Balchem Corporation Reports First Quarter 2025 Financial Results
Balchem (NASDAQ: BCPC) reported strong Q1 2025 financial results with record net sales of $250.5 million, up 4.5% year-over-year. The company achieved net earnings of $37.1 million, a 27.8% increase, and record adjusted EBITDA of $66.3 million, up 8.9% from the prior year quarter.
All three segments - Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products - showed sales and earnings growth. The Human Nutrition segment led with record sales of $158.5 million, while gross margin improved to 35.2%, up 120 basis points. Operating expenses decreased to $37.2 million, and free cash flow was $31.0 million.
The company maintains a strong financial position with $49.9 million in cash and continues to invest in growth initiatives despite global trade uncertainties.
Balchem (NASDAQ: BCPC) ha riportato risultati finanziari solidi per il primo trimestre 2025 con vendite nette record di 250,5 milioni di dollari, in crescita del 4,5% su base annua. L'azienda ha raggiunto un utile netto di 37,1 milioni di dollari, in aumento del 27,8%, e un EBITDA rettificato record di 66,3 milioni di dollari, in crescita dell'8,9% rispetto allo stesso trimestre dell'anno precedente.
Tutti e tre i segmenti - Nutrizione e Salute Umana, Nutrizione e Salute Animale e Prodotti Speciali - hanno mostrato crescita sia nelle vendite che negli utili. Il segmento Nutrizione Umana ha guidato con vendite record di 158,5 milioni di dollari, mentre il margine lordo è migliorato al 35,2%, con un aumento di 120 punti base. Le spese operative sono diminuite a 37,2 milioni di dollari e il flusso di cassa libero è stato di 31,0 milioni di dollari.
L'azienda mantiene una solida posizione finanziaria con 49,9 milioni di dollari in contanti e continua a investire in iniziative di crescita nonostante le incertezze del commercio globale.
Balchem (NASDAQ: BCPC) reportó sólidos resultados financieros en el primer trimestre de 2025 con ventas netas récord de 250,5 millones de dólares, un aumento del 4,5% interanual. La compañía alcanzó ganancias netas de 37,1 millones de dólares, un incremento del 27,8%, y un EBITDA ajustado récord de 66,3 millones de dólares, un 8,9% más que en el trimestre del año anterior.
Los tres segmentos - Nutrición y Salud Humana, Nutrición y Salud Animal, y Productos Especializados - mostraron crecimiento en ventas y ganancias. El segmento de Nutrición Humana lideró con ventas récord de 158,5 millones de dólares, mientras que el margen bruto mejoró al 35,2%, aumentando 120 puntos básicos. Los gastos operativos disminuyeron a 37,2 millones de dólares y el flujo de caja libre fue de 31,0 millones de dólares.
La empresa mantiene una sólida posición financiera con 49,9 millones de dólares en efectivo y continúa invirtiendo en iniciativas de crecimiento a pesar de las incertidumbres del comercio global.
Balchem (NASDAQ: BCPC)은 2025년 1분기 강력한 재무 실적을 발표했으며, 순매출 2억 5,050만 달러로 사상 최고치를 기록하며 전년 대비 4.5% 증가했습니다. 회사는 순이익 3,710만 달러를 달성하여 27.8% 증가했으며, 조정 EBITDA는 6,630만 달러로 사상 최고치를 기록해 전년 동기 대비 8.9% 상승했습니다.
인간 영양 및 건강, 동물 영양 및 건강, 특수 제품 등 세 개 부문 모두 매출과 이익이 성장했습니다. 인간 영양 부문이 1억 5,850만 달러의 기록적인 매출을 주도했으며, 총 마진은 35.2%로 120 베이시스 포인트 상승했습니다. 영업비용은 3,720만 달러로 감소했고, 자유 현금 흐름은 3,100만 달러였습니다.
