Balchem Corporation Reports Second Quarter 2024 Financial Results
Balchem (NASDAQ: BCPC) reported strong Q2 2024 financial results with record earnings from operations and adjusted EBITDA. Key highlights include:
- Net sales of $234.1 million, up 1.2% YoY
- Adjusted EBITDA of $62.3 million, up 5.0% YoY
- GAAP net earnings of $32.1 million, up 6.5% YoY
- GAAP EPS of $0.98, compared to $0.93 in Q2 2023
- Record adjusted EPS of $1.09, up from $1.06 in Q2 2023
- Free cash flow of $38.4 million
The Human Nutrition & Health and Specialty Products segments showed strong performance with record earnings. Balchem also launched Optifolin+®, a new choline-enriched folate ingredient. The company's net debt decreased to $202.8 million, with a leverage ratio of 0.9x.
Balchem (NASDAQ: BCPC) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con guadagni record dalle operazioni e EBITDA rettificato. I principali punti salienti includono:
- Vendite nette di 234,1 milioni di dollari, in aumento dell'1,2% rispetto all'anno precedente
- EBITDA rettificato di 62,3 milioni di dollari, in aumento del 5,0% YoY
- Utili netti GAAP di 32,1 milioni di dollari, in crescita del 6,5% YoY
- EPS GAAP di 0,98 dollari, rispetto a 0,93 dollari nel Q2 2023
- EPS rettificato record di 1,09 dollari, rispetto a 1,06 dollari nel Q2 2023
- Flusso di cassa libero di 38,4 milioni di dollari
I segmenti Nutrizione Umana & Salute e Prodotti Speciali hanno mostrato una performance notevole con guadagni record. Balchem ha anche lanciato Optifolin+®, un nuovo ingrediente a base di folati arricchito di colina. Il debito netto dell'azienda è sceso a 202,8 milioni di dollari, con un rapporto di leva di 0,9x.
Balchem (NASDAQ: BCPC) reportó sólidos resultados financieros para el segundo trimestre de 2024, con ganancias récord de operaciones y EBITDA ajustado. Los aspectos más destacados incluyen:
- Ventas netas de 234,1 millones de dólares, un aumento del 1,2% interanual
- EBITDA ajustado de 62,3 millones de dólares, un incremento del 5,0% interanual
- Ganancias netas bajo GAAP de 32,1 millones de dólares, un aumento del 6,5% interanual
- EPS GAAP de 0,98 dólares, en comparación con 0,93 dólares en el Q2 de 2023
- EPS ajustado récord de 1,09 dólares, en comparación con 1,06 dólares en el Q2 de 2023
- Flujo de caja libre de 38,4 millones de dólares
Los segmentos de Nutrición Humana y Salud y Productos Especiales mostraron un rendimiento sólido con ganancias récord. Balchem también lanzó Optifolin+®, un nuevo ingrediente de folato enriquecido con colina. La deuda neta de la compañía disminuyó a 202,8 millones de dólares, con un ratio de apalancamiento de 0,9x.
발켐 (NASDAQ: BCPC)은 2024년 2분기 강력한 재무 실적을 보고했으며, 기록적인 운영 수익과 조정된 EBITDA를 달성했습니다. 주요 하이라이트는 다음과 같습니다:
- 순매출 2억 3410만 달러, 전년 대비 1.2% 증가
- 조정 EBITDA 6230만 달러, 전년 대비 5.0% 증가
- GAAP 순이익 3210만 달러, 전년 대비 6.5% 증가
- GAAP EPS 0.98달러, 2023년 2분기 0.93달러 대비
- 조정 EPS 기록 1.09달러, 2023년 2분기 1.06달러 대비 증가
- 자유 현금 흐름 3840만 달러
인간 영양 및 건강, 특수 제품 부문은 기록적인 수익으로 강한 성과를 보였습니다. 발켐은 또한 콜린이 풍부한 새로운 엽산 성분인 Optifolin+®을 출시했습니다. 회사의 순부채는 2억 280만 달러로 감소했으며, 레버리지 비율은 0.9배입니다.
