FORM | 8-K |
Maryland | 1-13648 | 13-2578432 | ||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
Common Stock, par value $.06-2/3 per share | BCPC | The Nasdaq Stock Market LLC |
Item 9.01 | Financial Statements and Exhibits | ||||
(d) | Exhibits | ||||
Exhibit No. | Description | ||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
BALCHEM CORPORATION | ||||||||
By:/s/ Hatsuki Miyata | ||||||||
Hatsuki Miyata | ||||||||
General Counsel and Secretary | ||||||||
Date: July 26, 2024 |
Exhibit 99.1 | ||||||||
Human Nutrition & Health | Animal Nutrition & Health | Specialty Products |
5 Paragon Drive
Montvale, NJ 07645
balchem.com
|
p.845.326.5600
f. 845.326.5702
|
Three Months Ended June 30, |
Six Months Ended June 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net sales | $ | 234,081 | $ | 231,252 | $ | 473,740 | $ | 463,792 | ||||||||||||||||||
Gross margin | 82,994 | 77,349 | 164,508 | 150,519 | ||||||||||||||||||||||
Operating expenses | 37,197 | 34,513 | 77,035 | 73,275 | ||||||||||||||||||||||
Earnings from operations | 45,797 | 42,836 | 87,473 | 77,244 | ||||||||||||||||||||||
Interest and other expenses | 4,571 | 4,436 | 9,397 | 9,725 | ||||||||||||||||||||||
Earnings before income tax expense | 41,226 | 38,400 | 78,076 | 67,519 | ||||||||||||||||||||||
Income tax expense | 9,157 | 8,290 | 17,021 | 14,699 | ||||||||||||||||||||||
Net earnings | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||||||||||||
Diluted net earnings per common share | $ | 0.98 | $ | 0.93 | $ | 1.87 | $ | 1.63 | ||||||||||||||||||
Adjusted EBITDA(a) |
$ | 62,270 | $ | 59,317 | $ | 123,136 | $ | 115,674 | ||||||||||||||||||
Adjusted net earnings(a) |
$ | 35,577 | $ | 34,441 | $ | 69,161 | $ | 65,022 | ||||||||||||||||||
Adjusted net earnings per common share(a) |
$ | 1.09 | $ | 1.06 | $ | 2.12 | $ | 2.01 | ||||||||||||||||||
Shares used in the calculations of diluted and adjusted net earnings per common share |
32,649 | 32,434 | 32,638 | 32,424 |
(a) |
See “Non-GAAP Financial Information” for a reconciliations of GAAP and non-GAAP financial measures. |
Page | 2 |
Page | 3 |
Page | 4 |
Business Segment Net Sales: | Three Months Ended June 30, |
Six Months Ended June 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Human Nutrition & Health | $ | 147,928 | $ | 135,669 | $ | 300,672 | $ | 268,322 | ||||||||||||||||||
Animal Nutrition & Health | 49,557 | 61,329 | 103,478 | 126,218 | ||||||||||||||||||||||
Specialty Products | 35,094 | 32,726 | 66,707 | 64,957 | ||||||||||||||||||||||
Other and Unallocated (b) |
1,502 | 1,528 | 2,883 | 4,295 | ||||||||||||||||||||||
Total | $ | 234,081 | $ | 231,252 | $ | 473,740 | $ | 463,792 |
Business Segment Earnings Before Income Taxes: | Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Human Nutrition & Health | $ | 33,367 | $ | 27,499 | $ | 66,624 | $ | 45,934 | ||||||||||||||||||
Animal Nutrition & Health | 2,693 | 7,662 | 4,753 | 17,160 | ||||||||||||||||||||||
Specialty Products | 11,228 | 9,298 | 19,427 | 17,244 | ||||||||||||||||||||||
Other and Unallocated (b) |
(1,491) | (1,623) | (3,331) | (3,094) | ||||||||||||||||||||||
Interest and other expenses | (4,571) | (4,436) | (9,397) | (9,725) | ||||||||||||||||||||||
Total | $ | 41,226 | $ | 38,400 | $ | 78,076 | $ | 67,519 | ||||||||||||||||||
(b) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of: (i) Transaction and integration costs of $132 and $572 for the three and six months ended June 30, 2024, respectively, and $651 and $1,216 for the three and six months ended June 30, 2023, respectively, and (ii) Unallocated amortization expense of $0 and $0 for the three and six months ended June 30, 2024, respectively, and $0 and $312 for the three and six months ended June 30, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation. |
Page | 5 |
Selected Balance Sheet Items | ||||||||||||||
(Dollars in thousands) | June 30, 2024 | December 31, 2023 | ||||||||||||
(unaudited) | ||||||||||||||
Cash and Cash Equivalents | $ | 63,738 | $ | 64,447 | ||||||||||
Accounts Receivable, net | 123,400 | 125,284 | ||||||||||||
Inventories | 117,099 | 109,521 | ||||||||||||
Other Current Assets | 15,919 | 14,990 | ||||||||||||
Total Current Assets | 320,156 | 314,242 | ||||||||||||
Property, Plant & Equipment, net | 272,539 | 276,039 | ||||||||||||
Goodwill | 770,026 | 778,907 | ||||||||||||
Intangible Assets with Finite Lives, net | 176,102 | 191,212 | ||||||||||||
Right of Use Assets | 18,445 | 19,864 | ||||||||||||
Other Assets | 17,698 | 16,947 | ||||||||||||
Total Non-current Assets | 1,254,810 | 1,282,969 | ||||||||||||
