Investor Presentation Q1 2025. 1 Safe Harbor Statement 2 • During the course of this presentation, management may make forward-looking statements regarding financial performance and future events. • 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 thereo ...

Financial Data and Key Metrics Changes - The company reported record first quarter consolidated revenue of $251 million, a 4.5% increase year-over-year [16] - GAAP earnings from operations increased by 22.4% to $51 million, while adjusted EBITDA reached a record $66 million, up 8.9% [21][16] - Consolidated net income was $37 million, reflecting a 27.8% increase, translating to diluted net earnings per share of $1.13, up 27% [23][17] Business Segment Performance - Human Nutrition & Health segment generated record sales of $158 million, a 3.7% increase, with earnings from operations rising 14.2% to $38 million [24][25] - Animal Nutrition & Health segment saw sales of $57 million, up 6.2%, with earnings from operations increasing 154.2% to $5 million [26][27] - Specialty Products segment delivered sales of $33 million, a 5.3% increase, with earnings from operations rising 16.9% to $10 million [29][30] Market Data and Key Metrics Changes - The company imports approximately $100 million of raw materials annually, with less than $15 million from China, indicating a diversified supply chain [11] - Exports from the U.S. to other countries amount to approximately $90 million annually, with current tariffs having an immaterial impact on the company [13] Company Strategy and Industry Competition - The company is well-positioned to manage the evolving global trade environment, leveraging a strong manufacturing footprint and supply chain flexibility [9][10] - The management emphasized the ability to raise prices to offset tariff impacts, similar to strategies employed during the post-COVID inflationary period [12][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite uncertainties in global demand due to trade disputes [14][15] - The company anticipates healthy demand across end markets, with no current signs of demand deterioration [43] Other Important Information - Cash flows from operations were $36 million, with free cash flow of $31 million, and the company ended the quarter with $50 million in cash [24] - The effective tax rate for the first quarter was 22.7%, with expectations for the full year to be in the range of 22% to 23% [22][73] Q&A Session Summary Question: Impacts of tariffs and trade war - Management indicated confidence in managing raw material costs and the ability to raise prices if necessary, while expressing concerns about potential impacts on global demand [39][42][44] Question: Update on European Chinese dumping ruling - The company has filed an anti-dumping case accepted by the EU, with expectations for a response in the next three to six months [48][49] Question: Tailwinds for 2025 and product performance - Management highlighted strong growth in the choline and vitamin K2 categories, with expectations for continued growth in the Nutrients portfolio [58][60] Question: Debt repayment strategy - The company prioritizes organic growth investments and is evaluating M&A opportunities while continuing to pay down debt [70][71] Question: Effective tax rate expectations - The effective tax rate for the remainder of the year is expected to be around 22% to 22.5% based on first quarter results [73]

Financial Data and Key Metrics Changes - The company reported record first quarter consolidated revenue of $251 million, a 4.5% increase year-over-year [16] - GAAP earnings from operations increased by 22.4% to $51 million, while adjusted EBITDA reached a record $66 million, up 8.9% [21][16] - Consolidated net income was $37 million, reflecting a 27.8% increase, translating to diluted net earnings per share of $1.13, up 27% [23][17] Business Segment Performance - The Human Nutrition & Health segment generated record sales of $158 million, a 3.7% increase, with earnings from operations rising 14.2% to $38 million [24][25] - The Animal Nutrition & Health segment saw sales of $57 million, up 6.2%, with earnings from operations increasing 154.2% to $5 million [26][27] - The Specialty Products segment delivered sales of $33 million, a 5.3% increase, with earnings from operations rising 16.9% to $10 million [29][30] Market Data and Key Metrics Changes - The company imports approximately $100 million of raw materials annually, with less than $15 million from China, indicating a diversified supply chain [11] - The impact of current tariffs is estimated at approximately $20 million, with the company planning to offset half through alternative sourcing and pricing actions [12] Company Strategy and Industry Competition - The company is well-positioned to manage the evolving global trade environment, leveraging a strong manufacturing footprint and supply chain flexibility [9][10] - The management expressed confidence in the long-term growth outlook, emphasizing the resilience of the business model amid market uncertainties [32] Management's Comments on Operating Environment and Future Outlook - Management noted that demand remains healthy across end markets, with no current signs of recessionary impacts affecting order books [43][44] - The company has a solid track record of delivering results in various market conditions, having achieved 23 consecutive quarters of year-over-year growth in adjusted EBITDA [45] Other Important Information - Cash flows from operations were reported at $36 million, with free cash flow of $31 million and $50 million in cash on the balance sheet [24] - The effective tax rate for the first quarter was 22.7%, with expectations for the full year to be in the range of 22% to 23% [22][73] Q&A Session Summary Question: Impacts of tariffs and trade war - Management acknowledged the complexity of tariff impacts but expressed confidence in their ability to manage costs through supply chain flexibility and pricing strategies [39][42] Question: Update on European Chinese dumping ruling - The company has filed an anti-dumping case accepted by the EU, with expectations for a response in the next three to six months [48][49] Question: Tailwinds for 2025 and product performance - Management highlighted strong growth in the choline and vitamin K2 categories, with expectations for continued growth driven by new product launches [58][60] Question: Debt repayment strategy - The company prioritizes organic growth investments and is evaluating M&A opportunities while continuing to pay down debt [70][71] Question: Effective tax rate expectations - The effective tax rate for the remainder of the year is expected to be around 22% to 22.5% based on first-quarter performance [73]