회사는 4,990만 달러의 현금을 보유한 강력한 재무 상태를 유지하며, 글로벌 무역 불확실성에도 불구하고 성장 이니셔티브에 계속 투자하고 있습니다.
Balchem (NASDAQ : BCPC) a annoncé de solides résultats financiers pour le premier trimestre 2025 avec des ventes nettes record de 250,5 millions de dollars, en hausse de 4,5 % par rapport à l'année précédente. La société a réalisé un bénéfice net de 37,1 millions de dollars, soit une augmentation de 27,8 %, et un EBITDA ajusté record de 66,3 millions de dollars, en hausse de 8,9 % par rapport au trimestre précédent.
Les trois segments – Nutrition et Santé Humaine, Nutrition et Santé Animale, et Produits Spécialisés – ont affiché une croissance des ventes et des bénéfices. Le segment Nutrition Humaine a mené avec des ventes record de 158,5 millions de dollars, tandis que la marge brute s'est améliorée à 35,2 %, soit une hausse de 120 points de base. Les charges d'exploitation ont diminué à 37,2 millions de dollars et le flux de trésorerie disponible s'est élevé à 31,0 millions de dollars.
L'entreprise maintient une solide position financière avec 49,9 millions de dollars en liquidités et continue d'investir dans des initiatives de croissance malgré les incertitudes du commerce mondial.
Balchem (NASDAQ: BCPC) meldete starke Finanzergebnisse für das erste Quartal 2025 mit rekordverdächtigen Nettoumsätzen von 250,5 Millionen US-Dollar, was einem Anstieg von 4,5 % gegenüber dem Vorjahr entspricht. Das Unternehmen erzielte Nettoeinnahmen von 37,1 Millionen US-Dollar, eine Steigerung von 27,8 %, sowie ein rekordverdächtiges bereinigtes EBITDA von 66,3 Millionen US-Dollar, das um 8,9 % gegenüber dem Vorjahresquartal zunahm.
Alle drei Segmente – Human Nutrition and Health, Animal Nutrition and Health sowie Specialty Products – verzeichneten Umsatz- und Gewinnsteigerungen. Das Segment Human Nutrition führte mit Rekordumsätzen von 158,5 Millionen US-Dollar, während die Bruttomarge sich um 120 Basispunkte auf 35,2 % verbesserte. Die Betriebskosten sanken auf 37,2 Millionen US-Dollar, und der freie Cashflow betrug 31,0 Millionen US-Dollar.
Das Unternehmen hält eine starke Finanzposition mit 49,9 Millionen US-Dollar in bar und investiert trotz globaler Handelsunsicherheiten weiterhin in Wachstumsinitiativen.
- Record quarterly net sales of $250.5M, up 4.5% YoY
- Net earnings increased 27.8% to $37.1M
- Record adjusted EBITDA of $66.3M, up 8.9%
- Gross margin improved 120 basis points to 35.2%
- Operating expenses decreased by $2.7M
- Growth across all three business segments
- Higher effective tax rate at 22.7% vs 21.3% in prior year
- Revolving loan remains at $190M
Insights
Balchem delivers impressive Q1 with across-the-board growth, record revenues, and substantial margin expansion, demonstrating operational strength amid market uncertainties.
Balchem has kicked off 2025 with exceptional financial performance across all business segments. The
The gross margin expansion of
All three business segments showed remarkable strength: Human Nutrition and Health (their largest segment) achieved record sales of
The balance sheet remains rock-solid with
Management's reference to "global trade uncertainties" warrants attention, though the company appears well-positioned to navigate potential headwinds given its diversified business model and multiple growth drivers across segments. The continued execution of strategic initiatives alongside the operational outperformance demonstrates management's effectiveness at balancing short-term results with long-term growth objectives.
Balchem demonstrates excellent cross-segment execution with strategic digital initiatives enhancing market penetration while maintaining strong financial discipline.