Total Assets | $ | 1,574,966 | $ | 1,597,211 | ||||||||||
Current Liabilities | $ | 113,322 | $ | 148,491 | ||||||||||
Revolving Loan | 266,569 | 309,569 | ||||||||||||
Deferred Income Taxes | 49,956 | 52,046 | ||||||||||||
Other Long-Term Obligations | 32,755 | 33,121 | ||||||||||||
Total Liabilities | 462,602 | 543,227 | ||||||||||||
Stockholders' Equity | 1,112,364 | 1,053,984 | ||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,574,966 | $ | 1,597,211 |
Page | 6 |
Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net earnings | $ | 61,055 | $ | 52,820 | ||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||||||||
Depreciation and amortization | 26,174 | 27,074 | ||||||||||||
Stock compensation expense | 8,636 | 8,518 | ||||||||||||
Other adjustments | (1,106) | (2,647) | ||||||||||||
Changes in assets and liabilities | (16,379) | (15,936) | ||||||||||||
Net cash provided by operating activities | 78,380 | 69,829 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Capital expenditures and intangible assets acquired | (13,788) | (17,880) | ||||||||||||
Cash paid for acquisitions, net of cash acquired | — | (341) | ||||||||||||
Proceeds from the sale of assets | 272 | 1,881 | ||||||||||||
Proceeds from settlement of net investment hedge | — | 2,740 | ||||||||||||
Investment in affiliates | (80) | (72) | ||||||||||||
Net cash used in investing activities | (13,596) | (13,672) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from revolving loan | 26,000 | 13,000 | ||||||||||||
Principal payments on revolving loan | (69,000) | (48,000) | ||||||||||||
Principal payments on finance lease | (111) | (110) | ||||||||||||
Proceeds from stock options exercised | 9,682 | 3,826 | ||||||||||||
Dividends paid | (25,568) | (22,869) | ||||||||||||
Purchase of common stock | (5,213) | (3,924) | ||||||||||||
Net cash used in financing activities | (64,210) | (58,077) | ||||||||||||
Effect of exchange rate changes on cash | (1,283) | 2,216 | ||||||||||||
(Decrease) increase in cash and cash equivalents | (709) | 296 | ||||||||||||
Cash and cash equivalents, beginning of period | 64,447 | 66,560 | ||||||||||||
Cash and cash equivalents, end of period | $ | 63,738 | $ | 66,856 |
Page | 7 |
Page | 8 |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Reconciliation of adjusted gross margin | ||||||||||||||||||||||||||
GAAP gross margin | $ | 82,994 | $ | 77,349 | $ | 164,508 | $ | 150,519 | ||||||||||||||||||
Inventory valuation adjustment (1) |
— | 217 | — | 1,419 | ||||||||||||||||||||||
Amortization of intangible assets and finance lease (2) |
707 | 662 | 1,411 | 1,343 | ||||||||||||||||||||||
Restructuring costs (3) |
— | 120 | — | 120 | ||||||||||||||||||||||
Adjusted gross margin | $ | 83,701 | $ | 78,348 | $ | 165,919 | $ | 153,401 | ||||||||||||||||||
Reconciliation of adjusted earnings from operations | ||||||||||||||||||||||||||
GAAP earnings from operations | $ | 45,797 | $ | 42,836 | $ | 87,473 | $ | 77,244 | ||||||||||||||||||
Inventory valuation adjustment (1) |
— | 217 | — | 1,419 | ||||||||||||||||||||||
Amortization of intangible assets and finance lease (2) |
5,303 | 6,952 | 11,705 | 14,302 | ||||||||||||||||||||||
Transaction and integration costs (4) |
41 | (7,349) | 481 | (5,184) | ||||||||||||||||||||||
Restructuring costs (3) |
— | 6,266 | — | 6,266 | ||||||||||||||||||||||
Nonqualified deferred compensation plan expense (5) |
113 | 244 | 516 | 481 | ||||||||||||||||||||||
Adjusted earnings from operations | $ | 51,254 | $ | 49,166 | $ | 100,175 | $ | 94,528 | ||||||||||||||||||
Reconciliation of adjusted net earnings | ||||||||||||||||||||||||||
GAAP net earnings | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||||||||||||
Inventory valuation adjustment (1) |
— | 217 | — | 1,419 | ||||||||||||||||||||||
Amortization of intangible assets and finance lease (2) |
5,375 | 7,024 | 11,849 | 14,446 | ||||||||||||||||||||||
Transaction and integration costs (4) |
41 | (7,349) | 481 | (5,184) | ||||||||||||||||||||||
Restructuring costs (3) |
— | 6,266 | — | 6,266 | ||||||||||||||||||||||
Income tax adjustment (6) |
(1,908) | (1,827) | (4,224) | (4,745) | ||||||||||||||||||||||
Adjusted net earnings | $ | 35,577 | $ | 34,441 | $ | 69,161 | $ | 65,022 | ||||||||||||||||||
Adjusted net earnings per common share - diluted | $ | 1.09 | $ | 1.06 | $ | 2.12 | $ | 2.01 |
Page | 9 |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net earnings - as reported | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||||||||||||
Add back: | ||||||||||||||||||||||||||
