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,
|
|
|
|
|
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.
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.
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.
|
Selected Financial Data
|
($ in 000's)
|
|
Business Segment Net Sales:
|
|
Three Months Ended
|
|
March 31,
|
|
2010
|
2009
|
ARC Specialty Products
|
$9,668
|
$8,794
|
Food, Pharma & Nutrition
|
9,966
|
8,304
|
Animal Nutrition & Health
|
40,269
|
35,888
|
Total
|
$59,903
|
$52,986
|
|
Business Segment Earnings (Loss):
|
|
Three Months Ended
|
|
March 31,
|
|
2010
|
2009
|
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
|
|
March 31,
|
December 31,
|
|
2010
|
2009
|
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
|
CONTACT: Balchem Corporation
Karin McCaffery
845-326-5635
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