Balchem Corporation (Nasdaq:BCPC) reported as follows for the
period ended December 31, 2010.
($000 Omitted Except for Net
Earnings per Common Share) |
|
For the Three
Months Ended December 31, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 69,800 |
$ 59,184 |
Gross margin |
21,274 |
16,957 |
Operating expenses |
7,457 |
6,196 |
Earnings from operations |
13,817 |
10,761 |
Other income |
157 |
49 |
Earnings before income tax expense |
13,974 |
10,810 |
Income tax expense |
4,558 |
3,844 |
Net earnings |
$ 9,416 |
$ 6,966 |
|
|
|
Basic net earnings per common
share |
$ 0.33 |
$ 0.25 |
Diluted net earnings per common
share |
$ 0.31 |
$ 0.24 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,938 |
29,224 |
|
|
|
For the Twelve
Months Ended December 31, |
|
|
|
|
2010 |
2009 |
|
Unaudited |
Net sales |
$ 255,071 |
$ 219,438 |
Gross margin |
78,037 |
66,958 |
Operating expenses |
28,267 |
26,299 |
Earnings from operations |
49,770 |
40,659 |
Other income (expense) |
361 |
(57) |
Earnings before income tax expense |
50,131 |
40,602 |
Income tax expense |
16,854 |
13,817 |
Net earnings |
$ 33,277 |
$ 26,785 |
|
|
|
Basic net earnings per common
share |
$ 1.19 |
$ 0.98 |
Diluted net earnings per common
share |
$ 1.12 |
$ 0.93 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
29,621 |
28,874 |
New Record Quarterly and Annual Results for Sales and
Earnings
Record net sales of $69.8 million were achieved for the quarter
ended December 31, 2010, as all three business segments set new
quarterly sales records. This is an increase of 17.9% above
the $59.2 million result of the prior year comparative quarter.
Correspondingly, record net earnings were achieved for the quarter
of $9.4 million, an increase of $2.5 million, or 35.2% as compared
with the same period last year. The $9.4 million generated diluted
net earnings of $0.31 per common share versus $0.24 per common
share for the prior year comparable period, an increase of
29.2%.
Detailing this fourth quarter of 2010, sales of the Food, Pharma
& Nutrition segment were a record $10.7 million, which was a
14.7% improvement over the prior year comparable quarter. The
domestic and international food sectors continued solid double
digit growth of encapsulated ingredients for baking, prepared food,
preservation and confection markets. We also realized double digit
growth in sales of our human choline and VitaShure® products for
nutritional enhancement. These positive results were partially
offset by a decline in sales of our calcium carbonate products.
Earnings from operations for this segment were a fourth quarter
record of $2.5 million, as compared to $1.4 million in the prior
year comparable quarter, with gross margin levels improving,
largely due to a 12.8% improvement in sales volume as well as
improved product mix.
The Animal Nutrition & Health ("ANH") segment, including
specialties, choline and industrial derivative product sales,
totaled a record $47.5 million, an increase of 17.5%, or $7.1
million from the prior year comparable quarter. Our global feed
grade choline product sales were up modestly from the prior year
quarter, even as we allowed exports of liquid and dry choline to
decline slightly due to currency issues in combination with global
competition. However, we did experience a 9.2% increase on a
sequential quarterly basis, as data from USDA's Broiler Hatchery
report, which tracks the number of broiler chicks placed and eggs
set, points toward continued gains in both, forecasting even higher
in early 2011. Comparative sales statistics in this segment were
also negatively impacted by approximately 1.9% due to foreign
currency fluctuation associated with the European operation. The
ANH specialty ingredients, largely targeted to the ruminant and
companion animal markets, realized approximately 28% sales growth
from the prior year comparable quarter, as certain regional
improvement in dairy economics supported greater demand for these
products. Particularly strong were sales of Reashure® choline,
chelated minerals and Aminoshure-L®, our rumen protected lysine.
Sales of industrial grade products again realized significant
growth from the prior year comparable quarter, comprising
approximately 26% of the sales in this segment for the quarter.
This improvement came from sales of various choline and choline
derivatives for industrial applications, notably from natural gas
fracking as well as intermediate sales of our Italian- produced
methylamines. Earnings from operations for the entire ANH
segment increased to a new quarterly record of $6.8 million as
compared to $5.9 million in the prior year comparable
quarter. This quarterly earnings result particularly reflects
favorable operating efficiencies due to an overall 14% volume
improvement in sales.
The ARC Specialty Products segment generated record quarterly
sales of $11.5 million, an increase of 23.2% from the comparable
prior year quarter. This increase was principally the result of
strong sales of ethylene oxide for medical device sterilization and
increased volumes of propylene oxide in support of the recent
acquisition of Aberco, Inc., which targets nut meat and spice
fumigation. Record earnings from operations for this segment, at
$4.6 million improved 33.0% from the prior year comparable quarter.
These results reflect modest price increases, implemented during
the year to help off-set certain raw material cost increases,
improved operating efficiencies due to volume, and a favorable
product mix.