Balchem's Q1 results reveal more than just financial strength—they showcase a well-executed multi-segment strategy with each business unit contributing meaningfully to overall performance. The balanced growth across Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products creates a diversified revenue stream that reduces market-specific risks.
The launch of Balchem's new corporate website alongside dedicated brand sites for Albion® Minerals, K2VITAL™, Optifolin+®, OptiMSM®, and VitaCholine® represents a strategic digital transformation with two critical dimensions. First, the improved navigation and comprehensive product information streamline the B2B customer journey. Second, and perhaps more significant, the increased end-consumer orientation indicates Balchem is strategically building brand awareness to drive market penetration—essentially creating pull-through demand rather than relying solely on push strategies.
The company's release of its 2024 Sustainability Report aligns with increasing market demands for ESG transparency and demonstrates foresight in addressing evolving stakeholder expectations. This proactive approach to sustainability reporting positions Balchem favorably with institutional investors who increasingly incorporate ESG metrics into investment decisions.
From a capital allocation perspective, management has maintained an impressive balance between shareholder returns (
The reference to "changing global trade outlook" suggests management is monitoring potential supply chain or tariff challenges, but their commitment to remaining "nimble and flexible" demonstrates appropriate strategic adaptability. With all segments growing despite these uncertainties, Balchem's diversified business model appears to provide sufficient operational resilience.
MONTVALE, N.J., April 24, 2025 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ: BCPC) reported today financial results for its 2025 fiscal first quarter ended March 31, 2025. For the quarter, the Company reported net sales of
Ted Harris, Chairman, President and CEO of Balchem said, “The first quarter was an excellent start to the year for Balchem, with sales and earnings growth in all three segments. We delivered record net sales and adjusted EBITDA, strong net earnings, and solid first quarter cash flows.”
First Quarter 2025 Financial Highlights:
- Record net sales of
$250.5 million , an increase of$10.9 million , or4.5% , compared to the prior year quarter. - GAAP net earnings were
$37.1 million , an increase of27.8% , from the prior year quarter. - Record Adjusted EBITDA was
$66.3 million , an increase of8.9% , from the prior year quarter. - GAAP earnings per share of
$1.13 compared to$0.89 in the prior year quarter and adjusted earnings per share(a) of$1.22 compared to$1.03 in the prior year quarter. - Cash flows from operations were
$36.5 million , with free cash flow(a) of$31.0 million . - Sales and earnings from operations growth in all three of our segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.
Recent Highlights:
- In the first quarter, we launched Balchem's new corporate website. This innovative platform enhances user experience and provides comprehensive insights into our products and innovations. The new site features improved navigation, detailed product information, and resources for all stakeholders, including investors, customers, and employees. Additionally, we have introduced new product brand sites for Albion® Minerals, K2VITAL™, Optifolin+®, OptiMSM®, and VitaCholine®, which have an increased end-consumer orientation to aid in our efforts to build awareness and drive market penetration.
- On April 22, we released our 2024 Sustainability Report, highlighting our sustainability initiatives and accomplishments. Guided by our core values and our vision of making the world a healthier place, our Sustainability Report demonstrates our commitment to bringing innovative solutions for global health and nutrition needs, and to operate with excellence as strong stewards of our employees, customers, shareholders, and communities.
Mr. Harris said, “I am very pleased with how we have started 2025, both financially and strategically, with record Q1 financial results and solid progress being made on our strategic growth initiatives.”
