Balchem(BCPC) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Third Quarter 2025 Financial Overview Balchem Corporation reported record Q3 2025 financial results, with net sales up 11.5% to $267.6 million, GAAP net earnings up 19.1% to $40.3 million, and adjusted EBITDA up 11.0% to $71.4 million - Balchem Corporation delivered record financial results in Q3 2025, with strong growth across all three reporting segments, driven by market penetration of specialty nutrients and favorable 'better for you' trends[1][4] Q3 2025 Key Financial Highlights (YoY Growth) | Metric | Q3 2025 Value (in millions USD) | YoY Change (in millions USD) | YoY Growth % | | :----------------------------- | :------------ | :--------- | :----------- | | Net Sales | $267.6 million | +$27.6 million | 11.5% | | GAAP Net Earnings | $40.3 million | N/A | 19.1% | | Adjusted EBITDA | $71.4 million | N/A | 11.0% | | GAAP EPS | $1.24 | N/A | N/A | | Adjusted EPS | $1.35 | N/A | N/A | | Cash Flows from Operations | $65.6 million | N/A | N/A | | Free Cash Flow | $50.7 million | N/A | N/A | Recent Strategic and Operational Highlights Balchem made significant strategic progress, securing approvals for a new microencapsulation facility, publishing five new research studies including a choline 'biomarker' study, and reducing net debt to $88.9 million through strong cash flows - Balchem received approvals for a new state-of-the-art food ingredient and nutraceutical microencapsulation manufacturing facility in Orange County, NY, projected to more than double capacity for fast-growing microencapsulation technologies[4] - Five new sponsored research studies were published in Q3, including a significant choline 'biomarker' study that successfully identified choline and betaine concentrations in plasma as predictors of dietary choline intake in healthy humans[4] - Strong cash flows facilitated net repayments of $36.0 million on revolving debt, bringing net debt to $88.9 million and an overall leverage ratio of 0.3 times[4] Consolidated Financial Results Income Statement Analysis Balchem reported Q3 2025 consolidated net sales of $267.6 million, gross margin of $95.5 million, and net earnings of $40.3 million, with year-to-date net sales reaching $773.5 million Consolidated Income Statement Highlights (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (in thousands USD) | Three Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2025 (in thousands USD) | Nine Months Ended Sep 30, 2024 (in thousands USD) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Sales | $267,558 | $239,940 | $773,544 | $713,680 | | Gross Margin | $95,453 | $85,361 | $276,734 | $249,869 | | Earnings from Operations | $54,579 | $47,992 | $157,036 | $135,465 | | Net Earnings | $40,289 | $33,837 | $115,620 | $94,892 | | Diluted Net Earnings Per Common Share | $1.24 | $1.03 | $3.54 | $2.90 | | Adjusted EBITDA | $71,447 | $64,379 | $206,961 | $187,515 | | Adjusted Net Earnings Per Common Share | $1.35 | $1.13 | $3.84 | $3.25 | Segment Performance All three business segments—Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products—reported sales and earnings growth in Q3 2025, contributing to the company's overall strong performance - All three reporting segments (Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products) experienced growth in both sales and earnings from operations during the third quarter[4][7][8] Human Nutrition and Health The Human Nutrition and Health segment achieved record Q3 2025 sales of $174.1 million, a 14.3% increase, with earnings from operations growing 14.8% to $40.8 million, driven by nutrient and food ingredient sales Human Nutrition and Health Segment Performance (Q3 2025 vs 2024) | Metric | Q3 2025 Value (in millions USD) | Q3 2024 Value (in millions USD) | YoY Change (in millions USD) | YoY Growth % | | :-------------------------------- | :------------ | :------------ | :--------- | :----------- | | Sales | $174.1 million | $152.3 million | +$21.8 million | 14.3% | | Earnings from Operations | $40.8 million | $35.6 million | +$5.3 million | 14.8% | | Adjusted Earnings from