MONTVALE, N.J., Feb. 16, 2024 (GLOBE NEWSWIRE) — Balchem Corporation (NASDAQ:BCPC) reported today financial results for its 2023 fiscal fourth quarter ended December 31, 2023. The Company reported quarterly net sales of $228.7 million, quarterly net earnings of $26.6 million, adjusted EBITDA(a) of $55.4 million, and free cash flow(a) of $56.0 million.
Ted Harris, Chairman, CEO, and President of Balchem said, “The fourth quarter capped off another solid year for Balchem. We delivered record fourth quarter adjusted EBITDA and very strong free cash flow, despite the continued challenging demand environment in parts of our portfolio. I am particularly pleased with our Human Nutrition and Health segment posting record fourth quarter sales and earnings.”
Fourth Quarter 2023 Financial Highlights:
GAAP net earnings were $26.6 million, an increase of 24.5% from the prior year.
Adjusted EBITDA was $55.4 million, an increase of 5.4% from the prior year quarter.
GAAP earnings per share of $0.82 compared to $0.66 in the prior year quarter and adjusted earnings per share(a) of $0.95 compared to $0.94 in the prior year quarter.
Cash flows from operations were $67.4 million for the fourth quarter 2023, with record quarterly free cash flow(a) of $56.0 million, up 103.4% from the prior year quarter.
Record Human Nutrition & Health segment sales of $138.0 million, an increase of 5.8% compared to the prior year quarter with record earnings from operations of $25.2 million, up 43.8%.
Mr. Harris added, “Our full year 2023 results highlight the resilience of our business model in a challenging and volatile market environment. While full year 2023 net sales were down modestly, we delivered record adjusted EBITDA and generated record free cash flow, allowing us to further strengthen our balance sheet, while returning $25.4 million to our shareholders in a double digit increase to our dividend, all while continuing to advance our strategic growth initiatives.”
Full Year 2023 Financial Highlights:
GAAP net earnings were $108.5 million, an increase of 3.0% from the prior year. These net earnings resulted in GAAP earnings per share of $3.35 compared to $3.25 in the prior year.
Adjusted EBITDA was $230.9 million, an increase of 7.1%, from the prior year.
Cash flows from operations were $183.8 million for 2023, with record full year free cash flow of $151.1 million.
Record Human Nutrition & Health segment sales of $550.8 million, an increase of 4.5% compared to the prior year.
Record earnings from operations in both the Human Nutrition & Health and Specialty Products segments, increasing 24.7% and 5.5%, respectively.
Mr. Harris continued, “I am excited about 2024, and I believe the company is well positioned to deliver both top and bottom line growth on a full year basis, while continuing to advance our strategic growth initiatives that will ensure our growth over the longer term.”
Results for Period Ended December 31, 2023 (unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Net sales
$
228,699
$
232,531
$
922,439
$
942,358
Gross margin
74,993
68,639
302,056
280,451
Operating expenses
36,658
35,334
142,863
135,265
Earnings from operations
38,335
33,305
159,193
145,186
Interest and other expenses
5,068
7,529
21,932
11,437
Earnings before income tax expense
33,267
25,776
137,261
133,749
Income tax expense
6,619
4,370
28,718
28,382
Net earnings
$
26,648
$
21,406
$
108,543
$
105,367
Diluted net earnings per common share
$
0.82
$
0.66
$
3.35
$
3.25
Adjusted EBITDA(a)
$
55,430
$
52,611
$
230,910
$
215,688
Adjusted net earnings(a)
$
30,901
$
30,340
$
129,718
$
130,531
Adjusted diluted net earnings per common share(a)
$
0.95
$
0.94
$
4.00
$
4.03
Shares used in the calculations of diluted and adjusted net earnings per common share
32,477
32,398
32,448
32,393
(a) See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures.
Financial Results for the Fourth Quarter of 2023:
The Human Nutrition & Health segment generated fourth quarter sales of $138.0 million, an increase of $7.6 million or 5.8% compared to the prior year quarter. The increase was driven by higher sales within both the minerals and nutrients business and food and beverage markets, and a favorable impact related to changes in foreign currency exchange rates. Fourth quarter earnings from operations for this segment were $25.2 million, an increase of $7.7 million, or 43.8%, compared to $17.5 million in the prior year quarter, primarily due to the aforementioned higher sales and lower manufacturing input costs, partially offset by higher operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations(a) for this segment were $29.9 million, compared to $23.6 million in the prior year quarter, an increase of 26.7%.
The Animal Nutrition & Health segment generated quarterly sales of $58.2 million, a decrease of $6.6 million or 10.2% compared to the prior year quarter. The decrease was driven by lower sales in both the ruminant and monogastric species markets, partially offset by a favorable impact related to changes in foreign currency exchange rates. Fourth quarter earnings from operations for this segment were $5.3 million, a decrease of $3.8 million, or 41.3%, compared to $9.1 million in the prior year quarter, primarily due to the aforementioned lower sales, partially offset by lower manufacturing input costs. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations for this segment were $5.6 million, compared to $10.1 million in the prior year quarter, a decrease of 44.5%.