Mr. Harris added, “These results highlight the strength and resilience of our business model which will undoubtedly serve us well as we maneuver through the changing global trade outlook that is impacting markets. We believe we are well positioned to continue to drive growth through this market volatility and we will remain nimble and flexible to adjust accordingly as market conditions evolve.”
| Results for Period Ended March 31, 2025 (unaudited) (Dollars in thousands, except per share data) | ||||||
| Three Months Ended March 31, | ||||||
| 2025 | 2024 | |||||
| Net sales | $ | 250,519 | $ | 239,659 | ||
| Gross margin | 88,168 | 81,514 | ||||
| Operating expenses | 37,153 | 39,838 | ||||
| Earnings from operations | 51,015 | 41,676 | ||||
| Interest and other expenses | 3,075 | 4,826 | ||||
| Earnings before income tax expense | 47,940 | 36,850 | ||||
| Income tax expense | 10,887 | 7,864 | ||||
| Net earnings | $ | 37,053 | $ | 28,986 | ||
| Diluted net earnings per common share | $ | 1.13 | $ | 0.89 | ||
| Adjusted EBITDA(a) | $ | 66,290 | $ | 60,866 | ||
| Adjusted net earnings(a) | $ | 40,017 | $ | 33,584 | ||
| Adjusted net earnings per common share(a) | $ | 1.22 | $ | 1.03 | ||
| Shares used in the calculations of diluted and adjusted net earnings per common share | 32,807 | 32,627 | ||||
| (a) | See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures. |
Financial Results for the First Quarter of 2025:
The Human Nutrition and Health segment generated record sales of
The Animal Nutrition and Health segment generated quarterly sales of
The Specialty Products segment generated quarterly sales of
Consolidated quarterly gross margin of
Net interest expense was
First quarter cash flows provided by operating activities were
Ted Harris said, “The Balchem team delivered another strong quarter in Q1 of 2025. We remain confident in the long-term growth outlook for our company, despite the current global trade uncertainties, as we continue to focus on progressing our strategic growth initiatives over the course of the remainder of 2025 and beyond.”
Quarterly Conference Call
A quarterly conference call will be held on Thursday, April 24, 2025, at 11:00 AM Eastern Time (ET) to review first quarter 2025 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 Thursday, May 8, 2025. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13753034.
Segment Information
Balchem Corporation reports three business segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. The Human Nutrition and 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 and Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged performance gases 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 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. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, dividends, share repurchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These statements are based on the Company's currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties - many of which are beyond the Company’s control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Important factors and other risks that may affect the Company's business or that could cause actual results to differ materially are included in filings the Company makes with the U.S. Securities and Exchange Commission from time to time, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K, and in its 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. The Company undertakes 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)
($ in 000’s)
| Business Segment Net Sales: | Three Months Ended March 31, | |||||
| 2025 | 2024 | |||||
| Human Nutrition and Health | $ | 158,457 | $ | 152,744 | ||
| Animal Nutrition and Health | 57,277 | 53,921 | ||||
| Specialty Products | 33,275 | 31,613 | ||||
| Other and Unallocated (b) | 1,510 | 1,381 | ||||
| Total | $ | 250,519 | $ | 239,659 | ||
