Balchem Corporation Reports Fourth Quarter and Full Year 2023 Financial Results
- Balchem Corporation (BCPC) reported quarterly net sales of $228.7 million, with net earnings of $26.6 million and adjusted EBITDA of $55.4 million.
- The Human Nutrition and Health segment posted record fourth-quarter sales and earnings, showcasing growth in a challenging market environment.
- Full-year 2023 results for Balchem included record adjusted EBITDA, record free cash flow, and a double-digit increase in dividend payouts.
- Cash flows from operations were strong, with quarterly free cash flow up 103.4% from the prior year quarter and full-year free cash flow reaching $151.1 million.
- Record earnings from operations were achieved in both the Human Nutrition & Health and Specialty Products segments, indicating overall growth and performance.
- None.
Insights
The reported increase in GAAP net earnings of 24.5% for the fourth quarter and 3.0% for the full year by Balchem Corporation is a strong indicator of the company's financial health. The growth in adjusted EBITDA by 5.4% for the quarter and 7.1% for the year suggests operational efficiency and profitability, which are key metrics for investors. The significant 103.4% rise in free cash flow for the quarter reflects the company's ability to generate cash after accounting for capital expenditures, which is crucial for sustaining dividends, reducing debt, or funding acquisitions.
Furthermore, the Human Nutrition & Health segment's record sales and earnings underscore the company's successful focus on this area, which appears to be driving growth. The double-digit dividend increase indicates confidence in the company's financial stability and commitment to shareholder returns. Overall, these results may positively influence investor sentiment and could be reflected in the stock's performance.
From a market perspective, Balchem's performance in the Human Nutrition & Health sector stands out, especially given the 5.8% increase in sales in a challenging demand environment. This suggests that the company has effectively capitalized on trends in the health and wellness industry. Additionally, the resilience of their business model in volatile market conditions could signal a competitive advantage and may attract investors looking for stability in uncertain times.
The strategic growth initiatives mentioned, coupled with a strong balance sheet, suggest that Balchem is positioning itself for future growth opportunities. Investors might view these initiatives as a sign of forward-thinking management, potentially increasing the company's attractiveness in the long-term investment community.
Examining the broader economic context, Balchem's performance indicates a robust response to potential macroeconomic challenges, such as inflation and supply chain disruptions. The company's ability to deliver record adjusted EBITDA and free cash flow during such periods is indicative of strong management and operational resilience. This is particularly relevant in the current economic climate where many companies are struggling to maintain profitability.
The company's financial results may also reflect the overall health of the specialty chemicals and human nutrition markets, which could be experiencing growth despite broader economic headwinds. Investors might consider these results as a microcosm of the sector's potential for continued resilience or growth, even in the face of economic uncertainty.
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
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 of24.5% from the prior year. - Adjusted EBITDA was
$55.4 million , an increase of5.4% 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 , up103.4% from the prior year quarter. - Record Human Nutrition & Health segment sales of
$138.0 million , an increase of5.8% compared to the prior year quarter with record earnings from operations of$25.2 million , up43.8% .
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
Full Year 2023 Financial Highlights:
- GAAP net earnings were
$108.5 million , an increase of3.0% 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 of7.1% , 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 of4.5% compared to the prior year. - Record earnings from operations in both the Human Nutrition & Health and Specialty Products segments, increasing
24.7% and5.5% , 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
The Animal Nutrition & Health segment generated quarterly sales of
The Specialty Products segment generated fourth quarter sales of
Consolidated gross margin for the quarter ended December 31, 2023 of
Interest expense was
For the quarter ended December 31, 2023, cash flows provided by operating activities were
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 | |||||||||||||||
| 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 | 131,578 | ||||
| Inventories, net | 109,521 | 119,668 | ||||
| Other Current Assets | 14,990 | 17,997 | ||||
| Total Current Assets | 314,242 | 335,803 | ||||
| Property, Plant & Equipment, net | 276,039 | 271,355 | ||||
