Balchem Corporation (Nasdaq:BCPC)
reported
as follows for the period ended September 30, 2010.
($000 Omitted Except for Net
Earnings per Common Share) |
|
For the Three
Months Ended September 30, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 63,910 |
$ 54,292 |
Gross profit |
20,233 |
16,399 |
Operating expenses |
7,215 |
6,096 |
Earnings from operations |
13,018 |
10,303 |
Other income (expense) |
(73) |
20 |
Earnings before income tax expense |
12,945 |
10,323 |
Income tax expense |
4,452 |
3,471 |
Net earnings |
$ 8,493 |
$ 6,852 |
|
|
|
Basic net earnings per common
share |
$ 0.30 |
$ 0.25 |
Diluted net earnings per common
share |
$ 0.29 |
$ 0.24 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,667 |
28,954 |
|
|
|
For the Nine
Months Ended September 30, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 185,271 |
$ 160,254 |
Gross profit |
56,763 |
50,001 |
Operating expenses |
20,810 |
20,103 |
Earnings from operations |
35,953 |
29,898 |
Other income (expense) |
204 |
(106) |
Earnings before income tax expense |
36,157 |
29,792 |
Income tax expense |
12,296 |
9,973 |
Net earnings |
$ 23,861 |
$ 19,819 |
|
|
|
Basic net earnings per common
share |
$ 0.86 |
$ 0.72 |
Diluted net earnings per common
share |
$ 0.81 |
$ 0.69 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,515 |
28,758 |
New Record Quarterly Results for Sales and
Earnings
Record net sales of $63.9 million were achieved for the quarter
ended September 30, 2010. This is an increase of 17.7% above
the $54.3 million result of the prior year quarter. Accordingly,
record net earnings for the quarter were $8.5 million, an increase
of $1.6 million, or 23.9% as compared with the same period last
year. The $8.5 million generated diluted net earnings of $0.29 per
common share versus $0.24 per common share for the prior year
comparable period, an increase of 20.8%.
With all three segments exhibiting strong double digit sales
growth for the quarter, sales of the Food, Pharma & Nutrition
segment were particularly strong, setting another new quarterly
record of $10.7 million, which was a 23.8% improvement over the
prior year comparable quarter. The domestic and international food
sectors were 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 continue to experience
growth in the supplement markets and increased inclusion in food
products. These strong results were partially offset by a decline
in sales of our calcium and VitaShure® products; however, segment
earnings were very strong at $2.5 million, as compared to $1.3
million in the prior year comparable quarter. Total gross margin as
a percent of sales increased to 31.7% from 30.2% in the third
quarter of 2009, reflecting improved sales volumes, product mix and
plant efficiencies.
Animal Nutrition & Health ("ANH"), including specialties,
choline and industrial derivative product sales, totaled $42.4
million, an increase of 16.1%, or $5.9 million from the prior year
comparable quarter. Our global feed grade choline product sales
grew approximately 3%, largely due to improved sales of our Italian
produced choline sold into markets outside of North America. North
American choline sales into the poultry and swine markets did
improve slightly as well, even as the US broiler meat production
forecast for the third quarter did not meet industry expectations.
The new US broiler meat production forecast for all of 2010 is now
projecting an increase of 2.4% from the previous year according to
the USDA's Economic Research Service. Exports of liquid and dry
choline from our North American plants declined in the quarter
largely due to currency issues and, in combination with global
competition, resulted in our declining to bid on certain
international business in the quarter. Comparative sales
statistics in this segment were negatively impacted by
approximately 3.1% due to correlated foreign currency fluctuation
associated with the Italian operation. The ANH specialty
ingredients, largely targeted to the ruminant and companion animal
markets, was flat with the prior year comparable quarter.
Some regional improvement in dairy economics supported
greater demand for certain products, particularly sales of
Aminoshure-L®, our rumen protected lysine, and Reashure®. These
improved sales were however offset by a decline in sales of our
Chelated Mineral products, principally into the international
market. Sales of industrial grade products again realized
significant growth from the prior year comparable quarter and
comprise approximately 28% of the sales in this segment for the
quarter. We continued to realize improvement in sales for various
industrial applications, predominantly in North America as
international industrial sales were essentially flat with the prior
year quarter. Earnings from operations for the entire ANH
segment increased to a new record of $6.1 million as compared to
$5.3 million in the prior year comparable quarter. This
quarterly earnings result particularly reflects favorable operating
variances due to an overall 12% volume improvement in sales.
The ARC Specialty Products segment generated record quarterly
sales of $10.8 million, an increase of 18.6% 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 and
spice fumigation. Earnings from operations for this segment, at
$4.5 million improved 20.9% from the prior year comparable quarter.
In the second quarter, we did realize modest price increases to
help off-set certain raw material cost increases incurred through
the first half of 2010.