Balchem (NASDAQ: BCPC) a annoncé de solides résultats financiers pour le deuxième trimestre 2024, avec des bénéfices record provenant des opérations et un EBITDA ajusté. Les points saillants comprennent :
- Ventes nettes de 234,1 millions de dollars, en hausse de 1,2 % par rapport à l'année précédente
- EBITDA ajusté de 62,3 millions de dollars, en hausse de 5,0 % par rapport à l'année précédente
- Bénéfice net GAAP de 32,1 millions de dollars, en augmentation de 6,5 % par rapport à l'année précédente
- BPA GAAP de 0,98 dollar, par rapport à 0,93 dollar au T2 2023
- BPA ajusté record de 1,09 dollar, contre 1,06 dollar au T2 2023
- Flux de trésorerie disponible de 38,4 millions de dollars
Les segments Nutrition Humaine & Santé et Produits Spéciaux ont montré une forte performance avec des bénéfices record. Balchem a également lancé Optifolin+®, un nouvel ingrédient de folate enrichi en choline. La dette nette de l'entreprise a diminué à 202,8 millions de dollars, avec un ratio d'endettement de 0,9x.
Balchem (NASDAQ: BCPC) hat starke finanzielle Ergebnisse für das zweite Quartal 2024 veröffentlicht, mit Rekordgewinnen aus den betrieblichen Tätigkeiten und bereinigtem EBITDA. Die wichtigsten Highlights sind:
- Nettoumsatz von 234,1 Millionen Dollar, ein Anstieg von 1,2% im Jahresvergleich
- Bereinigtes EBITDA von 62,3 Millionen Dollar, ein Anstieg von 5,0% im Jahresvergleich
- GAAP-Nettoergebnis von 32,1 Millionen Dollar, ein Anstieg von 6,5% im Jahresvergleich
- GAAP EPS von 0,98 Dollar, im Vergleich zu 0,93 Dollar im Q2 2023
- Rekordbereinigtes EPS von 1,09 Dollar, im Vergleich zu 1,06 Dollar im Q2 2023
- Free Cashflow von 38,4 Millionen Dollar
Die Segmente Humanernährung & Gesundheit sowie Spezialprodukte zeigten eine starke Leistung mit Rekordgewinnen. Balchem hat auch Optifolin+® eingeführt, eine neue Folatsubstanz, die mit Cholin angereichert ist. Die Nettoverschuldung des Unternehmens sank auf 202,8 Millionen Dollar, mit einem Verschuldungsgrad von 0,9x.
- Record adjusted EBITDA of $62.3 million, up 5.0% year-over-year
- GAAP net earnings increased 6.5% to $32.1 million
- Record adjusted earnings per share of $1.09, up from $1.06 in Q2 2023
- Strong sales growth and record earnings in Human Nutrition & Health and Specialty Products segments
- Launch of new product Optifolin+®, expanding the Minerals and Nutrients portfolio
- Net debt reduced to $202.8 million, with a low leverage ratio of 0.9 times
- Animal Nutrition & Health segment sales decreased 19.2% to $49.6 million
- Animal Nutrition & Health segment earnings from operations decreased 64.9% to $2.7 million
Insights
Balchem 's Q2 2024 results demonstrate a mixed performance across its business segments. The company reported overall growth, with net sales increasing by
The standout performers were the Human Nutrition & Health and Specialty Products segments. Human Nutrition & Health saw impressive growth with sales up
However, the Animal Nutrition & Health segment faced challenges, with sales declining
Financially, Balchem maintains a strong position with a healthy cash flow. The company generated
The launch of Optifolin+® demonstrates Balchem's commitment to innovation and expanding its product portfolio. This new offering could potentially drive future growth in the Human Nutrition & Health segment.
Overall, while the company faces headwinds in its Animal Nutrition & Health segment, the strong performance in other areas and solid financial position suggest Balchem is well-positioned to navigate current market conditions.
Balchem's Q2 2024 results offer intriguing insights into current market trends across various nutrition and health sectors. The divergent performance of the company's segments provides a snapshot of broader industry dynamics.
