Balchem(US:BCPC)2025-07-31 20:17PART I FINANCIAL INFORMATION Financial Statements (unaudited) The unaudited condensed consolidated financial statements show a stronger financial position as of June 30, 2025, compared to year-end 2024, with increased assets, sales, and profitability Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $364,855 | $313,770 | | Total assets | $1,678,247 | $1,575,371 | | Total current liabilities | $138,137 | $157,685 | | Total liabilities | $410,334 | $425,458 | | Total stockholders' equity | $1,267,913 | $1,149,913 | Condensed Consolidated Statements of Earnings Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $255,467 | $234,081 | $505,986 | $473,740 | | Gross margin | $93,113 | $82,994 | $181,281 | $164,508 | | Earnings from operations | $51,442 | $45,797 | $102,457 | $87,473 | | Net earnings | $38,278 | $32,069 | $75,331 | $61,055 | | Net earnings per share - diluted | $1.17 | $0.98 | $2.30 | $1.87 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $83,709 | $78,380 | | Net cash used in investing activities | ($12,533) | ($13,596) | | Net cash used in financing activities | ($60,729) | ($64,210) | | Increase (decrease) in cash | $15,912 | ($709) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported strong performance for Q2 and the first half of 2025, with net sales rising 9.1% and 6.8% respectively, driven by volume and mix growth across all segments Q2 2025 vs Q2 2024 Performance Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $255,467 | $234,081 | 9.1% | | Gross margin | $93,113 | $82,994 | 12.2% | | Earnings from operations | $51,442 | $45,797 | 12.3% | | Net earnings | $38,278 | $32,069 | 19.4% | H1 2025 vs H1 2024 Performance Summary (in thousands) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $505,986 | $473,740 | 6.8% | | Gross margin | $181,281 | $164,508 | 10.2% | | Earnings from operations | $102,457 | $87,473 | 17.1% | | Net earnings | $75,331 | $61,055 | 23.4% | - Sales growth in Q2 2025 was primarily driven by volume and mix, which contributed 8.4% to the Human Nutrition & Health segment's 8.7% growth and 7.7% to the Animal Nutrition & Health segment's 13.1% growth95 - Cash flow from operations increased to $83.7 million in H1 2025 from $78.4 million in H1 2024, mainly due to higher net earnings, with $38.6 million used for stock repurchases and $28.3 million for dividend payments111112113 Segment Results All three business segments reported increased net sales and operating earnings for both the three and six-month periods ended June 30, 2025 Net Sales by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Human Nutrition & Health | $160,773 | $147,928 | 8.7% | $319,230 | $300,672 | 6.2% | | Animal Nutrition & Health | $56,028 | $49,557 | 13.1% | $113,305 | $103,478 | 9.5% | | Specialty Products | $37,185 | $35,094 | 6.0% | $70,460 | $66,707 | 5.6% | Earnings from Operations by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Human Nutrition & Health | $38,342 | $33,367 | 14.9% | $76,316 | $66,624 | 14.5% | | Animal Nutrition & Health | $3,514 | $2,693 | 30.5% | $8,750 | $4,753 | 84.1% | | Specialty Products | $11,269 | $11,228 | 0.4% | $20,854 | $19,427 | 7.3% | - In late June 2025, the European Commission announced provisional anti-dumping duties on choline chloride imports from China, following a complaint lodged by Balchem Italia Srl, which is expected to impact the Animal Nutrition & Health segment90 Liquidity and Capital Resources The company's liquidity position strengthened, with cash and cash equivalents increasing to $65.4 million at June 30, 2025, from $49.5 million at year-end 2024 - Cash and cash equivalents increased by $15.9 million during the first six months of 2025, ending the period at $65.4 million111 Cash Flow Summary - H1 2025 vs H1 2024 (in thousands) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Operating Activities | $83,709 | $78,380 | | Investing Activities | ($12,533) | ($13,596) | | Financing Activities | ($60,729) | ($64,210) | - The company repurchased $38.6 million of common stock in H1 2025, a significant increase from $5.2 million in H1 2024111116 - As of June 30, 2025, the company had $360 million available under its 2022 Credit Agreement115 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from fluctuating interest rates on its revolving loan and from foreign currency exchange rate changes due to its international operations - A 100 basis point increase or decrease in interest rates would result in an approximate $1.9 million change in annual interest expense124 - The company is exposed to foreign currency exchange risk as the financial results of its foreign subsidiaries are translated into U.S. dollars for consolidation125 - The company is exposed to commodity price risks for its primary raw materials and manages these exposures through pricing and operational means124 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025126 - No material changes were made to the internal controls over financial reporting during the quarter ended June 30, 2025127 PART II OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings in the normal course of business, with management not expecting a material adverse effect on its financial position or results - The company is party to various legal proceedings, but management believes the ultimate outcome will not have a material effect on its financial condition76129 - A settlement was reached with the EPA and DOJ in January 2025 regarding alleged violations at the Verona, Missouri facility, involving a $300 thousand civil penalty and other community benefit projects75 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in Risk Factors were identified compared to the Annual Report on Form 10-K for the year ended December 31, 2024130 Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, the company repurchased a total of 204,965 shares through open market purchases and shares withheld for employee tax settlements Share Repurchase Activity - Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1-30, 2025 | 49,616 | $156.24 | | May 1-31, 2025 | 155,055 | $164.24 | | June 1-30, 2025 | 294 | $158.35 | | Second Quarter Total | 204,965 | | - Since the inception of the stock repurchase program in June 1999, a total of 3,379,862 shares have been repurchased out of a total authorization of 3,763,038 shares131 Other Information During the fiscal quarter ended June 30, 2025, no directors or officers of the company adopted, modified, or terminated a Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during Q2 2025132 Exhibits The report includes required certifications from the CEO and CFO pursuant to Rule 13a-14(a) and Section 1350, as well as Inline XBRL data files - Exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL data files133