| Business Segment Earnings Before Income Taxes: | Three Months Ended March 31, | |||||||
| 2025 | 2024 | |||||||
| Human Nutrition and Health | $ | 37,974 | $ | 33,257 | ||||
| Animal Nutrition and Health | 5,236 | 2,060 | ||||||
| Specialty Products | 9,585 | 8,199 | ||||||
| Other and Unallocated (b) | (1,780 | ) | (1,840 | ) | ||||
| Interest and other expenses | (3,075 | ) | (4,826 | ) | ||||
| Total | $ | 47,940 | $ | 36,850 | ||||
| (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 transaction and integration costs of | ||||||||
| Selected Balance Sheet Items | ||||||
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||
| (unaudited) | ||||||
| Cash and Cash Equivalents | $ | 49,901 | $ | 49,515 | ||
| Accounts Receivable, net | 130,447 | 119,662 | ||||
| Inventories | 144,926 | 130,802 | ||||
| Other Current Assets | 14,965 | 13,791 | ||||
| Total Current Assets | 340,239 | 313,770 | ||||
| Property, Plant and Equipment, net | 283,753 | 282,154 | ||||
| Goodwill | 793,087 | 780,030 | ||||
| Intangible Assets with Finite Lives, net | 165,965 | 165,050 | ||||
| Right of Use Assets | 17,276 | 17,050 | ||||
| Other Assets | 17,235 | 17,317 | ||||
| Total Non-current Assets | 1,277,316 | 1,261,601 | ||||
| Total Assets | $ | 1,617,555 | $ | 1,575,371 | ||
| Current Liabilities | $ | 139,555 | $ | 157,685 | ||
| Revolving Loan | 190,000 | 190,000 | ||||
| Deferred Income Taxes | 45,217 | 43,722 | ||||
| Other Long-Term Obligations | 34,082 | 34,051 | ||||
| Total Liabilities | 408,854 | 425,458 | ||||
| Stockholders' Equity | 1,208,701 | 1,149,913 | ||||
| Total Liabilities and Stockholders' Equity | $ | 1,617,555 | $ | 1,575,371 | ||
| Balchem Corporation Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 37,053 | $ | 28,986 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 11,014 | 13,668 | ||||||
| Stock compensation expense | 3,810 | 4,750 | ||||||
| Other adjustments | (105 | ) | (949 | ) | ||||
| Changes in assets and liabilities | (15,315 | ) | (13,067 | ) | ||||
| Net cash provided by operating activities | 36,457 | 33,388 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures and intangible assets acquired | (5,559 | ) | (6,910 | ) | ||||
| Cash paid for acquisitions, net of cash acquired | (323 | ) | — | |||||
| Proceeds from the sale of assets | — | 213 | ||||||
| Investment in affiliates | (30 | ) | (42 | ) | ||||
| Net cash used in investing activities | (5,912 | ) | (6,739 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving loan | 29,000 | 26,000 | ||||||
| Principal payments on revolving loan | (29,000 | ) | (34,000 | ) | ||||
| Principal payments on finance leases | (49 | ) | (57 | ) | ||||
| Proceeds from stock options exercised | 1,668 | 8,791 | ||||||
| Dividends paid | (28,263 | ) | (25,555 | ) | ||||
| Repurchases of common stock | (5,325 | ) | (5,202 | ) | ||||
| Net cash used in financing activities | (31,969 | ) | (30,023 | ) | ||||
| Effect of exchange rate changes on cash | 1,810 | (724 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 386 | (4,098 | ) | |||||
| Cash and cash equivalents, beginning of period | 49,515 | 64,447 | ||||||
| Cash and cash equivalents, end of period | $ | 49,901 | $ | 60,349 | ||||
Non-GAAP Financial Information
In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures in this press release include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, and free cash flow. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain equity compensation, nonqualified deferred compensation plan expense (income), and certain one-time or unusual transactions. Detailed non-GAAP adjustments are described in the reconciliation tables below and also explained in the related footnotes. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Investors should not consider non-GAAP measures as alternatives to the related GAAP measures.
Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Table 1
(unaudited)
| Reconciliation of Non-GAAP Measures to GAAP (Dollars in thousands, except per share data) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Reconciliation of adjusted gross margin | ||||||||
| GAAP gross margin | $ | 88,168 | $ | 81,514 | ||||
| Amortization of intangible assets and finance leases (1) | 693 | 704 | ||||||
| Adjusted gross margin | $ | 88,861 | $ | 82,218 | ||||
| Reconciliation of adjusted earnings from operations | ||||||||
| GAAP earnings from operations | $ | 51,015 | $ | 41,676 | ||||
| Amortization of intangible assets and finance leases (1) | 4,112 | 6,402 | ||||||
| Transaction and integration costs (2) | 489 | 440 | ||||||
| Nonqualified deferred compensation plan expense (3) | 34 | 403 | ||||||
| Adjusted earnings from operations | $ | 55,650 | $ | 48,921 | ||||
| Reconciliation of adjusted net earnings | ||||||||
| GAAP net earnings | $ | 37,053 | $ | 28,986 | ||||
| Amortization of intangible assets and finance leases (1) | 4,184 | 6,474 | ||||||
| Transaction and integration costs (2) | 489 | 440 | ||||||
| Income tax adjustment (4) | (1,709 | ) | (2,316 | ) | ||||
| Adjusted net earnings | $ | 40,017 | $ | 33,584 | ||||
| Adjusted net earnings per common share - diluted | $ | 1.22 | $ | 1.03 | ||||
Table 2
(unaudited)
| Reconciliation of GAAP Net Earnings to EBITDA and to Adjusted EBITDA (Dollars in thousands) | ||||||
| Three Months Ended March 31, | ||||||
| 2025 | 2024 | |||||
| Net earnings - as reported | $ | 37,053 | $ | 28,986 | ||
| Add back: | ||||||
| Provision for income taxes | 10,887 | 7,864 | ||||
| Interest and other expenses | 3,075 | 4,826 | ||||
| Depreciation and amortization | 10,942 | 13,597 | ||||
| EBITDA | 61,957 | 55,273 | ||||
| Add back: | ||||||
| Non-cash compensation expense related to equity awards | 3,810 | 4,750 | ||||
| Transaction and integration costs (2) | 489 | 440 | ||||
| Nonqualified deferred compensation plan expense (3) | 34 | 403 | ||||
| Adjusted EBITDA | $ | 66,290 | $ | 60,866 | ||
Table 3
(unaudited)
| Reconciliation of GAAP Effective Income Tax Rate to Non-GAAP Effective Income Tax Rate (Dollars in thousands) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2025 | Effective Tax Rate | 2024 | Effective Tax Rate | |||||||||
| GAAP Income Tax Expense | $ | 10,887 | 22.7 | % | $ | 7,864 | 21.3 | % | ||||
| Impact of ASU 2016-09 (5) | 590 | 708 | ||||||||||
| Adjusted Income Tax Expense | $ | 11,477 | 23.9 | % | $ | 8,572 | 23.3 | % | ||||
Table 4
(unaudited)
| Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Dollars in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by operating activities | $ | 36,457 | $ | 33,388 | ||||
| Capital expenditures and proceeds from the sale of assets | (5,421 | ) | (6,573 | ) | ||||
| Free cash flow | $ | 31,036 | $ | 26,815 | ||||
| (1) Amortization of intangible assets and finance leases: Amortization of intangible assets and finance leases consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, capitalized loan issuance costs, other intangibles acquired primarily in connection with business combinations, and finance leases. We record expense relating to the amortization of these intangibles and finance leases in our GAAP financial statements. Amortization expenses for our intangible assets and finance leases are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. |
| (2) Transaction and integration costs: Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with transactions that are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. |
| (3) Nonqualified deferred compensation plan (income) expense: Gains and losses on rabbi trust assets related to our nonqualified deferred compensation plan are recorded in other (income) expense while the offsetting increases or decreases to the deferred compensation liability are recorded within earnings from operations. The increases and decreases in the deferred compensation liability are driven by market volatility and are not a true reflection of company performance. We believe excluding these amounts from our non-GAAP financial measures is useful to investors because these items are inconsistent in amount based on market conditions causing comparison of current and historical financial results to be difficult. |
| (4) Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the taxable and deductible non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” and uses our non-GAAP effective rate applied to both our GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3 for the calculation of our non-GAAP effective tax rate. |
| (5) Impact of ASU 2016-09: The primary impact of ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"), was the recognition during the three months ended March 31, 2025 and 2024, of excess tax benefits as a reduction to the provision for income taxes and the classification of these excess tax benefits in operating activities in the consolidated statement of cash flows instead of financing activities. Management excludes this item for the purpose of calculating Adjusted Income Tax Expense. We believe that excluding the item in our non-GAAP financial measures is useful to investors because it is inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. |
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