The Human Nutrition & Health segment's strong growth (
Conversely, the Animal Nutrition & Health segment's significant decline (
The Specialty Products segment's growth, particularly in performance gases, might indicate increased demand in industrial or medical applications. This diversification helps balance the company's portfolio against fluctuations in other markets.
Balchem's ability to maintain profitability and even achieve record earnings in some segments, despite inflationary pressures and supply chain challenges that have affected many industries, is noteworthy. The company's focus on innovation and strategic initiatives, coupled with its strong cash flow and debt reduction, suggests a proactive approach to navigating market uncertainties.
Looking ahead, the contrasting performance across segments underscores the importance of diversification in the current market environment. Companies able to pivot and capitalize on growth areas while managing challenges in others are likely to be more resilient in the face of economic uncertainties.
MONTVALE, N.J., July 26, 2024 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ: BCPC) reported today financial results for its 2024 fiscal second quarter ended June 30, 2024. The Company reported quarterly net sales of
Ted Harris, Chairman, President and CEO of Balchem said, "We delivered solid second quarter financials with record earnings from operations and adjusted EBITDA. I am particularly pleased with the excellent performance in our Human Nutrition and Health and Specialty Products segments, both delivering strong sales and earnings growth.”
Second Quarter 2024 Financial Highlights:
- Net sales were
$234.1 million , an increase of1.2% compared to the prior year quarter. - Adjusted EBITDA was a record
$62.3 million , an increase of5.0% from the prior year quarter. - GAAP net earnings were
$32.1 million , an increase of6.5% from the prior year quarter. - GAAP earnings per share of
$0.98 compared to$0.93 in the prior year quarter and record adjusted earnings per share(a) of$1.09 compared to$1.06 in the prior year quarter. - Cash flows from operations were
$45.0 million for the second quarter of 2024, with quarterly free cash flow(a) of$38.4 million . - Strong sales growth and record earnings from operations in both our Human Nutrition and Health and Specialty Product segments.
Recent Highlights:
- On May 20th, Balchem launched a new product, Optifolin+®, which is a patented, choline-enriched, bioactive, reduced folate ingredient that supports cellular health at all stages of life. Optifolin+® is biologically active, which means that it is readily available for transport and use in the human body and tissues, making Optifolin+® an excellent choice to meet Vitamin B9 recommended requirements.
- Strong cash flows in the second quarter enabled us to make repayments on our revolving debt of
$35.0 million , bringing our net debt to$202.8 million , with an overall leverage ratio on a net debt basis of 0.9 times.
Mr. Harris said, "I am excited about the recent launch of Optifolin+® and our continued focus on bringing innovative solutions for the health and nutritional needs of the world. Optifolin+® adds to our already strong Minerals and Nutrients portfolio that includes leading brands such as VitaCholine®, K2Vital®, Albion® Minerals, and OptiMSM®.”
Mr. Harris continued, "We continue to make good progress on our strategic initiatives while delivering solid financial results. I am very pleased with our performance in the first half of 2024 and look forward to the remainder of the year."