Consolidated gross profit for the quarter ended September 30,
2010 improved to $20.2 million, as compared to $16.4 million for
the prior year comparable period. This $3.8 million increase was
principally a result of an 11% increase in sales volumes. This
margin improvement was partially offset by increases in certain key
raw material costs, as we had to deal with a force majeure event
from a key supplier. Margin percentage did increase to 31.7% of
sales as compared to 30.2% in the prior year comparative period,
and showed improvement on a sequential basis. We continue to
leverage our plant capabilities, driving efficiencies from core
volume growth, new product launches of our human and animal health
specialty products into both 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 $7.2 million were up from the prior
year comparable quarter, particularly related to the Aberco
acquisition, recruiting fees, relocation expenses, and consultancy
fees.
For the nine months ended September 30, 2010, consolidated net
sales have increased 15.6% to $185.3 million versus the $160.3
million in the comparable prior year period. Net earnings have
increased 20.4% to $23.9 million, generating $0.81 per diluted
share, versus net earnings of $19.8 million, or $0.69 per diluted
share, in the prior year comparable period, an earnings per share
improvement of 17.4%.
The company continues to maintain a healthy balance sheet with
$89.8 million in net working capital. Our cash balance was
$65.4 million on September 30, 2010, up from $46.4 million at
December 31, 2009, and reflects payment for the noted Aberco
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, even as we have incurred $10.7
million of capital and acquisition expenditures in 2010.
Commenting on 2010, Dino A. Rossi, Chairman, President and CEO
of Balchem said, "These record setting third quarter sales and
earnings results reflect strong performances across all of
Balchem's segments. Our diversified base of business, continued
ability to leverage cross-business integration capabilities, in
support of both organic and acquisition growth, has continued to
generate exceptional results. Our growing global presence, though
tempered somewhat by softness in certain U.S. markets and
unfavorable currency fluctuations, generated solid operating
margins and cash flow. Raw material costs had a slight
negative impact on certain segments, but we continue to closely
monitor all key economic and competitive forces to deliver quality
product value to our customer base.
While signs of an improving global economy in the markets we
serve reflect ongoing volatility, we believe 2010 will continue to
be a year of solid improvements in sales and earnings, meeting our
strategic objectives for the year. We have, and continue to,
de-bottleneck certain production capabilities, leveraging existing
production and logistic sites. We are investing in new commercial
encapsulation technology for our animal health specialty business,
which should be operational quarter one, 2011. Research
resources are focused on developing new, innovative products for
each of our business segments. We expect continued improved results
in the food & nutrition sectors. Industrial choline derivatives
are expected to continue strong double digit growth, and the ARC
Specialty Products segment should improve based on revenue growth
from its current base, as well as the development of new market
opportunities for packaged gases. Our strong balance sheet and
diversified revenue base continue to provide us with the financial
strength and flexibility to capitalize on both organic and other
strategic opportunities and continue to create superior
returns."
Quarterly Conference Call
A quarterly conference call will be held on Friday, October 29,
2010 at 11:00 AM Eastern Time (ET) to review third 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 Wednesday, November 3, 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
#359380. 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 |
Nine Months Ended |
|
September 30, |
September 30, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$ 10,812 |
$ 9,119 |
$ 30,702 |
$ 27,006 |
Food, Pharma & Nutrition |
10,696 |
8,639 |
31,245 |
26,034 |
Animal Nutrition & Health |
42,402 |
36,534 |
123,324 |
107,214 |
Total |
$ 63,910 |
$ 54,292 |
$ 185,271 |
$ 160,254 |
|
Business Segment
Earnings: |
|
Three Months Ended |
Nine Months Ended |
|
September 30, |
September 30, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$ 4,455 |
$ 3,686 |
$ 11,385 |
$ 10,822 |
Food, Pharma & Nutrition |
2,470 |
1,342 |
7,298 |
3,584 |
Animal Nutrition & Health |
6,093 |
5,275 |
17,270 |
15,492 |
Interest and other income
(expense) |
(73) |
20 |
204 |
(106) |
Total |
$ 12,945 |
$ 10,323 |
$ 36,157 |
$ 29,792 |
|
Selected Balance Sheet
Items |
|
September 30, |
December 31, |
|
2010 |
2009 |
Cash and Cash Equivalents |
$ 65,447 |
$ 46,432 |
Accounts Receivable |
29,310 |
29,149 |
Inventories |
15,130 |
13,965 |
Other Current Assets |
2,621 |
3,466 |
Total Current Assets |
112,508 |
93,012 |
|
|
|
Property, Plant, & Equipment (net) |
43,671 |
41,579 |
Other Assets |
57,210 |
53,222 |
Total Assets |
$ 213,389 |
$ 187,813 |
|
|
|
Current Liabilities |
$ 22,731 |
$ 33,815 |
Long-Term Obligations |
11,793 |
6,855 |
Total Liabilities |
34,524 |
40,670 |
|
|
|
Stockholders' Equity |
178,865 |
147,143 |
|
|
|
Total Liabilities and Stockholders'
Equity |
$ 213,389 |
$ 187,813 |
CONTACT: Balchem Corporation
Karin McCaffery
845-326-5635
Balchem (NASDAQ:BCPC)
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