Balchem Corporation (Nasdaq:BCPC)
reported
as follows (unaudited) for the period ended December 31,
2011.
($000 Omitted Except for Net
Earnings per Share) |
|
For the Three
Months Ended December 31, |
|
|
|
|
2011 |
2010 |
|
|
|
Net sales |
$ 69,733 |
$ 69,800 |
Gross profit |
20,843 |
21,274 |
Operating expenses |
7,150 |
7,457 |
Earnings from operations |
13,693 |
13,817 |
Other income |
79 |
157 |
Earnings before income tax expense |
13,772 |
13,974 |
Income tax expense |
4,276 |
4,558 |
Net earnings |
$ 9,496 |
$ 9,416 |
|
|
|
Basic net earnings per common
share |
$ 0.33 |
$ 0.33 |
Diluted net earnings per common
share |
$ 0.31 |
$ 0.31 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
30,343 |
29,938 |
|
For the Twelve
Months Ended December 31, |
|
|
|
|
2011 |
2010 |
|
|
Net sales |
$ 291,867 |
$ 255,071 |
Gross profit |
86,001 |
78,037 |
Operating expenses |
29,776 |
28,267 |
Earnings from operations |
56,225 |
49,770 |
Other income |
513 |
361 |
Earnings before income tax expense |
56,738 |
50,131 |
Income tax expense |
17,973 |
16,854 |
Net earnings |
$ 38,765 |
$ 33,277 |
|
|
|
Basic net earnings per common
share |
$ 1.36 |
$ 1.19 |
Diluted net earnings per common
share |
$ 1.28 |
$ 1.12 |
|
|
|
Shares used in the calculation of diluted net
earnings per common share |
30,244 |
29,621 |
Fourth quarter 2011 revenues were $69.7 million, effectively
equal to the $69.8 million of the prior year comparable quarter,
delivering an overall annual growth rate of 14.4% above the 2010
result. These quarterly results reflect particular strength in the
ARC Specialty Products segment, unexpected softness in the domestic
food sector of Food, Pharma & Nutrition ("FPN") and mixed
results from Animal Nutrition & Health ("ANH"), with
significant improvement coming from the ruminant production animal
sector, flatness from the poultry markets, which was then offset by
softness in the industrial products end market.
Net earnings of $9.5 million for the quarter were also
substantially equal to the $9.4 million of the prior year quarter,
yielding diluted net earnings per share of $0.31, which is equal to
the prior year comparable quarter. Full year earnings, however,
achieved a new annual record of $38.8 million reflecting an
increase of 16.5% versus 2010 and generating a 14.3% improvement to
$1.28 per diluted share.
In this fourth quarter of 2011, sales of the Animal Nutrition
& Health ("ANH") segment, including ruminant specialties,
choline and industrial derivative products, totaled $47.8 million,
an increase of $0.3 million from the prior year comparable quarter.
Our ANH specialty ingredients, largely targeted to ruminant
production animal markets, realized approximately 21% sales growth,
principally from sales of Reashure®, and our new Aminoshure
products. Dairy economics in the US and certain export markets
remain strong, supporting greater demand for these products despite
relatively high feed prices. Our global feed grade choline product
sales were equal to the prior year comparable quarter as volumes
sold in these markets were strongly influenced by the dynamics of
our customer base, predominantly the poultry production industry.
As previously projected from USDA Broiler statistics, broiler chick
placements and egg sets were lower for the fourth quarter due to
continued high grain prices, along with only minor economic
improvements in the North American poultry end markets. Higher
selling prices, largely a result of continued raw material cost
escalation, effectively offset lower volumes. We continue to
contest raw material price escalation; however, where necessary, we
implemented price increases within contractual guidelines, but did
realize some erosion in gross margins. Sales of industrial grade
products were down approximately 11% from the prior year comparable
quarter due to a number of variables. This decline correlates to a
recent shift towards increased oil-directed drilling in the United
States, as opposed to natural gas drilling, which does not have the
same clay stabilization requirements. This redirection of rig
utilization is largely due to natural gas prices trading at or near
ten-year lows and high levels of natural gas inventory. In
addition, our success in this space has begun to attract
competition from off-shore producers, which also contributed to the
lower volumes sold. As a result of these various dynamics, earnings
from operations for the entire ANH segment decreased to $6.0
million, as compared to $6.8 million in the prior year comparable
quarter.
The ARC Specialty Products segment generated record quarterly
sales of $12.3 million, an increase of 6.9% from the comparable
prior year quarter. This increase was the result of strong volumes
of ethylene oxide sold for medical device sterilization. Propylene
oxide sales, particularly for nutmeat fumigation, also continued to
show steady, improving revenue growth. Earnings from operations for
this segment, at $5.0 million, improved 10.6% from the prior year
comparable quarter, largely due to the benefits of the increased
volumes sold of ethylene oxide.