Financial Performance - Total net sales for the three months ended March 31, 2025, were $250,519,000, representing a 4.5% increase from $239,659,000 in the same period of 2024[84] - Gross margin increased to $88,168,000 for the first quarter of 2025, up 8.2% from $81,514,000 in 2024, with gross margin as a percentage of net sales rising to 35.2%[86] - Earnings from operations for the first quarter of 2025 were $51,015,000, a 22.4% increase compared to $41,676,000 in 2024[89] - Net earnings for the first quarter of 2025 were $37,053,000, reflecting a 27.8% increase from $28,986,000 in 2024[84] Segment Performance - Human Nutrition & Health segment net sales grew by 3.7% to $158,457,000, driven by higher sales in food ingredients and nutrients[88] - Animal Nutrition & Health segment net sales increased by 6.2% to $57,277,000, primarily due to higher sales in ruminant species markets[88] - Specialty Products segment net sales rose by 5.3% to $33,275,000, attributed to higher sales in performance gases and plant nutrition[88] Operating Expenses and Cash Flow - Operating expenses decreased by 6.7% to $37,153,000 in the first quarter of 2025, down from $39,838,000 in 2024[87] - Cash flows from operating activities increased by 9.2% to $36,457 for the three months ended March 31, 2025, compared to $33,388 in 2024[95] - Cash flows used in investing activities decreased by 12.3% to $(5,912) in 2025 from $(6,739) in 2024[95] - Total investments in property, plant, and equipment and intangible assets were $5,559 for the three months ended March 31, 2025, down from $6,910 in 2024[97] Working Capital and Cash Position - Cash and cash equivalents increased to $49,901 as of March 31, 2025, up from $49,515 at December 31, 2024, with $44,380 held by foreign subsidiaries[94] - Working capital rose to $200,684 at March 31, 2025, compared to $156,085 at December 31, 2024, reflecting an increase of $44,599[94] Debt and Dividend Payments - The company borrowed $29,000 in 2025 to fund the 2024 dividend and bonus payments, with total loan payments also amounting to $29,000[98] - Dividend payments increased to $28,263 in the three months ended March 31, 2025, compared to $25,555 in 2024[100] Tax and Liabilities - The effective tax rate for the first quarter of 2025 was 22.7%, up from 21.3% in 2024, primarily due to lower tax benefits from stock-based compensation[91] - The deferred compensation liability was $11,653 as of March 31, 2025, up from $11,470 at December 31, 2024[104] Risk Factors - A 100 basis point change in interest rates would result in an approximate $1,900 increase or decrease in annual interest expense[107] - The company is exposed to foreign currency exchange risk due to the financial condition of foreign subsidiaries being reported in local currencies[108] Future Outlook - The company is actively pursuing additional acquisition candidates and expects to generate sufficient cash flow to fund working capital and necessary capital investments[93]