Results for Period Ended June 30, 2024 (unaudited) (Dollars in thousands, except per share data) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net sales | $ | 234,081 | $ | 231,252 | $ | 473,740 | $ | 463,792 | ||||||||
Gross margin | 82,994 | 77,349 | 164,508 | 150,519 | ||||||||||||
Operating expenses | 37,197 | 34,513 | 77,035 | 73,275 | ||||||||||||
Earnings from operations | 45,797 | 42,836 | 87,473 | 77,244 | ||||||||||||
Interest and other expenses | 4,571 | 4,436 | 9,397 | 9,725 | ||||||||||||
Earnings before income tax expense | 41,226 | 38,400 | 78,076 | 67,519 | ||||||||||||
Income tax expense | 9,157 | 8,290 | 17,021 | 14,699 | ||||||||||||
Net earnings | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||
Diluted net earnings per common share | $ | 0.98 | $ | 0.93 | $ | 1.87 | $ | 1.63 | ||||||||
Adjusted EBITDA(a) | $ | 62,270 | $ | 59,317 | $ | 123,136 | $ | 115,674 | ||||||||
Adjusted net earnings(a) | $ | 35,577 | $ | 34,441 | $ | 69,161 | $ | 65,022 | ||||||||
Adjusted net earnings per common share(a) | $ | 1.09 | $ | 1.06 | $ | 2.12 | $ | 2.01 | ||||||||
Shares used in the calculations of diluted and adjusted net earnings per common share | 32,649 | 32,434 | 32,638 | 32,424 |
(a) | See “Non-GAAP Financial Information” for a reconciliations of GAAP and non-GAAP financial measures. |
Financial Results for the Second Quarter of 2024:
The Human Nutrition & Health segment generated sales of
The Animal Nutrition & Health segment generated quarterly sales of
The Specialty Products segment generated quarterly sales of
Record quarterly consolidated gross margin of
Interest expense was
Second quarter cash flows provided by operating activities were
Ted Harris said, “The Balchem team delivered solid second quarter financial results, once again highlighting the resilience of our business model. Two of our three reporting segments are performing very well, with both our Human Nutrition and Health segment and Specialty Products segment delivering record earnings from operations, which are more than offsetting the challenges we are experiencing in our Animal Nutrition and Health segment. We are well positioned in the markets we serve and remain confident in the long-term growth outlook for our company as we continue to focus on progressing our strategic growth initiatives in 2024 and beyond.”
Quarterly Conference Call
A quarterly conference call will be held on Friday, July 26, 2024, at 11:00 AM Eastern Time (ET) to review second quarter 2024 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, August 9, 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 #13747779.
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 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," “likely,” "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)
($ in 000’s)
Business Segment Net Sales: | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Human Nutrition & Health | $ | 147,928 | $ | 135,669 | $ | 300,672 | $ | 268,322 | ||||||||
Animal Nutrition & Health | 49,557 | 61,329 | 103,478 | 126,218 | ||||||||||||
Specialty Products | 35,094 | 32,726 | 66,707 | 64,957 | ||||||||||||
Other and Unallocated (b) | 1,502 | 1,528 | 2,883 | 4,295 | ||||||||||||
Total | $ | 234,081 | $ | 231,252 | $ | 473,740 | $ | 463,792 |
Business Segment Earnings Before Income Taxes: | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Human Nutrition & Health | $ | 33,367 | $ | 27,499 | $ | 66,624 | $ | 45,934 | ||||||||
Animal Nutrition & Health | 2,693 | 7,662 | 4,753 | 17,160 | ||||||||||||
Specialty Products | 11,228 | 9,298 | 19,427 | 17,244 | ||||||||||||
Other and Unallocated (b) | (1,491 | ) | (1,623 | ) | (3,331 | ) | (3,094 | ) | ||||||||
Interest and other expenses | (4,571 | ) | (4,436 | ) | (9,397 | ) | (9,725 | ) | ||||||||
Total | $ | 41,226 | $ | 38,400 | $ | 78,076 | $ | 67,519 | ||||||||
