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8-K - FORM 8-K - BALCHEM CORP | form8k-106799_bcp.htm |
Exhibit 99.1
FOR
IMMEDIATE RELEASE
Balchem Corporation
Announces First Quarter 2010 Results
New
Hampton, NY, May 4, 2010 – Balchem Corporation (NASDAQ: BCPC)
reported
as follows (unaudited) for the period ended March 31, 2010.
($000
Omitted Except for Net Earnings per Share)
For the Three Months
Ended March 31,
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2010
|
2009
|
|||||||
Net
sales
|
$ | 59,903 | $ | 52,986 | ||||
Gross
profit
|
17,414 | 16,298 | ||||||
Operating
expenses
|
6,920 | 6,988 | ||||||
Earnings
from operations
|
10,494 | 9,310 | ||||||
Other
income (expense)
|
167 | (144 | ) | |||||
Earnings
before income tax expense
|
10,661 | 9,166 | ||||||
Income
tax expense
|
3,632 | 3,068 | ||||||
Net
earnings
|
$ | 7,029 | $ | 6,098 | ||||
Basic
net earnings per common share
|
$ | 0.25 | $ | 0.23 | ||||
Diluted
net earnings per common share
|
$ | 0.24 | $ | 0.21 | ||||
Shares
used in the calculation of diluted net earnings per common
share
|
29,344 | 28,544 |
Record
Quarterly Earnings and Sales
For the quarter ended March 31,
2010, the company achieved record net earnings of $7.0 million as compared to
$6.1 for the prior year comparable period, an increase of $0.9 million, or
15.3%. The $7.0 million generated diluted net earnings per common share of
$0.24, versus $0.21 for the prior year comparable period, an increase of 14.3%.
Record first quarter net sales of $59.9 million were approximately 13.1% greater
than the $53.0 million result of the prior year comparable quarter.
Detailing
this first quarter of 2010, sales of the Food, Pharma & Nutrition segment
were a record $10.0 million, which was a 20% improvement over the prior year
comparable quarter. The domestic and international food sectors were up again
this quarter, as we saw solid double digit growth of encapsulated ingredients
for baking, preservation and confection markets. In the quarter, we also
realized double digit growth of our human choline products globally, as we
continue to target new food applications, and we also experienced a rebound in
the supplement markets. These results were partially offset by slowness in sales
of our calcium products and a slight decline in quarterly sales of our
VitaShure®
products for nutritional enhancement. Earnings from operations for this segment
were a record $2.0 million, as compared to $1.0 million in the prior year
comparable quarter, with gross margin levels improving, largely due to a 9.2%
improvement in sales volume as well as improved product mix.
Balchem
Corporation (NASDAQ:BCPC)
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Animal
Nutrition & Health (“ANH”), including specialties, choline and industrial
derivative product sales, totaled $40.3 million, an increase of 12.2%, or $4.4
million from the prior year comparable quarter. Global feed grade choline
product sales grew approximately 1.2% over the prior year quarter. Sales of
choline products sourced from our Italian operation into the European and other
international poultry markets improved 4.8%. Within the North American poultry
production market, levels have stabilized and are forecasted to improve slightly
over the balance of 2010. The ANH specialty ingredients, largely targeted to the
ruminant and companion animal markets, realized 24.1% sales growth from the
prior year comparable quarter, as some regional improvement in dairy economics
supported greater demand for these products, particularly with strong sales of
Reashure®,
Nitroshure™, Chelated Minerals and Aminoshure-L®, our
rumen protected lysine. Sales of industrial grade derivatives realized 43.9%
sales growth from the prior year comparable quarter and improved approximately
19.5% on a sequential basis. Earnings from operations for the entire
ANH segment increased to $5.2 million as compared to $5.0 million in the prior
year comparable quarter. This quarterly earnings result reflects
unfavorable increases in certain petro-chemical commodities used to manufacture
choline. Price increases have been, and will be, implemented where we are
contractually able to do so in the second quarter, as certain products continue
to be affected by these higher costs.
The ARC
Specialty Products segment generated record quarterly sales of $9.7 million, an
increase of 9.9% from the comparable prior year quarter. This increase was
principally a result of an increase in volumes sold in the quarter. Earnings
from operations for this segment, at $3.3 million were essentially flat with the
prior year comparable quarter as the benefits of increased sales volumes were
offset by higher petro-chemical based raw material costs, and increased expenses
related to development work on our ERC technology for repackaging, distribution
and delivery of a product for the fruit ripening industry. Starting in the
second quarter, we did increase prices to help off-set certain of the raw
material cost increases. We continue to monitor petro-chemical raw material
price escalation and if continued, would seek to adjust prices within
contractual guidelines.
Consolidated gross profit for the
quarter ended March 31, 2010 improved approximately 6.8% to $17.4 million, as
compared to $16.3 million for the prior year comparable period. This increase
was principally a result of increased sales; however, the normally expected
correlating margin improvement was partially offset by an unfavorable product
mix and increases in certain key raw material costs. Margin percentage declined
to 29.1% of sales as compared to 30.8% of sales in the prior year comparative
period, but did show improvement on a sequential basis. We continue to focus on
volume growth of our human and animal health products into export markets,
capitalizing on our varied choline production capabilities, and new product
launches. Operating (Selling, R&D, and General and Administrative) expenses
at $6.9 million was basically flat with the prior year comparable quarter, as
some modest increase of employee headcount, other payroll related expenses, and
increased investment in R&D were offset by lower General &
Administrative expenses.