The Specialty Products segment generated fourth quarter sales of $31.0 million, a decrease of $0.8 million or 2.6% compared to the prior year quarter, due to lower sales in both the performance gases business and the plant nutrition business, partially offset by a favorable impact related to changes in foreign currency exchange rates. Fourth quarter earnings from operations for this segment were $8.6 million, an increase of $0.6 million, or 7.4%, compared to $8.0 million in the prior year quarter, primarily driven by lower manufacturing input costs. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets and other adjustments, adjusted earnings from operations for this segment were $9.8 million, compared to $9.2 million in the prior year quarter, an increase of 7.1%.
Consolidated gross margin for the quarter ended December 31, 2023 of $75.0 million increased by $6.4 million or 9.3%, compared to $68.6 million for the prior year comparable period. Gross margin as a percentage of sales was 32.8% as compared to 29.5% in the prior year period, an increase of 327 basis points, primarily due to a favorable mix and decreases in certain manufacturing input costs. Operating expenses of $36.7 million for the quarter increased $1.3 million from the prior year comparable quarter, primarily due to an increase in outside services and higher compensation-related expenses, partially offset by a favorable adjustment to transaction costs. Excluding non-cash operating expenses associated with amortization of intangible assets of $6.3 million, operating expenses were $30.4 million, or 13.3% of sales.
Interest expense was $5.3 million and $5.1 million in the fourth quarters of 2023 and 2022, respectively. Our effective tax rates for the three months ended December 31, 2023 and 2022 were 19.9% and 17.0%, respectively. The increase in the effective tax rate from the prior year was primarily due to an increase in certain state taxes and lower tax benefits from stock-based compensation.
For the quarter ended December 31, 2023, cash flows provided by operating activities were $67.4 million and free cash flow was $56.0 million. The $165.8 million of net working capital on December 31, 2023 included a cash balance of $64.4 million. Significant cash payments during the quarter included repayments on the revolving loan of $71.0 million, and capital expenditures and intangible assets acquired of $11.7 million.
Ted Harris, Chairman, President, and CEO of Balchem said, “2023 was another solid year for Balchem and I would like to thank each and every one of our over 1,300 employees for their contributions to these results and the progress we have made around our strategic initiatives. Once again, we have shown resilience and the ability to deliver strong results, even in challenging times. I am excited about our future.”
Quarterly Conference Call
A quarterly conference call will be held on Friday, February 16, 2024, at 11:00 AM Eastern Time (ET) to review fourth quarter 2023 results. Ted Harris, Chairman, President, and CEO and Martin Bengtsson, CFO 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 replay three hours after the conclusion of the call through end of day Friday, March 1, 2024. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13744174.
Segment Information
Balchem Corporation reports three business segments: Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products. The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. Sales and production of products outside of our reportable segments and other minor business activities are included in “Other and Unallocated”.
Forward-Looking Statements
This release contains forward-looking statements, within the meaning of the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our expectation or belief concerning future events that involve risks and uncertainties. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Actions and performance could differ materially from what is contemplated by the forward-looking statements contained in this release. Factors that might cause differences from the forward-looking statements include those referred to or identified in Balchem’s Annual Report on Form 10-K for the year ended December 31, 2023 and other factors that may be identified elsewhere in this release or in our other SEC filings. Reference should be made to such factors and all forward-looking statements are qualified in their entirety by the above cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact: Jacqueline Yarmolowicz, Balchem Corporation (Telephone: 845-326-5600)
Selected Financial Data (unaudited)
(Dollars in thousands)
Business Segment Net Sales:
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Human Nutrition & Health
$
137,974
$
130,403
$
550,751
$
527,131
Animal Nutrition & Health
58,164
64,751
238,326
262,297
Specialty Products
31,004
31,816
125,965
131,438
Other and Unallocated (b)
1,557
5,561
7,397
21,492
Total
$
228,699
$
232,531
$
922,439
$
942,358
Business Segment Earnings Before Income Taxes:
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Human Nutrition & Health
$
25,210
$
17,533
$
102,419
$
82,125
Animal Nutrition & Health
5,346
9,113
27,576
36,056
Specialty Products
8,595
8,004
34,579
32,789
Other and Unallocated (b)
(816
)
(1,345
)
(5,381
)
(5,784
)
Interest and other expenses
(5,068
)
(7,529
)
(21,932
)
(11,437
)
Total
$
33,267
$
25,776
$
137,261
$
133,749
(b) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of: (i) Transaction and integration costs, and unallocated legal fees totaling $17 and $1,617 for the three and twelve months ended December 31, 2023, respectively, and $765 and $3,581 for the three and twelve months ended December 31, 2022, respectively (refer to Note 4 for descriptions of these charges), and (ii) Unallocated amortization expense of $0 and $312 for the three and twelve months ended December 31, 2023, respectively, and $738 and $2,951 for the three and twelve months ended December 31, 2022, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.
Selected Balance Sheet Items
(Dollars in thousands)
December 31, 2023
December 31, 2022
Cash and Cash Equivalents
$
64,447
$
66,560
Accounts Receivable, net
125,284
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