Sales of the Food, Pharma & Nutrition segment were $9.6
million, which was a 10.6% decline from the prior year comparable
quarter. While we did realize double digit growth in sales of our
human choline products for nutritional enhancement, the food sector
sales of encapsulated ingredients for prepared food, preservation
and confection markets were particularly slow in the quarter as we
saw soft demand from our base business and expected pipeline
prospects which did not convert/ launch in the quarter to offset
this soft demand. On an absolute quarterly comparative note, we
also realized a decline of approximately $300,000 due to the fourth
quarter 2010 disposition of the calcium product line. Earnings from
operations for this segment did, however, increase by approximately
6.9% to $2.6 million, reflecting a favorable product mix and a
favorable earnings impact from the discontinued operation of the
calcium product line.
Consolidated gross margin for the quarter ended December 31,
2011 was $20.8 million, as compared to $21.3 million for the prior
year comparable period. Gross margin percentage declined slightly
to 29.9% of sales as compared to 30.5% in the prior year
comparative period, principally due to lower sales volumes and the
previously mentioned raw material cost increases. Operating
(Selling, R&D, and General and Administrative) expenses at $7.2
million were down 4.1% from the prior year comparable quarter,
declining as a percentage of sales to 10.3% from 10.7% in the prior
year quarter. Our effective income tax rates for the fourth
quarters of 2011 and 2010 were 31.0% and 32.6%, respectively. The
decrease in our effective rate for the quarter ended December 31,
2011 was a result of favorable adjustments related to changes in
state income tax apportionment.
The company continues to maintain and grow a solid financial
structure. Diligent working capital controls, particularly
effective inventory and accounts receivable management contribute
strongly to the business performance. The $144.8 million of net
working capital on December 31, 2011 included a cash balance of
$114.8 million, up from $77.3 million at December 31, 2010, net of
$6.6 million in capital expenditures for 2011, reflecting continued
strong cash flows.
Commenting further, Dino A. Rossi, Chairman, CEO and President
of Balchem, said, "The fourth quarter results continue to reflect
the effectiveness of our diversified, yet balanced, growth
platforms. While all three segments did not achieve record
quarterly levels, all three did achieve record annual revenue and
operating earnings levels. The 14% annual revenue growth of $37
million was realized by a near equal split of volume and prices.
Persistent escalation of raw material costs continues to be a
challenge, but our supply chain efforts, along with improved
volumes and product mix, generated a strong 16.5% growth in net
earnings, year over year. Marketplace challenges continue to
support mixed performance scenarios, but there is growing global
demand for our products, as noted in this quarter, particularly
with the new products for ANH Specialties and human choline, based
on innovative technology and new scientific health claims. These
consolidated results continue to strengthen our balance sheet,
which will facilitate both innovative organic and acquisitive
growth objectives, as we move into 2012."
Quarterly Conference Call
A quarterly conference call will be held on Monday, February 27,
2012 at 11:00 AM Eastern Time (ET) to review fourth quarter 2011
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, March 9, 2012. 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
#389043. 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, 2010. 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 |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2011 |
2010 |
2011 |
2010 |
ARC Specialty Products |
$ 12,335 |
$ 11,537 |
$ 47,851 |
$ 42,239 |
Food, Pharma & Nutrition |
9,605 |
10,749 |
42,525 |
41,994 |
Animal Nutrition & Health |
47,793 |
47,514 |
201,491 |
170,838 |
Total |
$ 69,733 |
$ 69,800 |
$ 291,867 |
$ 255,071 |
|
|
|
|
|
Business Segment
Earnings: |
|
Three Months Ended |
Twelve Months Ended |
|
December 31, |
December 31, |
|
2011 |
2010 |
2011 |
2010 |
ARC Specialty Products |
$ 5,041 |
$ 4,559 |
$ 18,636 |
$ 15,944 |
Food, Pharma & Nutrition |
2,618 |
2,450 |
11,113 |
9,748 |
Animal Nutrition & Health |
6,034 |
6,808 |
26,476 |
24,078 |
Interest and other income |
79 |
157 |
513 |
361 |
Total |
$ 13,772 |
$ 13,974 |
$ 56,738 |
$ 50,131 |
|
Selected Balance Sheet
Items |
|
December 31, |
December 31, |
|
2011 |
2010 |
Cash and Cash Equivalents |
$ 114,781 |
$ 77,253 |
Accounts Receivable |
34,433 |
32,050 |
Inventories |
18,637 |
15,720 |
Other Current Assets |
7,889 |
4,629 |
Total Current Assets |
175,740 |
129,652 |
|
|
|
Property, Plant, & Equipment
(net) |
44,282 |
43,388 |
Other Assets |
51,695 |
55,584 |
Total Assets |
$ 271,717 |
$ 228,624 |
|
|
|
Current Liabilities |
$ 30,913 |
$ 29,508 |
Long-Term Obligations |
8,795 |
11,649 |
Total Liabilities |
39,708 |
41,157 |
|
|
|
Stockholders' Equity |
232,009 |
187,467 |
|
|
|
Total Liabilities and Stockholders'
Equity |
$ 271,717 |
$ 228,624 |
CONTACT: Karin McCaffery, Balchem Corporation
Telephone: 845-326-5635
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