Balchem Corporation (Nasdaq:BCPC)
reported
as follows for the period ended June 30, 2010.
($000 Omitted Except for Net
Earnings per Share) |
|
For the Three Months
Ended June 30, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 61,458 |
$ 52,976 |
Gross profit |
19,116 |
17,304 |
Operating expenses |
6,675 |
7,019 |
Earnings from operations |
12,441 |
10,285 |
Other income |
110 |
18 |
Earnings before income tax expense |
12,551 |
10,303 |
Income tax expense |
4,212 |
3,434 |
Net earnings |
$ 8,339 |
$ 6,869 |
|
|
|
Basic net earnings per common
share |
$ 0.30 |
$ 0.25 |
Diluted net earnings per common
share |
$ 0.28 |
$ 0.24 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,534 |
28,776 |
For the Six Months
Ended June 30, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 121,361 |
$ 105,962 |
Gross profit |
36,530 |
33,602 |
Operating expenses |
13,595 |
14,007 |
Earnings from operations |
22,935 |
19,595 |
Other income (expense) |
277 |
(126) |
Earnings before income tax expense |
23,212 |
19,469 |
Income tax expense |
7,844 |
6,502 |
Net earnings |
$ 15,368 |
$ 12,967 |
|
|
|
Basic net earnings per common
share |
$ 0.55 |
$ 0.48 |
Diluted net earnings per common
share |
$ 0.52 |
$ 0.45 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,439 |
28,660 |
Record Quarterly Earnings
For the quarter ended June 30, 2010, the company achieved record
net earnings of $8.3 million as compared to $6.9 million for the
prior year comparable period, an increase of $1.5 million, or
21.4%. Second quarter net sales of $61.5 million were approximately
16.0% greater than the $53.0 million result of the prior year
comparable quarter. The $8.3 million net earnings generated diluted
net earnings per common share of $0.28, versus $0.24 for the prior
year comparable period, an increase of 16.7%.
With all three segments exhibiting strong double digit sales
growth for the quarter, sales of the Food, Pharma & Nutrition
segment were particularly strong, setting a new quarterly record of
$10.6 million, which was a 16.4% improvement over the prior year
comparable quarter. The domestic food sector was up again this
quarter, as we continued solid double digit growth of encapsulated
ingredients for baking, preservation and confection markets. We
also realized double digit growth of our human choline products
globally, as we converted new food applications, and also
experienced a rebound in the supplement markets. These strong sales
results were partially offset by a decline in sales of our calcium
and VitaShure® products; however, segment earnings were a record
$2.8 million, as compared to $1.3 million in the prior year
comparable quarter. Gross margin levels improved, largely due to
improved sales volumes, product mix and plant efficiencies.
Animal Nutrition & Health ("ANH"), including specialties,
choline and industrial derivative product sales, totaled $40.7
million, an increase of 16.8%, or $5.9 million from the prior year
comparable quarter. Our global feed grade choline product sales
were essentially flat with the prior year quarter; however, our
North American choline sales improved, as did the North American
broiler meat production market, which improved 2.6% over the prior
year quarter and is expected to be up 2-3% in the second half of
2010. Exports of liquid and dry choline from our North American
plants declined in the quarter as rising raw material costs, in
combination with global competition, resulted in our declining to
bid on certain international business in the quarter. Sales
statistics in this segment were also negatively impacted by
approximately 2.0% due to correlated foreign currency fluctuation
associated with the Italian operation. The ANH specialty
ingredients, largely targeted to the ruminant and companion animal
markets, realized 11.4% 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 Aminoshure-L®, our rumen protected lysine. Sales of industrial
grade products realized significant growth from the prior year
comparable quarter and improved approximately 29.5% on a sequential
basis, as we saw continued improvement in sales for various
industrial applications, predominantly in North America, but also
in Europe. Earnings from operations for the entire ANH segment
increased to $6.0 million as compared to $5.3 million in the prior
year comparable quarter. This quarterly earnings result
reflects favorable operating variances due to the overall 14%
volume improvement in sales.
The ARC Specialty Products segment generated record quarterly
sales of $10.2 million, an increase of 12.4% from the comparable
prior year quarter. This increase was principally the result of an
increase in volumes sold, largely propylene oxide in support of the
recent acquisition of Aberco, Inc., which targets nut meat
fumigation. Earnings from operations for this segment, at $3.6
million declined 3.5% from the prior year comparable quarter as the
benefits of increased sales volumes were offset by higher
petro-chemical based raw material costs, expenses related to
development work on our ERC technology for repackaging of a product
for the fruit ripening industry, and the noted acquisition. In the
second quarter, we did realize modest price increases to help
off-set certain of the raw material cost increases, incurred
through the first quarter. We continue to closely monitor
petro-chemical raw material costs and will seek to reflectively
adjust prices within contractual guidelines.