| Goodwill | 778,907 | 769,509 | ||||
| Intangible Assets with Finite Lives, net | 191,212 | 213,295 | ||||
| Right of Use Assets | 19,864 | 19,432 | ||||
| Other Assets | 16,947 | 15,118 | ||||
| Total Non-current Assets | 1,282,969 | 1,288,709 | ||||
| Total Assets | $ | 1,597,211 | $ | 1,624,512 | ||
| Current Liabilities | $ | 148,491 | $ | 140,042 | ||
| Revolving Loan | 309,569 | 440,569 | ||||
| Deferred Income Taxes | 52,046 | 62,784 | ||||
| Long-Term Obligations | 33,121 | 42,833 | ||||
| Total Liabilities | 543,227 | 686,228 | ||||
| Stockholders' Equity | 1,053,984 | 938,284 | ||||
| Total Liabilities and Stockholders' Equity | $ | 1,597,211 | $ | 1,624,512 | ||
| Balchem Corporation Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (unaudited) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | 108,543 | $ | 105,367 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 54,935 | 51,848 | ||||||
| Stock compensation expense | 16,052 | 13,224 | ||||||
| Other adjustments | (15,779 | ) | (6,681 | ) | ||||
| Changes in assets and liabilities, net of acquired balances | 20,010 | (25,222 | ) | |||||
| Net cash provided by operating activities | 183,761 | 138,536 | ||||||
| Cash flows from investing activities: | ||||||||
| Cash paid for acquisitions, net of cash acquired | (1,252 | ) | (365,780 | ) | ||||
| Capital expenditures and intangible assets acquired | (37,892 | ) | (49,945 | ) | ||||
| Proceeds from sale of assets | 1,881 | 206 | ||||||
| Proceeds from settlement of net investment hedge | 2,740 | — | ||||||
| Investment in affiliates | (290 | ) | (495 | ) | ||||
| Net cash used in investing activities | (34,813 | ) | (416,014 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving loan | 18,000 | 435,000 | ||||||
| Principal payments on revolving debt | (149,000 | ) | (103,000 | ) | ||||
| Principal payments on acquired debt | — | (30,988 | ) | |||||
| Cash paid for financing costs | — | (1,232 | ) | |||||
| Principal payments on finance lease | (222 | ) | (177 | ) | ||||
| Proceeds from stock options exercised | 5,242 | 3,212 | ||||||
| Dividends paid | (22,872 | ) | (20,713 | ) | ||||
| Repurchases of common stock | (4,469 | ) | (35,423 | ) | ||||
| Net cash (used in) provided by financing activities | (153,321 | ) | 246,679 | |||||
| Effect of exchange rate changes on cash | 2,260 | (5,880 | ) | |||||
| Decrease in cash and cash equivalents | (2,113 | ) | (36,679 | ) | ||||
| Cash and cash equivalents, beginning of period | 66,560 | 103,239 | ||||||
| Cash and cash equivalents, end of period | $ | 64,447 | $ | 66,560 | ||||
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
| Reconciliation of Non-GAAP Measures to GAAP (Dollars in thousands, except per share data) (unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Reconciliation of adjusted gross margin | |||||||||||||||
| GAAP gross margin | $ | 74,993 | $ | 68,639 | $ | 302,056 | $ | 280,451 | |||||||
| Inventory valuation adjustment (1) | — | 1,473 | 1,419 | 3,057 | |||||||||||
| Amortization of intangible assets and finance lease (2) | 665 | 712 | 2,683 | 2,025 | |||||||||||
| Restructuring costs (3) | 186 | — | 601 | — | |||||||||||
| Adjusted gross margin | $ | 75,844 | $ | 70,824 | $ | 306,759 | $ | 285,533 | |||||||
| Reconciliation of adjusted earnings from operations | |||||||||||||||
| GAAP earnings from operations | $ | 38,335 | $ | 33,305 | $ | 159,193 | $ | 145,186 | |||||||
| Inventory valuation adjustment (1) | — | 1,473 | 1,419 | 3,057 | |||||||||||
| Amortization of intangible assets and finance lease (2) | 6,964 | 7,641 | 28,274 | 27,481 | |||||||||||
| Restructuring costs (3) | 186 | — | 8,365 | — | |||||||||||
| Transaction and integration costs and unallocated legal fees (4) | (1,383 | ) | 293 | (9,683 | ) | 3,109 | |||||||||
| Nonqualified deferred compensation plan expense (income) (5) | 523 | 337 | 917 | (401 | ) | ||||||||||
| Adjusted earnings from operations | $ | 44,625 | $ | 43,049 | $ | 188,485 | $ | 178,432 | |||||||
| Reconciliation of adjusted net earnings | |||||||||||||||
| GAAP net earnings | $ | 26,648 | $ | 21,406 | $ | 108,543 | $ | 105,367 | |||||||
| Inventory valuation adjustment (1) | — | 1,473 | 1,419 | 3,057 | |||||||||||
| Amortization of intangible assets and finance lease (2) | 7,035 | 7,713 | 28,561 | 27,816 | |||||||||||
| Restructuring costs (3) | 186 | — | 8,365 | — | |||||||||||
| Transaction and integration costs and unallocated legal fees (4) | (1,383 | ) | 293 | (9,683 | ) | 3,109 | |||||||||
| Unrealized foreign currency loss on contingent consideration liability and net realized (gain) on foreign currency forward contracts (6) | — | 2,015 | — | (512 | ) | ||||||||||
| Income tax adjustment (7) | (1,585 | ) | (2,560 | ) | (7,487 | ) | (8,306 | ) | |||||||
| Adjusted net earnings | $ | 30,901 | $ | 30,340 | $ | 129,718 | $ | 130,531 | |||||||
| Adjusted net earnings per common share - diluted | $ | 0.95 | $ | 0.94 | $ | 4.00 | $ | 4.03 | |||||||
The following table sets forth a reconciliation of Net Income calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022.
