vast not that be impact low getting started we would unsettled a volume certainly QX best some should that measure businesses part more I have activities destocking high would into as will continue are QX. this I we But that And volumes see changes period. through So, of that was price low in the we growth certain our volume of similar larger fairly volume

Another the of acquisitions example, micrograms. Kappa, for important some kind note is on of in used

side growth up in volumes, question. best even of indicator thing. a example that overall but little Again, significant not a your Kappa of our of So, of gives for won’t why necessarily just bit volume another show you on the our feel growth, hopefully

Bob Labick

demand? kind you a Kappa. Yes, thank dollars, revenues, destocking if And Kappa? you. lowered the expect give I sales second, quarterly in that done and from But the your is just And a the Kappa slightly like absolutely. market for sense for math line thoughts about high-single with it I the and growth you indeed color, that’s for that you that And can on into digit great think with the to have contribution, And back have the sticking of, just and looks may acquisition then wrong. destocking us of below highlighted, run may assume backing that of outlook the get rate is, when to which millions the I you talked that’s

Ted Harris

Yes.

so absolutely are by in there You business currency Bob, that are the right, that’s are the than other factors more it what of probably is. is impacted vast others euros, majority couple translation. of exactly sales A

businesses in quarter. Europe. the But destocking acquired kind the a As of majority said. as is it’s is the well quarter you And as, European of we vast the third slower also Kappa,

So, your math is absolutely correct.

for the little And going to currency so headwind we think that a while. we will are experience certainly –

while. We little for are experience going to the a destocking

summer European of months. We obviously the are

So, to that we see heading there. expect and we some top for quarters results into deliver growth the return similar to next XXXX, few line should type

about a for we activities. choline nutrient another launches on the human building our is interesting forth. awareness product included new opportunity is types is from encouraged growth We that those term in and by are nutrition our driven getting like growth longer product, a of This so remain and the working little opportunities. and And for lot very bit of largely success

Bob Labick

Okay, for on last the acquisition. great. one just And Bergstrom me then from

it in said that are Maybe us maybe the the by you for think or you overall segment at a opportunity growth AN&H. opportunity about AN&H a bit? I little talk you, bit they contributed HN&H a growth just and sell both Bergstrom how looking there, and to from little is that previously

Ted Harris

Yes.

supplements. the maybe Bergstrom. So, And are food until animal the both we very our that pet But is market. opportunity Bergstrom. pet nutrition to attractive want – successful MSM in we about supplements Balchem pet really a to as our well. choline. one for I I as the take excited And been in up minerals really aspect pet and interesting part today, included honestly, animal has don’t identified of will haven’t But health over-blow penetrating supplements pet or

know, just as that’s to treats things humans take. that and supplements So, well like, bones as like like and

And food animal of are portfolio to know that that supplements some of will that through pet business products. supplements. so pet and our leverage our And able to we an be products we within pull in has existing we position build business excited Bergstrom you believe companion a

focus far it’s growth but Health Nutrition So, spot sweet of a business. as right & of part for of Bergstrom, as Animal in it’s our kind small areas

it’s But Health business. & Nutrition business Animal results, And Bergstrom into it. well putting so the both as the will we look as about excited them Health we as Human & Nutrition are But small. the be at we

Bob Labick

Super. very Alright. much. Thanks

Ted Harris

Thanks Okay. Bob.

Operator

with with line Wainwright. question. proceed is Ram Our Selvaraju your next Please H.C. from question the of

Ram Selvaraju

operating wondering for kind if could very my Thanks segments. much across of taking delve I we further a Hi. little was your into different questions.

to respect any? with are If you destruction, of which see demand either meaningful indications see increases or the price to expect emerging starting you to level see at of differences if

Ted Harris

Yes.

would in the stab So, area Nutrition be for Health most Thanks that from take are question. seeing business. would I Animal at would a with And that Europe I will & the particularly perspective. Ram. say, that our And I impact we start in the

always talked have We about.

an a for is which that out. essential again, cow. ultimately milk been of that out the addresses an few calls and it in an better life of product results take last tight that production that our where option is to where In business, market, that essential choline But the as have margins nutrient for not kind not as for lately, because dairy on nutrient. think dairy liver I nutrient the fatty in farmers or fairly life, milk business, ruminant our essential is prices classified efficiency viewed considered of

demand always of And far tied we I where that. destruction slowing, would have products. to inflationary as segments increases So, high at been that the a the about demand and largely we across talked lead businesses and of as bit or quite our the end with cost the leery see we is scale have