Operations | $44.1 million | $39.0 million | N/A | 13.2% | - The increase in Human Nutrition and Health sales was driven by higher sales within both the nutrients business and the food ingredients and solutions businesses[7] Animal Nutrition and Health The Animal Nutrition and Health segment reported Q3 sales of $56.4 million, up 6.6%, driven by increased sales in ruminant and monogastric markets, with earnings from operations growing 5.2% to $3.7 million Animal Nutrition and Health Segment Performance (Q3 2025 vs 2024) | Metric | Q3 2025 Value (in millions USD) | Q3 2024 Value (in millions USD) | YoY Change (in millions USD) | YoY Growth % | | :-------------------------------- | :------------ | :------------ | :--------- | :----------- | | Sales | $56.4 million | $52.9 million | +$3.5 million | 6.6% | | Earnings from Operations | $3.7 million | $3.5 million | +$0.2 million | 5.2% | | Adjusted Earnings from Operations | $4.0 million | $4.0 million | N/A | 0.0% | - Sales growth in the Animal Nutrition and Health segment was driven by higher sales in both the ruminant and monogastric species markets[7] Specialty Products The Specialty Products segment generated Q3 sales of $35.7 million, a 7.5% increase, driven by performance gases and plant nutrition, with record earnings from operations rising 9.7% to $11.5 million Specialty Products Segment Performance (Q3 2025 vs 2024) | Metric | Q3 2025 Value (in millions USD) | Q3 2024 Value (in millions USD) | YoY Change (in millions USD) | YoY Growth % | | :-------------------------------- | :------------ | :------------ | :--------- | :----------- | | Sales | $35.7 million | $33.2 million | +$2.5 million | 7.5% | | Earnings from Operations | $11.5 million | $10.5 million | N/A | 9.7% | | Adjusted Earnings from Operations | $12.7 million | $11.7 million | N/A | 8.8% | - Sales growth in the Specialty Products segment was due to higher sales in both the performance gases and plant nutrition businesses[8] Other Financial Details Consolidated gross margin increased 11.8% to $95.5 million, operating expenses rose $3.5 million, net interest expense decreased to $2.6 million, and the effective tax rate was 22.6% due to lower state taxes Consolidated Gross Margin, Operating Expenses, Interest, and Tax Rate (Q3 2025 vs 2024) | Metric | Q3 2025 Value (in millions USD) | Q3 2024 Value (in millions USD) | YoY Change (in millions USD) | YoY Growth % | | :-------------------------------- | :------------ | :------------ | :--------- | :----------- | | Gross Margin | $95.5 million | $85.4 million | +$10.1 million | 11.8% | | Gross Margin as % of Sales | 35.7% | 35.6% | +0.1% | N/A | | Operating Expenses | $40.9 million | $37.4 million | +$3.5 million | N/A | | Net Interest Expense | $2.6 million | $4.1 million | -$1.5 million | N/A | | Effective Tax Rate | 22.6% | 22.9% | -0.3% | N/A | - Operating expenses increased primarily due to an increase in professional services and higher compensation-related costs[9] - The decrease in interest expense was primarily due to lower outstanding borrowings, and the lower effective tax rate was primarily due to certain lower state taxes[10] Financial Position and Cash Flows Balance Sheet As of September 30, 2025, Balchem's total assets increased to $1,661.0 million, with cash and cash equivalents rising to $65.1 million and stockholders' equity increasing to $1,297.9 million Selected Balance Sheet Items (September 30, 2025 vs December 31, 2024) | Metric | Sep 30, 2025 (in thousands USD) | Dec 31, 2024 (in thousands USD) | | :-------------------------------- | :----------- | :----------- | | Cash and Cash Equivalents | $65,093 | $49,515 | | Accounts Receivable, Net | $131,542 | $119,662 | | Inventories | $132,435 | $130,802 | | Total Current Assets | $343,715 | $313,770 | | Total Assets | $1,661,031 | $1,575,371 | | Current Liabilities | $126,369 | $157,685 | | Revolving Loan | $154,000 | $190,000 | | Total Liabilities | $363,167 | $425,458 | | Stockholders' Equity | $1,297,864 | $1,149,913 | Cash Flow Statement For the nine months ended September 30, 2025, net cash from operating activities