Table 2
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net income - as reported | $ | 26,648 | $ | 21,406 | $ | 108,543 | $ | 105,367 | ||||||
| Add back: | ||||||||||||||
| Provision for income taxes | 6,619 | 4,370 | 28,718 | 28,382 | ||||||||||
| Interest and other expenses | 5,068 | 7,529 | 21,932 | 11,437 | ||||||||||
| Depreciation and amortization | 13,984 | 13,817 | 54,647 | 51,513 | ||||||||||
| EBITDA | 52,319 | 47,122 | 213,840 | 196,699 | ||||||||||
| Add back certain items: | ||||||||||||||
| Non-cash compensation expense related to equity awards | 3,785 | 3,386 | 16,052 | 13,224 | ||||||||||
| Inventory valuation adjustment (1) | — | 1,473 | 1,419 | 3,057 | ||||||||||
| Restructuring costs (3) | 186 | — | 8,365 | — | ||||||||||
| Transaction and integration costs and unallocated legal fees (4) | (1,383 | ) | 293 | (9,683 | ) | 3,109 | ||||||||
| Nonqualified deferred compensation plan expense (income) (5) | 523 | — | 337 | — | 917 | — | (401 | ) | ||||||
| Adjusted EBITDA | $ | 55,430 | $ | 52,611 | $ | 230,910 | $ | 215,688 | ||||||
The following table sets forth a reconciliation of our GAAP effective income tax rate to our non-GAAP effective income tax rate for the three and twelve months ended December 31, 2023 and 2022.
Table 3
(unaudited)
| Three Months Ended December 31, | |||||||||||
| 2023 | Effective Tax Rate | 2022 | Effective Tax Rate | ||||||||
| GAAP Income Tax Expense | $ | 6,619 | 19.9 | % | $ | 4,370 | 17.0 | % | |||
| Impact of ASU 2016-09(8) | 369 | 249 | |||||||||
| Adjusted Income Tax Expense | $ | 6,988 | 21.0 | % | $ | 4,619 | 17.9 | % | |||
| Year Ended December 31, | |||||||||||
| 2023 | Effective Tax Rate | 2022 | Effective Tax Rate | ||||||||
| GAAP Income Tax Expense | $ | 28,718 | 20.9 | % | $ | 28,382 | 21.2 | % | |||
| Impact of ASU 2016-09(8) | 1,232 | 963 | |||||||||
| Adjusted Income Tax Expense | $ | 29,950 | 21.8 | % | $ | 29,345 | 21.9 | % | |||
The following table sets forth a reconciliation of net cash provided by operating activities to free cash flow for the three and twelve months ended December 31, 2023 and 2022.
Table 4
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net cash provided by operating activities | $ | 67,406 | $ | 41,655 | $ | 183,761 | $ | 138,536 | |||||||
| Capital expenditures, proceeds from the sale of assets, settlement of net investment hedge, and capitalized ERP implementation costs | (11,441 | ) | (14,136 | ) | (32,653 | ) | (49,157 | ) | |||||||
| Free cash flow | $ | 55,965 | $ | 27,519 | $ | 151,108 | $ | 89,379 | |||||||
| (1) Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. |
| (2) Amortization of intangible assets and finance lease: Amortization of intangible assets and finance lease 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, an intangible asset in connection with a company-wide ERP system implementation, and one finance lease. We record expense relating to the amortization of these intangibles and finance lease in our GAAP financial statements. Amortization expenses for our intangible assets and finance lease 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. |
| (3) Restructuring costs: Expenses related to a reorganization of the business. |
| (4) Transaction and integration costs and unallocated legal fees: Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. Unallocated legal fees for transaction-related non-compete agreement disputes 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. |
| (5) 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. Adjustments have been made to the prior period presentation to conform with the current period presentation. |
| (6) Unrealized foreign currency loss on contingent consideration liability and net realized (gain) on foreign currency exchange forward contracts: The unrealized foreign currency loss related to the contingent consideration liability recorded in connection with the Kappa acquisition and was recorded as other expense in our GAAP financial statements. The net realized gain on foreign currency exchange forward contracts related to four short-term foreign currency exchange forward contracts with JP Morgan Chase, N.A. in connection with the Kappa acquisition. These contracts did not qualify for hedge accounting and the net gain was recorded as other income in our GAAP financial statements. We believe that excluding these gains and losses from our Non-GAAP financial measures is useful to investors because such income or expense are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. |
| (7) 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. |
| (8) 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 and twelve months ended December 31, 2023 and 2022, 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. |
FAQ
What were Balchem Corporation's quarterly net sales for the fourth quarter of 2023?
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