(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 of |
Selected Balance Sheet Items | ||||||||
(Dollars in thousands) | June 30, 2024 | December 31, 2023 | ||||||
(unaudited) | ||||||||
Cash and Cash Equivalents | $ | 63,738 | $ | 64,447 | ||||
Accounts Receivable, net | 123,400 | 125,284 | ||||||
Inventories | 117,099 | 109,521 | ||||||
Other Current Assets | 15,919 | 14,990 | ||||||
Total Current Assets | 320,156 | 314,242 | ||||||
Property, Plant & Equipment, net | 272,539 | 276,039 | ||||||
Goodwill | 770,026 | 778,907 | ||||||
Intangible Assets with Finite Lives, net | 176,102 | 191,212 | ||||||
Right of Use Assets | 18,445 | 19,864 | ||||||
Other Assets | 17,698 | 16,947 | ||||||
Total Non-current Assets | 1,254,810 | 1,282,969 | ||||||
Total Assets | $ | 1,574,966 | $ | 1,597,211 | ||||
Current Liabilities | $ | 113,322 | $ | 148,491 | ||||
Revolving Loan | 266,569 | 309,569 | ||||||
Deferred Income Taxes | 49,956 | 52,046 | ||||||
Other Long-Term Obligations | 32,755 | 33,121 | ||||||
Total Liabilities | 462,602 | 543,227 | ||||||
Stockholders' Equity | 1,112,364 | 1,053,984 | ||||||
Total Liabilities and Stockholders' Equity | $ | 1,574,966 | $ | 1,597,211 |
Balchem Corporation Condensed Consolidated Statements of Cash Flows (Dollars in thousands) | ||||||||
(unaudited) | ||||||||
Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 61,055 | $ | 52,820 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 26,174 | 27,074 | ||||||
Stock compensation expense | 8,636 | 8,518 | ||||||
Other adjustments | (1,106 | ) | (2,647 | ) | ||||
Changes in assets and liabilities | (16,379 | ) | (15,936 | ) | ||||
Net cash provided by operating activities | 78,380 | 69,829 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures and intangible assets acquired | (13,788 | ) | (17,880 | ) | ||||
Cash paid for acquisitions, net of cash acquired | — | (341 | ) | |||||
Proceeds from the sale of assets | 272 | 1,881 | ||||||
Proceeds from settlement of net investment hedge | — | 2,740 | ||||||
Investment in affiliates | (80 | ) | (72 | ) | ||||
Net cash used in investing activities | (13,596 | ) | (13,672 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from revolving loan | 26,000 | 13,000 | ||||||
Principal payments on revolving loan | (69,000 | ) | (48,000 | ) | ||||
Principal payments on finance lease | (111 | ) | (110 | ) | ||||
Proceeds from stock options exercised | 9,682 | 3,826 | ||||||
Dividends paid | (25,568 | ) | (22,869 | ) | ||||
Purchase of common stock | (5,213 | ) | (3,924 | ) | ||||
Net cash used in financing activities | (64,210 | ) | (58,077 | ) | ||||
Effect of exchange rate changes on cash | (1,283 | ) | 2,216 | |||||
(Decrease) increase in cash and cash equivalents | (709 | ) | 296 | |||||
Cash and cash equivalents, beginning of period | 64,447 | 66,560 | ||||||
Cash and cash equivalents, end of period | $ | 63,738 | $ | 66,856 | ||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Reconciliation of adjusted gross margin | ||||||||||||||||
GAAP gross margin | $ | 82,994 | $ | 77,349 | $ | 164,508 | $ | 150,519 | ||||||||
Inventory valuation adjustment (1) | — | 217 | — | 1,419 | ||||||||||||
Amortization of intangible assets and finance lease (2) | 707 | 662 | 1,411 | 1,343 | ||||||||||||
Restructuring costs (3) | — | 120 | — | 120 | ||||||||||||
Adjusted gross margin | $ | 83,701 | $ | 78,348 | $ | 165,919 | $ | 153,401 | ||||||||
Reconciliation of adjusted earnings from operations | ||||||||||||||||
GAAP earnings from operations | $ | 45,797 | $ | 42,836 | $ | 87,473 | $ | 77,244 | ||||||||
Inventory valuation adjustment (1) | — | 217 | — | 1,419 | ||||||||||||
Amortization of intangible assets and finance lease (2) | 5,303 | 6,952 | 11,705 | 14,302 | ||||||||||||
Transaction and integration costs (4) | 41 | (7,349 | ) | 481 | (5,184 | ) | ||||||||||