Consolidated gross profit for the quarter ended June 30, 2010
improved approximately 10.5% to $19.1 million, as compared to $17.3
million for the prior year comparable period. This increase was
principally a result of increased sales; however, the expected
correlating margin improvement was partially offset by additional
increases in certain key raw material costs, as we had to deal with
a force majeure event from a key supplier. Margin percentage
declined to 31.1% of sales as compared to 32.7% of sales in the
prior year comparative period, but did show 2.0% improvement on a
sequential basis. We continue to leverage our plant capabilities,
driving efficiencies from volume growth, new product launches of
our human and animal health specialty products into the domestic
and international markets, as well as capitalizing logistically on
our varied choline production capabilities. Operating (Selling,
R&D, and General and Administrative) expenses at $6.7 million
were down from the prior year comparable quarter as modest
increased expenses, particularly related to the Aberco acquisition,
were offset by a reduction in outside contract research,
principally due to the timing of these activities, and reversal of
accounts receivable reserves for international accounts that were
an expense/reserve item in the prior year comparable quarter.
For the six months ended June 30, 2010, consolidated net sales
have increased 14.5% to $121.4 million versus the $106.0 million in
the comparable prior year period. Net earnings have increased 18.5%
to $15.4 million, generating $0.52 per diluted share, versus net
earnings of $13.0 million, or $0.45 per diluted share, in the prior
year comparable period, an earnings per share improvement of
15.6%.
The company continues to maintain a healthy balance sheet with
$77.1 million in net working capital. Our cash balance was
$50.4 million on June 30, 2010, up from $46.4 million at December
31, 2009, and reflects payment for the noted acquisition in June.
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 June 30, 2010, even as we incurred $7.1
million of capital and acquisition expenditures.
Commenting on 2010, Dino A. Rossi, Chairman, President and CEO
of Balchem said, "This record second quarter earnings result
reflects strong performances across all of Balchem's segments. Our
diversified base of business and continued ability to leverage
cross-business integration opportunities, in support of organic
growth and acquisition opportunities, has continued to generate
exceptional results. Our growing global presence continues to
off-set softness in certain U.S. markets and while raw material
costs had a slight 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 global economy are being closely tracked
with cautious optimism. Ongoing volatility is still expected, but
we believe 2010 will continue to be a year of solid improvements in
sales and earnings. We have de-bottlenecked certain production
capabilities, continuing to leverage existing sites and are
investing in new commercial encapsulation technology for our animal
health specialty business. Research resources are focused on
developing new, innovative products for each of our business
segments. We expect continued improved results in the Food, Pharma
& Nutrition segment. Industrial choline derivatives are
expected to continue strong double digit growth, and the ARC
Specialty Products segment should improve its earnings based on
revenue growth from its current base, as well as the development of
new market opportunities for packaged gases. Our strong balance
sheet continues to position us with the ability to capitalize on
other strategic opportunities to broaden our technologies and
global footprint."
Quarterly Conference Call
A quarterly conference call will be held on Tuesday, August 3,
2010 at 2:00 PM Eastern Time (ET) to review second 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, August 6, 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
#354575. 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 Unaudited
Financial Data |
($ in
000's) |
|
Business Segment
Net Sales: |
|
Three Months Ended |
Six Months Ended |
|
June 30, |
June 30, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$10,222 |
$9,093 |
$19,890 |
$17,887 |
Food, Pharma & Nutrition |
10,583 |
9,091 |
20,549 |
17,395 |
Animal Nutrition & Health |
40,653 |
34,792 |
80,922 |
70,680 |
Total |
$61,458 |
$52,976 |
$121,361 |
$105,962 |
|
Business Segment
Earnings (Loss): |
|
Three Months Ended |
Six Months Ended |
|
June 30, |
June 30, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$3,618 |
$3,749 |
$6,930 |
$7,136 |
Food, Pharma & Nutrition |
2,847 |
1,283 |
4,828 |
2,242 |
Animal Nutrition & Health |
5,976 |
5,253 |
11,177 |
10,217 |
Interest and other income
(expense) |
110 |
18 |
277 |
(126) |
Total |
$12,551 |
$10,303 |
$23,212 |
$19,469 |
Selected Balance Sheet
Items |
|
June 30, |
December 31, |
|
2010 |
2009 |
Cash and Cash Equivalents |
$50,374 |
$46,432 |
Accounts Receivable |
30,367 |
29,149 |
Inventories |
16,931 |
13,965 |
Other Current Assets |
2,364 |
3,466 |
Total Current Assets |
100,036 |
93,012 |
|
|
|
Property, Plant, & Equipment (net) |
42,165 |
41,579 |
Other Assets |
58,198 |
53,222 |
Total Assets |
$200,399 |
$187,813 |
|
|
|
Current Liabilities |
$22,906 |
$33,815 |
Long-Term Obligations |
12,022 |
6,855 |
Total Liabilities |
34,928 |
40,670 |
|
|
|
Stockholders' Equity |
165,471 |
147,143 |
|
|
|
Total Liabilities and Stockholders'
Equity |
$200,399 |
$187,813 |
CONTACT: Balchem Corporation
Karin McCaffery
845-326-5635
Balchem (NASDAQ:BCPC)
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