Financial Data and Key Metrics Changes - The company reported record first quarter consolidated revenue of $251 million, a 4.5% increase year-over-year [12][13] - GAAP earnings from operations increased by 22.4% compared to the prior year [13][18] - Adjusted EBITDA reached a record $66 million, up 8.9%, with an adjusted EBITDA margin of 26.5%, an increase of 106 basis points from the prior year [13][17] - Consolidated net income for the quarter was $37 million, a 27.8% increase, translating to diluted net earnings per share of $1.13, up 27% year-over-year [13][19] Business Segment Performance - The Human Nutrition and Health segment generated record sales of $158 million, a 3.7% increase, with earnings from operations of $38 million, up 14.2% [19][20] - The Animal Nutrition and Health segment reported sales of $57 million, a 6.2% increase, with earnings from operations of $5 million, up 154.2% [21][22] - The Specialty Products segment delivered sales of $33 million, a 5.3% increase, with earnings from operations of $10 million, up 16.9% [22][23] Market Data and Key Metrics Changes - The company imports approximately $100 million of raw materials annually, with less than $15 million from China, indicating a diversified supply chain [7][8] - The company exports approximately $90 million annually, with current tariffs having an immaterial impact on exports [10][11] Company Strategy and Industry Competition - The company is well-positioned to manage through the changing global trade environment, leveraging a strong manufacturing and sales model [6][12] - The management emphasized the ability to raise prices to offset tariff impacts, similar to actions taken during the post-COVID inflationary period [9][30] - The company is focusing on organic growth and evaluating M&A opportunities, with a cautious approach due to current market uncertainties [50][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience amid evolving trade conditions, noting healthy demand across end markets [11][12] - The company is monitoring potential recessionary impacts on overall demand but currently sees no signs of demand weakening [11][31] - The management remains optimistic about growth in the Human Nutrition and Health segment, particularly in the Food Ingredients and Nutrients businesses [20][60] Other Important Information - The effective tax rate for the first quarter was 22.7%, with expectations for the full year to be in the range of 22% to 22.5% [18][53] - The company closed the quarter with $50 million in cash on the balance sheet and free cash flow of $31 million [19] Q&A Session Summary Question: Impact of tariffs and trade war - Management feels well-positioned to manage tariff impacts, expecting to offset half of the costs through supply chain flexibility and pricing actions [29][30] Question: Update on European Chinese dumping ruling - The company has filed an antidumping case accepted by the EU, expecting a response in three to six months, with confidence in the case's strength [35][36] Question: Tailwinds for 2025 - Management highlighted growth in choline and vitamin K2 categories, with strong demand and marketing efforts contributing to performance [40][42] Question: Debt repayment strategy - The company prioritizes organic growth investments, with ongoing debt repayment and potential share buybacks considered [50][52] Question: Breakdown of Human Nutrition and Health segment growth - The food ingredient business grew faster than the nutrients business, indicating strong performance across various product lines [58][60]

Core Viewpoint - Blachem (BCPC) reported quarterly earnings of $1.22 per share, missing the Zacks Consensus Estimate of $1.25 per share, but showing an increase from $0.89 per share a year ago, indicating a -2.40% earnings surprise [1] Financial Performance - The company posted revenues of $250.52 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.38% and up from $239.66 million year-over-year [2] - Over the last four quarters, Blachem has surpassed consensus EPS estimates only once [2] Stock Performance - Blachem shares have declined approximately 2.9% since the beginning of the year, while the S&P 500 has decreased by 8.6% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.28 on revenues of $252.28 million, and for the current fiscal year, it is $5.10 on revenues of $1.02 billion [7] - The estimate revisions trend for Blachem is currently favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Chemical - Specialty industry, to which Blachem belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting that the industry outlook may impact stock performance [8]