Consolidated gross margin for the quarter ended December 31,
2010 improved to $21.3 million, as compared to $17.0 million for
the prior year comparable period as margin percentage increased to
30.5% of sales as compared to 28.7% in the prior year comparative
period. The $4.3 million increase was principally a result of a 14%
increase in sales volumes. 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. We are also making strategic investments in our
manufacturing facilities as required to keep pace with the growing
demand for certain products. Operating (Selling, R&D, and
General and Administrative) expenses at $7.5 million were up 20%
from the prior year comparable quarter, particularly related to an
increase of employee headcount, other payroll related expenses,
recruiting and consultancy fees, but were only up 3%
sequentially.
For the twelve months ended December 31, 2010, consolidated net
sales increased 16.2% to a record $255.1 million versus the $219.4
million in the comparable prior year period, with all three
segments contributing double digit growth. Record net earnings
increased 24.2% to $33.3 million, generating $1.12 per diluted
share, versus net earnings of $26.8 million, or $0.93 per diluted
share, in the prior year comparable period, reflecting an earnings
per share improvement of 20.4%.
The company continues to maintain a healthy balance sheet with
diligent working capital controls, particularly effective inventory
and accounts receivable management, and realized $100 million in
net working capital on December 31, 2010. Our cash balance of
$77.3 million at year end, up from $46.4 million at December 31,
2009, reflects strong cash flows net of $12.2 million for capital
expenditures and the previously noted Aberco acquisition in
June.
Commenting on 2010, Dino A. Rossi, Chairman, President and CEO
of Balchem, said, "These record setting fourth quarter sales and
earnings results clearly reflect strong performances from all of
Balchem's segments. Our evolving, diversified base of businesses,
continue to strategically leverage cross-business integration
capabilities, in support of organic, new product line extensions,
and acquisition growth, leading to exceptional results. Growing
global presence, though tempered somewhat by unfavorable currency
fluctuations, continued to fuel solid operating margins and cash
flow. While raw material costs in the quarter had a slight
negative impact on certain segments sequentially, we aggressively
managed the controllable factors to deliver quality and product
value to our customer base.
"With signs of improving global economies, the markets we serve
do reflect ongoing volatility, but we believe 2011 will continue to
be a year of solid improvements in sales and earnings, meeting our
strategic organic growth objectives for the year. We will continue
to de-bottleneck/expand certain production capabilities, leverage
existing production and logistic sites, and invest in new
commercial technology to support our business
platforms. Research resources are focused on developing new,
innovative products for each of our business segments. We expect
improved results in the food & nutrition sectors, and strong
double digit growth in ANH Specialties and industrial choline
derivatives. 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 noted diversified revenue base continue to
provide us with a projection of financial strength, and
flexibility, to capitalize on organic and strategic opportunities
to create superior returns in 2011."
Quarterly Conference Call
A quarterly conference call will be held on Monday, February 28
at 11:00 AM Eastern Time (ET) to review fourth 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 Thursday, March 3, 2011. 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
#367145. 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 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 |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$ 11,537 |
$ 9,362 |
$ 42,239 |
$ 36,368 |
Food, Pharma & Nutrition |
10,749 |
9,373 |
41,994 |
35,407 |
Animal Nutrition & Health |
47,514 |
40,449 |
170,838 |
147,663 |
Total |
$ 69,800 |
$ 59,184 |
$ 255,071 |
$ 219,438 |
|
Business
Segment Earnings: |
|
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2010 |
2009 |
2010 |
2009 |
ARC Specialty Products |
$ 4,559 |
$ 3,428 |
$ 15,944 |
$ 14,250 |
Food, Pharma & Nutrition |
2,450 |
1,445 |
9,748 |
5,029 |
Animal Nutrition & Health |
6,808 |
5,888 |
24,078 |
21,380 |
Interest and other income
(expense) |
157 |
49 |
361 |
(57) |
Total |
$ 13,974 |
$ 10,810 |
$ 50,131 |
$ 40,602 |
|
Selected Balance Sheet
Items |
|
|
|
|
December 31, |
December 31, |
|
2010 |
2009 |
Cash and Cash Equivalents |
$ 77,253 |
$ 46,432 |
Accounts Receivable |
32,050 |
29,149 |
Inventories |
15,720 |
13,965 |
Other Current Assets |
4,629 |
3,466 |
Total Current Assets |
129,652 |
93,012 |
|
|
|
Property, Plant, & Equipment (net) |
43,388 |
41,579 |
Other Assets |
55,584 |
53,222 |
Total Assets |
$ 228,624 |
$ 187,813 |
|
|
|
Current Liabilities |
$ 29,508 |
$ 33,815 |
Long-Term Obligations |
11,649 |
6,855 |
Total Liabilities |
41,157 |
40,670 |
|
|
|
Stockholders' Equity |
187,467 |
147,143 |
|
|
|
Total Liabilities and Stockholders'
Equity |
$ 228,624 |
$ 187,813 |
CONTACT: Karin McCaffery, Balchem Corporation
Telephone: 845-326-5635
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