The company continues to maintain a
healthy balance sheet with $68.0 million in net working capital. Our
cash balance was $51.4 million on March 31, 2010, up from $46.4 million at
December 31, 2009. During the first quarter, we paid our annual dividend which
totaled $3.1 million and total debt was reduced to $6.0 million. Diligent
working capital controls, particularly effective inventory and accounts
receivable management, combined with the noted improved operating results, drove
strong cash flow generation for the quarter ended March 31,
2010.
Balchem
Corporation (NASDAQ:BCPC)
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Commenting on 2010, Dino A. Rossi,
Chairman, President and CEO of Balchem said, “This record first quarter
continues to reflect strong performances across all of Balchem’s segments
demonstrating the value of our diversified base of business and our ability to
leverage cross-business integration opportunities. Our growing global presence
helped to off-set softness in certain U.S. markets and while raw material costs
had a negative impact on certain segments, we continue to closely monitor all
key economic drivers, stay customer solution focused, and take appropriate
actions to generate solid operating margins and cash flow.
Signs of
an improving economy are being very closely tracked with cautious optimism.
Ongoing volatility in the global economy is still expected, but we believe 2010
will be a year of solid improvements in sales and earnings. We have
de-bottlenecked production capabilities, and continue to leverage our existing
business and research resources to launch new, innovative products through each
of our business segments. We expect improved results in the Food, Pharma &
Nutrition segment, particularly in the choline and global food markets. The
Animal Nutrition & Health segment is realizing significant volume growth of
its specialty products, and choline grade derivatives are expected to continue
strong double digit growth. The ARC Specialty Products segment should continue
its steady earnings and revenue growth from its current base, as well as the
development of new market opportunities for specialized delivery of certain
gases. Our strong balance sheet continues to position us with the ability to
capitalize on other strategic opportunities to broaden our global
footprint."
Quarterly
Conference Call
A quarterly conference call will be
held on Tuesday, May
4, 2010 at 2:00 PM Eastern Time (ET) to review first quarter 2010 results. Dino
A. Rossi, Chairman, President and CEO, and Frank Fitzpatrick, Chief Financial
Officer, will host the call. We invite you to listen to the conference by
calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes
prior to the scheduled start time of the conference call. The conference call
will be available for digital replay through Friday, May 7, 2010. To access the
replay of the conference call, dial 1-877-660-6853 (local dial-in
1-201-612-7415), and use account #298 and replay ID #349831. Both account and
replay ID numbers are required for replay access.
Segment
Information
Balchem
Corporation consists of three business segments: ARC Specialty Products; Food,
Pharma & Nutrition; and Animal Nutrition & Health. Through ARC Specialty
Products, Balchem provides specialty-packaged chemicals for use in healthcare
and other industries. The Food, Pharma & Nutrition segment provides
proprietary microencapsulation, granulation and agglomeration solutions to a
variety of applications in the human food, pharmaceutical and nutrition
marketplaces. The Animal Nutrition & Health segment manufactures and
supplies products to numerous animal health markets and certain derivative
products into industrial applications.
Forward-Looking
Statements
This
release contains forward-looking statements, which reflect Balchem’s expectation
or belief concerning future events that involve risks and uncertainties. Balchem
can give no assurance that the expectations reflected in forward-looking
statements will prove correct and various factors could cause results to differ
materially from Balchem’s expectations, including risks and factors identified
in Balchem’s annual report on Form 10-K for the year ended December 31, 2009.
Forward-looking statements are qualified in their entirety by the above
cautionary statement. Balchem assumes no duty to update its outlook or other
forward-looking statements as of any future date.
Contact: Karin
McCaffery, Balchem Corporation
Telephone: 845-326-5635
Balchem
Corporation (NASDAQ:BCPC)
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Selected
Financial Data
($
in 000’s)
Business
Segment Net Sales:
Three
Months Ended
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||||||||
March
31,
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2010
|
2009
|
|||||||
ARC
Specialty Products
|
$ | 9,668 | $ | 8,794 | ||||
Food,
Pharma & Nutrition
|
9,966 | 8,304 | ||||||
Animal
Nutrition & Health
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40,269 | 35,888 | ||||||
Total
|
$ | 59,903 | $ | 52,986 |
Business
Segment Earnings (Loss):
Three
Months Ended
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||||||||
March
31,
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2010
|
2009
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ARC
Specialty Products
|
$ | 3,312 | $ | 3,387 | ||||
Food,
Pharma & Nutrition
|
1,981 | 959 | ||||||
Animal
Nutrition & Health
|
5,201 | 4,964 | ||||||
Other
income (expense)
|
167 | (144 | ) | |||||
Total
|
$ | 10,661 | $ | 9,166 |
Selected
Balance Sheet Items
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||||||||
March
31,
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December
31,
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2010
|
2009
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Cash
and Cash Equivalents
|
$ | 51,361 | $ | 46,432 | ||||
Accounts
Receivable
|
30,692 | 29,149 | ||||||
Inventories
|
15,845 | 13,965 | ||||||
Other
Current Assets
|
2,777 | 3,466 | ||||||
Total
Current Assets
|
100,675 | 93,012 | ||||||
Property,
Plant, & Equipment (net)
|
41,811 | 41,579 | ||||||
Other
Assets
|
52,299 | 53,222 | ||||||
Total
Assets
|
$ | 194,785 | $ | 187,813 | ||||
Current
Liabilities
|
$ | 32,689 | $ | 33,815 | ||||
Long-Term
Obligations
|
6,291 | 6,855 | ||||||
Total
Liabilities
|
38,980 | 40,670 | ||||||
Stockholders'
Equity
|
155,805 | 147,143 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 194,785 | $ | 187,813 |