Financial Performance - Record net sales of $250.5 million, an increase of $10.9 million, or 4.5%, compared to the prior year quarter[5] - GAAP net earnings were $37.1 million, an increase of 27.8% from the prior year quarter[5] - Record Adjusted EBITDA was $66.3 million, an increase of 8.9% from the prior year quarter[5] - Net earnings for Q1 2025 were $37,053,000, a 28% increase from $28,986,000 in Q1 2024[21] - Adjusted net earnings for Q1 2025 were $40,017,000, compared to $33,584,000 in Q1 2024, representing a 19% increase[25] - EBITDA for Q1 2025 was $61,957,000, up from $55,273,000 in Q1 2024, indicating a 12% increase[27] Segment Performance - Human Nutrition and Health segment generated record sales of $158.5 million, an increase of $5.7 million, or 3.7% compared to the prior year quarter[8] - Animal Nutrition and Health segment generated quarterly sales of $57.3 million, an increase of $3.4 million, or 6.2% compared to the prior year quarter[8] - Specialty Products segment generated quarterly sales of $33.3 million, an increase of $1.7 million, or 5.3% compared to the prior year quarter[9] Cash Flow and Assets - Cash flows from operations were $36.5 million, with free cash flow of $31.0 million[12] - Free cash flow for Q1 2025 was $31,036,000, an increase from $26,815,000 in Q1 2024, marking an 15% growth[30] - Total assets as of March 31, 2025, were $1,617.6 million, an increase from $1,575.4 million at the end of 2024[19] Margins - Consolidated quarterly gross margin of $88.2 million increased by $6.7 million, or 8.2%, compared to the prior year comparable period[10] - Adjusted gross margin for Q1 2025 was $88,861,000, up from $82,218,000 in Q1 2024, reflecting a 8% increase[25] Tax and Dividends - The effective income tax rate for Q1 2025 was 22.7%, compared to 21.3% in Q1 2024[28] - Dividends paid in Q1 2025 totaled $28,263,000, compared to $25,555,000 in Q1 2024, reflecting an increase of 11%[21] Other Information - The company launched a new corporate website to enhance user experience and product insights[5] - Cash and cash equivalents at the end of Q1 2025 were $49,901,000, compared to $60,349,000 at the end of Q1 2024[21] - Capital expenditures for Q1 2025 were $5,559,000, down from $6,910,000 in Q1 2024, a decrease of 20%[21] - Proceeds from stock options exercised in Q1 2025 were $1,668,000, a significant decrease from $8,791,000 in Q1 2024[21]

Core Insights - Balchem Corporation published its 2024 Sustainability Report, highlighting its commitment to sustainability initiatives aimed at improving health and well-being globally [1][2] Sustainability Goals - The company aims to reduce greenhouse gas emissions and water usage by 25% by 2030, with a notable achievement of a 32% reduction in GHG emissions from the 2020 baseline in 2024 [2][4] - Water withdrawal was reduced by 15% in 2024 compared to the 2020 baseline, indicating progress towards the water usage reduction goal [4] Business Segments - Balchem operates in three business segments: Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products, providing specialized ingredients for various industries [3] Alignment with Global Initiatives - The company celebrated its fourth anniversary of commitment to the UN Global Compact, aligning with principles on human rights, labor, environment, and anti-corruption [4] - Approximately 70% of Balchem's revenue supports UN Sustainable Development Goals, particularly SDG 2 (zero hunger), SDG 3 (good health and well-being), and SDG 12 (responsible consumption and production) [4] Employee Safety and Product Quality - In 2024, Balchem improved its Total Recordable Incident Rate (TRIR) to 0.57 and Lost Time Incident Rate (LTIR) to 0.21, reflecting enhanced safety measures and training [4]

Core Viewpoint - Blachem (BCPC) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - Blachem is projected to earn $5.10 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 29.8% [8]. - Over the past three months, the Zacks Consensus Estimate for Blachem has risen by 9.8% [8]. Investment Implications - The upgrade to Zacks Rank 1 suggests that Blachem's underlying business is improving, which could lead to increased buying pressure and a rise in stock price [5][10]. - The Zacks Rank system maintains a balanced distribution of ratings, with only the top 5% of stocks receiving a 'Strong Buy' rating, indicating Blachem's strong position among its peers [9][10].

Company Overview - Balchem Corporation develops, manufactures, and markets specialty ingredients aimed at improving health and well-being across various industries globally [4] - The company operates through three business segments: Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products [4] - The Human Nutrition & Health segment focuses on customized food and beverage ingredient systems and key nutrients for food, supplement, and pharmaceutical applications [4] - The Animal Nutrition & Health segment supplies products to various animal health markets [4] - Specialty Products offers specialty-packaged chemicals for healthcare and other industries, as well as chelated minerals for the agricultural market [4] Upcoming Events - A conference call is scheduled for April 24, 2025, at 11:00 AM Eastern Time to review the first quarter 2025 results [1] - First quarter results will be published before the market opens on the same day [2] - The conference call will be accessible via toll-free and local dial-in numbers, with a replay available for a limited time after the call [3]