I Europe markets. kind would is say European there Next, in relative broad on in the just proteins, of lot going to animal

bird overall reducing feed market in the from not read cases culled, Europe, flu Europe, significant seeing U.S., even than we The those bird and that’s bit is experiencing replenishment probably in significant about more situation. You impacting a some And have a certainly, environment, are in Europe little that actually just are flu. is inflation. what’s demand. the In we are destruction think And happening U.S. I some of demand being that birds

that I I pet largely would kind seeing the put where the say rest So, of the kind on & portfolio middle of food side are part would protein, second really of Nutrition other animal Europe. in And in Animal really then, Health on business the the we impacts scale, there. our particularly no the is of

on prices on the are this whole are Performance there repackage impact I refrigeration, seeing But Gases ammonia impact host matter is are would it’s because gases. example, a – we for continue we – of seeing a what. no for say, the seeing some On business, impact bit we little medical demand we sterilization business, no – up going device were to But that sterilization Xx. to of because

we end at have would and of of impacts end a color low wide on what’s what’s high – little So, that you impacted. gives array bit do and a hopefully the of I at being the

Ram Selvaraju

helpful. very That’s

capital like And can looks KX, little specifically you strategies to introducing vitamin expect the What market right landscape from the to adoption a about trajectory U.S.? some now of employ to respect U.S. talk you what market? the this, competitive now, be? to bit with lineup the the of with follow-on respect a the potential into As to

Ted Harris

that growth in have anybody acquisition of our did. if to They existing will, relationships They prior and think existing the organization in Kappa U.S. thesis, absolutely. good Yes, relationships. KX. to important direct a part I really with don’t sales is for The existing U.S. didn’t customers, absolutely the you want business But the have a the in distributor U.S.,

and business compelling present we and broader, this, the just has broader, to customer you the weren’t U.S. the forth. solutions, with and understate course, ability deeper Balchem’s legacy so they like have just can’t more combinations relationships. more But ability customers have in has around – our And more now not a to of – it’s discussion So,

the Europe. strategy studies is the together do pull organization real big and our would our that formerly U.S. products And product and degrees. those in I allow dynamics to speak in synthetic are Balchem, will the force. really in the to organizations There Kappa a to do to in unique, they bit we present help are vital the two train four differentially U.S., share a support differentiated what is the in think Europe. and U.S. that they others. part The need the to as are was all in science to varying we But say U.S., Kappa similar has in of are on competitive U.S. probably go-to-market the to America. and us Kappa, competitive in as to more focus. North grow really one combined few the are all would think We a with and than competitors And quite dynamics U.S. has late So, that’s of they a primary similar say are less little I of, so a the the little

Ram Selvaraju

Thanks. Great.

of be coming a expect pace on facility ones credit repayment Just what of Martin, the can you quick you debt in the comment quarters. couple to the on Martin. for

expect to the most most forward, the million you rate reported you comment expect be that guys if in recently $XX going you reported that applicable accelerate what was of can rate enter reflective Thanks. on it tax tax be And the to was to look the to similar If are XXXX, in also, period? whether just to if we as effective you that recently reported repayment? or period, going

Martin Bengtsson

Yes, absolutely.

And debt our done past the we our think will do terms that to down will after dynamics the we absolutely I cash with two repayments, in of organic the have we debt growth saying in flows prioritize continue excess sort there we of so. as sort have we have investments. of paying

In you terms bit that combine as of how have now interest much, you little to would with environment say well. rising almost the a rate

a rates the go generate less we as interest cash. little up, So, bit

So, pace also little lower. a bit that repayment be will

a be what $XX would we you reasonable QX, here think If the quarter million sort less the interest $XX million on down is in that were number would quarter that $XX say, rate maybe of we okay, it pay in million you per than to that to depending did of down, probably paying will a environment.

ongoing, significant rate And change quarter perspective, our million forward. acquisitions, not million really it $XX time. I us. rates going $XX seen that’s where I tax to say then to the a for expect per run tax moves So, changes but slightly, These things of any sort rate they over would what significantly needle wouldn’t from

good use, past. as call said and we the XX% have a between that as ‘XX, rate assumption, planning having to it So, ‘XX GAAP assumption as a in

where peg So, I where that’s would I it. would – that’s

Ram Selvaraju

very much. you Thank

Ted Harris

Ram. Thanks

Operator

At you. time, Q&A will back this Harris End of floor Ted Mr. for the remarks. closing to I turn Thank

Ted Harris

in flies, Thanks and time thank support, reporting can’t believe our once today We well and again, I forward today. QX – all look just And very joining you as call Great. much your really as your of appreciate actually Investor out Rob. next then to a for time Chicago, how in meantime, January. and at presenting Global be I few in will In Industrial we next year. Conference XXXX conferences, person year Baird’s there results will be full Conference at the Tuesday in February CJS

can elsewhere. So, those at you some see of hopefully one we of or conferences

for again joining thanks today. So,

Operator

This concludes today’s conference.

your You you your this participation. Thank may time. for disconnect lines

Balchem (BCPC) 4 Nov 222022 Q3 Earnings call transcript