Restructuring costs (3) | — | 6,266 | — | 6,266 | ||||||||||||
Nonqualified deferred compensation plan expense (5) | 113 | 244 | 516 | 481 | ||||||||||||
Adjusted earnings from operations | $ | 51,254 | $ | 49,166 | $ | 100,175 | $ | 94,528 | ||||||||
Reconciliation of adjusted net earnings | ||||||||||||||||
GAAP net earnings | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||
Inventory valuation adjustment (1) | — | 217 | — | 1,419 | ||||||||||||
Amortization of intangible assets and finance lease (2) | 5,375 | 7,024 | 11,849 | 14,446 | ||||||||||||
Transaction and integration costs (4) | 41 | (7,349 | ) | 481 | (5,184 | ) | ||||||||||
Restructuring costs (3) | — | 6,266 | — | 6,266 | ||||||||||||
Income tax adjustment (6) | (1,908 | ) | (1,827 | ) | (4,224 | ) | (4,745 | ) | ||||||||
Adjusted net earnings | $ | 35,577 | $ | 34,441 | $ | 69,161 | $ | 65,022 | ||||||||
Adjusted net earnings per common share - diluted | $ | 1.09 | $ | 1.06 | $ | 2.12 | $ | 2.01 | ||||||||
Table 2
(unaudited)
Reconciliation of GAAP Net Earnings to EBITDA and to Adjusted EBITDA (Dollars in thousands) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net earnings - as reported | $ | 32,069 | $ | 30,110 | $ | 61,055 | $ | 52,820 | ||||||||
Add back: | ||||||||||||||||
Provision for income taxes | 9,157 | 8,290 | 17,021 | 14,699 | ||||||||||||
Interest and other expenses | 4,571 | 4,436 | 9,397 | 9,725 | ||||||||||||
Depreciation and amortization | 12,433 | 13,355 | 26,030 | 26,930 | ||||||||||||
EBITDA | 58,230 | 56,191 | 113,503 | 104,174 | ||||||||||||
Add back certain items: | ||||||||||||||||
Non-cash compensation expense related to equity awards | 3,886 | 3,748 | 8,636 | 8,518 | ||||||||||||
Inventory valuation adjustment (1) | — | 217 | — | 1,419 | ||||||||||||
Transaction and integration costs (4) | 41 | (7,349 | ) | 481 | (5,184 | ) | ||||||||||
Restructuring costs (3) | — | 6,266 | — | 6,266 | ||||||||||||
Nonqualified deferred compensation plan expense (5) | 113 | 244 | 516 | 481 | ||||||||||||
Adjusted EBITDA | $ | 62,270 | $ | 59,317 | $ | 123,136 | $ | 115,674 | ||||||||
Table 3
(unaudited)
Reconciliation of GAAP Effective Income Tax Rate to Non-GAAP Effective Income Tax Rate (Dollars in thousands) | ||||||||||||||
Three Months Ended June 30, | ||||||||||||||
2024 | Effective Tax Rate | 2023 | Effective Tax Rate | |||||||||||
GAAP Income Tax Expense | $ | 9,157 | 22.2 | % | $ | 8,290 | 21.6 | % | ||||||
Impact of ASU 2016-09 (7) | 620 | 448 | ||||||||||||
Adjusted Income Tax Expense | $ | 9,777 | 23.7 | % | $ | 8,738 | 22.8 | % |
Six Months Ended June 30, | ||||||||||||||
2024 | Effective Tax Rate | 2023 | Effective Tax Rate | |||||||||||
GAAP Income Tax Expense | $ | 17,021 | 21.8 | % | $ | 14,699 | 21.8 | % | ||||||
Impact of ASU 2016-09 (7) | 1,327 | 844 | ||||||||||||
Adjusted Income Tax Expense | $ | 18,348 | 23.5 | % | $ | 15,543 | 23.0 | % | ||||||
Table 4
(unaudited)
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Dollars in thousands) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net cash provided by operating activities | $ | 44,992 | $ | 34,991 | $ | 78,380 | $ | 69,829 | ||||||||
Capital expenditures, proceeds from the sale of assets, and settlement of net investment hedge | (6,602 | ) | (3,280 | ) | (13,175 | ) | (12,892 | ) | ||||||||
Free cash flow | $ | 38,390 | $ | 31,711 | $ | 65,205 | $ | 56,937 |
(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: 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. |
(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) 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. |
(7) 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 six months ended June 30, 2024 and 2023, 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. |
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