Provision for income taxes | 9,157 | 8,290 | 17,021 | 14,699 | ||||||||||||||||||||||
Interest and other expenses | 4,571 | 4,436 | 9,397 | 9,725 | ||||||||||||||||||||||
Depreciation and amortization | 12,433 | 13,355 | 26,030 | 26,930 | ||||||||||||||||||||||
EBITDA | 58,230 | 56,191 | 113,503 | 104,174 | ||||||||||||||||||||||
Add back certain items: | ||||||||||||||||||||||||||
Non-cash compensation expense related to equity awards | 3,886 | 3,748 | 8,636 | 8,518 | ||||||||||||||||||||||
Inventory valuation adjustment (1) |
— | 217 | — | 1,419 | ||||||||||||||||||||||
Transaction and integration costs (4) |
41 | (7,349) | 481 | (5,184) | ||||||||||||||||||||||
Restructuring costs (3) |
— | 6,266 | — | 6,266 | ||||||||||||||||||||||
Nonqualified deferred compensation plan expense (5) |
113 | 244 | 516 | 481 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 62,270 | $ | 59,317 | $ | 123,136 | $ | 115,674 |
Three Months Ended June 30, | ||||||||||||||||||||||||||
2024 | Effective Tax Rate | 2023 | Effective Tax Rate | |||||||||||||||||||||||
GAAP Income Tax Expense | $ | 9,157 | 22.2 | % | $ | 8,290 | 21.6 | % | ||||||||||||||||||
Impact of ASU 2016-09 (7) |
620 | 448 | ||||||||||||||||||||||||
Adjusted Income Tax Expense | $ | 9,777 | 23.7 | % | $ | 8,738 | 22.8 | % |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2024 | Effective Tax Rate | 2023 | Effective Tax Rate | |||||||||||||||||||||||
GAAP Income Tax Expense | $ | 17,021 | 21.8 | % | $ | 14,699 | 21.8 | % | ||||||||||||||||||
Impact of ASU 2016-09 (7) |
1,327 | 844 | ||||||||||||||||||||||||
Adjusted Income Tax Expense | $ | 18,348 | 23.5 | % | $ | 15,543 | 23.0 | % |
Page | 10 |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 44,992 | $ | 34,991 | $ | 78,380 | $ | 69,829 | ||||||||||||||||||
Capital expenditures, proceeds from the sale of assets, and settlement of net investment hedge |
(6,602) | (3,280) | (13,175) | (12,892) | ||||||||||||||||||||||
Free cash flow | $ | 38,390 | $ | 31,711 | $ | 65,205 | $ | 56,937 |
(1) Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. | ||
(2) Amortization of intangible assets and finance lease: Amortization of intangible assets and finance lease consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, capitalized loan issuance costs, other intangibles acquired primarily in connection with business combinations, an intangible asset in connection with a company-wide ERP system implementation, and one finance lease. We record expense relating to the amortization of these intangibles and finance lease in our GAAP financial statements. Amortization expenses for our intangible assets and finance lease are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. | ||
(3) Restructuring costs: Expenses related to a reorganization of the business. | ||
(4) Transaction and integration costs: Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with transactions that are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. | ||
(5) Nonqualified deferred compensation plan (income) expense: Gains and losses on rabbi trust assets related to our nonqualified deferred compensation plan are recorded in other (income) expense while the offsetting increases or decreases to the deferred compensation liability are recorded within earnings from operations. The increases and decreases in the deferred compensation liability are driven by market volatility and are not a true reflection of company performance. We believe excluding these amounts from our non-GAAP financial measures is useful to investors because these items are inconsistent in amount based on market conditions causing comparison of current and historical financial results to be difficult. Adjustments have been made to the prior period presentation to conform with the current period presentation. | ||
(6) Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the taxable and deductible non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” and uses our non-GAAP effective rate applied to both our GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3 for the calculation of our non-GAAP effective tax rate. | ||
(7) Impact of ASU 2016-09: The primary impact of ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), was the recognition during the three and six months ended June 30, 2024 and 2023, of excess tax benefits as a reduction to the provision for income taxes and the classification of these excess tax benefits in operating activities in the consolidated statement of cash flows instead of financing activities. |
Page | 11 |