increased to $149.3 million, with Q3 free cash flow at $50.7 million, and significant payments for debt repayment, stock repurchases, and capital expenditures Condensed Consolidated Statements of Cash Flows (Nine Months Ended Sep 30, 2025 vs 2024) | Cash Flow Activity | Nine Months Ended Sep 30, 2025 (in thousands USD) | Nine Months Ended Sep 30, 2024 (in thousands USD) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $149,281 | $129,682 | | Net Cash Used in Investing Activities | $(27,475) | $(22,777) | | Net Cash Used in Financing Activities | $(111,562) | $(98,602) | | Increase in Cash and Cash Equivalents | $15,578 | $9,247 | | Cash and Cash Equivalents, End of Period | $65,093 | $73,694 | Free Cash Flow (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (in thousands USD) | Three Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2025 (in thousands USD) | Nine Months Ended Sep 30, 2024 (in thousands USD) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $65,572 | $51,302 | $149,281 | $129,682 | | Capital Expenditures and Proceeds from Sale of Assets | $(14,891) | $(9,065) | $(26,866) | $(22,240) | | Free Cash Flow | $50,681 | $42,237 | $122,415 | $107,442 | - Significant cash payments during Q3 included net repayments on the revolving loan of $36.0 million, repurchases of common stock of $15.4 million, and capital expenditures and intangible assets acquired of $14.9 million[11] Non-GAAP Financial Measures Non-GAAP Measures Overview Balchem Corporation uses non-GAAP financial measures, including adjusted gross margin, EBITDA, and free cash flow, to provide a clearer understanding of performance by excluding specific adjustments and unusual transactions - Non-GAAP financial measures are used to help understand and compare past and future financial performance, excluding certain business combination accounting adjustments, equity compensation, nonqualified deferred compensation plan expense, and one-time or unusual transactions[21] - The non-GAAP measures disclosed include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and related per diluted share amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, free cash flow, and net debt[21] Reconciliation Tables The report provides detailed reconciliations of various non-GAAP financial measures to their most directly comparable GAAP financial measures, including adjustments for amortization, transaction and integration costs, restructuring costs, impairment charges, nonqualified deferred compensation plan expenses, and income tax adjustments Adjusted Gross Margin, Earnings from Operations, and Net Earnings Reconciliations show adjustments to GAAP gross margin, earnings from operations, and net earnings, primarily for amortization of intangible assets and finance leases, transaction and integration costs, restructuring costs, impairment charges, and nonqualified deferred compensation plan expense Reconciliation of Non-GAAP Measures to GAAP (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (GAAP) (in thousands USD) | Three Months Ended Sep 30, 2025 (Adjusted) (in thousands USD) | Nine Months Ended Sep 30, 2025 (GAAP) (in thousands USD) | Nine Months Ended Sep 30, 2025 (Adjusted) (in thousands USD) | | :------------------------------------ | :------------------------------------- | :--------------------------------------- | :------------------------------------ | :-------------------------------------- | | Gross Margin | $95,453 | $96,192 | $276,734 | $278,890 | | Earnings from Operations | $54,579 | $59,710 | $157,036 | $171,729 | | Net Earnings | $40,289 | $43,982 | $115,620 | $125,560 | | Net Earnings Per Common Share - Diluted | $1.24 | $1.35 | $3.54 | $3.84 | EBITDA and Adjusted EBITDA GAAP net earnings are reconciled to EBITDA by adding back income taxes, interest, and depreciation, with Adjusted EBITDA further including non-cash compensation and various one-time costs Reconciliation of GAAP Net Earnings to EBITDA and Adjusted EBITDA (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (in thousands USD) | Three Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2025 (in thousands USD) | Nine Months Ended Sep 30, 2024 (in thousands USD) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Earnings - as reported | $40,289 | $33,837 | $115,620 | $94,892 | | EBITDA | $66,060 | $58,823 | $190,789 | $172,326 | | Adjusted EBITDA | $71,447 | $64,379 | $206,961 | $187,515 | Effective Income Tax Rate The reconciliation of GAAP effective income tax rate to non-GAAP effective income tax rate primarily adjusts for the impact of ASU 2016-09, which relates to the recognition of excess tax benefits from share-based payments Reconciliation of GAAP to Non-GAAP Effective Income Tax Rate (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (GAAP) (in thousands USD) | Three Months Ended Sep 30, 2025 (Adjusted) (in thousands USD) | Nine Months Ended Sep 30, 2025 (GAAP) (in thousands USD) | Nine Months Ended Sep 30, 2025 (Adjusted) (in thousands USD) | | :------------------------------------ | :------------------------------------- | :--------------------------------------- | :------------------------------------ | :-------------------------------------- | | Income Tax Expense | $11,755 | $11,776 | $33,375 | $34,269 | | Effective Tax Rate | 22.6% | 22.6% | 22.4% | 23.0% | Free Cash Flow Free cash flow is reconciled from net cash provided by operating activities by subtracting capital expenditures and adding proceeds from the sale of assets Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Q3 and YTD 2025 vs 2024) | Metric | Three Months Ended Sep 30, 2025 (in thousands USD) | Three Months Ended Sep 30, 2024 (in thousands USD) | Nine Months Ended Sep 30, 2025 (in thousands USD) | Nine Months Ended Sep 30, 2024 (in thousands USD) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $65,572 | $51,302 | $149,281 | $129,682 | | Capital Expenditures and Proceeds from Sale of Assets | $(14,891) | $(9,065) | $(26,866) | $(22,240) | | Free Cash Flow | $50,681 | $42,237 | $122,415 | $107,442 | Corporate Information Quarterly Conference Call Balchem Corporation will host a quarterly conference call on October 21, 2025, at 11:00 AM ET, with CEO Ted Harris and CFO Martin Bengtsson, to discuss Q3 2025 results - A quarterly conference call to review Q3 2025 results will be held on Tuesday, October 21, 2025, at 11:00 AM Eastern Time (ET)[13] - The call will be hosted by Ted Harris, Chairman, President and CEO, and Martin Bengtsson, CFO, and can be accessed via dial-in or live webcast[13] Segment Descriptions Balchem Corporation operates through three primary business segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products, each serving distinct markets with specialized products and solutions - Balchem Corporation reports three business segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products[14] - The Human Nutrition and Health segment delivers customized food and beverage ingredient systems and key nutrients to the food, supplement, and pharmaceutical industries[14] - The Animal Nutrition and Health segment manufactures and supplies products to numerous animal health markets[14] - The Specialty Products segment provides specialty-packaged performance gases for healthcare and other industries, and chelated minerals to the micronutrient agricultural market[14] Forward-Looking Statements This release contains forward-looking statements about future events, subject to risks and uncertainties that could cause actual results to differ materially, with no obligation for public updates - The release contains forward-looking statements reflecting expectations or beliefs concerning future events, which involve risks and uncertainties[15] - These statements are based on currently available information and assumptions, but actual results could differ materially due to future events, risks, and potentially inaccurate assumptions beyond the company's control[15] - The company undertakes no obligation to publicly update or revise any forward-looking statements[15] Contact Information For further inquiries, contact Jacqueline Yarmolowicz at Balchem Corporation - Contact Jacqueline Yarmolowicz at Balchem Corporation for inquiries (Telephone: 845-326-5600)[16]