NEW HAMPTON, N.Y., Feb. 24, 2009 (GLOBE NEWSWIRE) -- Balchem Corporation (Nasdaq:BCPC) reported as follows (unaudited) for the period ended December 31, 2008.
($000 Omitted Except for Net Earnings per Share)
For the Three Months Ended December 31,
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2008 2007
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Net sales $ 54,053 $ 53,733
Gross profit 13,432 12,398
Operating expenses 5,954 5,816
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Earnings from operations 7,478 6,582
Other expense (175) (206)
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Earnings before income tax expense 7,303 6,376
Income tax expense 2,411 2,221
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Net earnings $ 4,892 $ 4,155
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Basic net earnings per common share $ 0.27 $ 0.23
Diluted net earnings per common share $ 0.26 $ 0.22
Shares used in the calculation of diluted
net earnings per common share 19,094 18,811
For the Twelve Months Ended December 31,
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2008 2007
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Net sales $ 232,050 $ 176,201
Gross profit 52,578 46,930
Operating expenses 23,230 21,024
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Earnings from operations 29,348 25,906
Other expense (917) (1,077)
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Earnings before income tax expense 28,431 24,829
Income tax expense 9,381 8,711
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Net earnings $ 19,050 $ 16,118
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Basic net earnings per common share $ 1.06 $ 0.91
Diluted net earnings per common share $ 1.00 $ 0.87
Shares used in the calculation of diluted
net earnings per common share 19,014 18,611
Record Fourth Quarter Results for Sales and Earnings
Record net sales of $54.1 million were achieved for the fourth quarter ended December 31, 2008, an increase of approximately 1% above the $53.7 million result of the prior year comparable quarter. The company achieved record net earnings for the quarter of $4.9 million, an increase of $0.7 million, or 17.7%. The $4.9 million generated diluted net earnings of $0.26 per common share versus $0.22 per common share for the prior year comparable period, an increase of 18.2%.
Detailing this fourth quarter of 2008, the Animal Nutrition and Health segment achieved quarterly sales of $37.2 million, an increase of $0.8 million, or 2.3%, over the prior year quarter. Within this segment, the specialty animal nutrition and health products, targeted predominantly for ruminant animals, realized approximately 11.1% growth over the 2007 fourth quarter results with continued strong sales of Reashure(r) and Nitroshure(r), in addition to new sales generated from our initial launch of AminoShure(tm)-L., a rumen protected lysine designed to deliver consistent lysine levels and enhance amino acid nutrient availability to dairy cows. Feed grade choline and industrial derivatives grew approximately 1.0% over the prior year quarter, as industrial derivative increases were partially offset by a slight decline in feed grade choline, particularly into the poultry markets. We continued to experience hurricane-related raw material supply chain disruptions until late in the fourth quarter, which slowed our ability to produce, hence sell product into certain international markets. However, earnings from operations for this entire ANH segment did increase to $2.9 million as compared to $1.8 million in the prior year comparable quarter, largely due to favorable product mix in addition to reductions in the cost of certain petro-chemical commodities used to manufacture choline and derivatives.
Sales of the Food, Pharma and Nutrition segment were $7.6 million, a decrease of 15.7% or $1.4 million from the prior year comparable quarter. While full year sales of this segment were up 11.4% for 2008, quarterly comparative sales results for this segment continue to reflect the roller-coaster effect of pipeline fills, year end inventory level management, and some effects of the worldwide economic downturn at year end on our customers. Earnings from operations for this segment declined to $0.7 million, as compared to $1.9 million in the prior year comparable quarter, due to the softness in sales volume; hence lower/unfavorable manufacturing levels, as we, too, controlled/reduced inventory levels.
The ARC Specialty Products segment generated record fourth quarter sales of $9.3 million, an increase of 10.6% over the comparable prior year quarter. Earnings from operations for this segment, at $3.8 million, were 30.8% higher than the prior year quarter, principally from increased volumes of ethylene oxide and methyl chloride, and increased selling prices.
Consolidated gross profit for the quarter ended December 31, 2008 was $13.4 million, and, as compared to $12.4 million for the prior year comparable period, increased from 23.1% to 24.9% of sales, as a result of certain segments' product mix, price increases and declines in raw material costs. As previously noted, we continue to focus on gross margin improvement, implementing raw material cost driven price increases, production and supply chain improvements, and top line growth through new product development. Operating (Selling, R&D, and Administrative) expenses at $6.0 million, increased $0.1 million over the prior year comparable quarter, but decreased to 10% of sales for all of 2008, a reduction from 11.9% in 2007.
For the twelve months ended December 31, net sales increased 31.7% to $232.0 million compared to $176.2 million in the comparable prior year period. Net earnings increased 18.2% to $19.1 million, generating $1.00 per diluted share, versus net earnings of $16.1 million, or $0.87 per diluted share, in the prior year comparable period.
Balance sheet ratios and cash flow continue to be strong. Early in 2007, we borrowed $39 million; the proceeds of which were used to fund the Chinook and Akzo acquisitions. At December 31, 2008, our outstanding borrowings were $11.6 million, $8.2 million net of cash, reflecting accelerated payments of $17.5 million over the scheduled term payments of the loan. We have quality accounts receivable of $30.3 million, inventory levels of $16.6 million, which were reduced by 6% from September 30, 2008, so we are well positioned to continue with an aggressive debt reduction program.
Outlook
Commenting on 2008, Dino A. Rossi, Chairman, President and CEO of Balchem said, "This record fourth quarter, combined with strong performances across Balchem's business in the first nine months of the year, despite the well publicized difficult economic conditions, continues to demonstrate the value of our diversified business. Our prior year strategic acquisitions, with improved cross business integration, have increased our global presence; thereby off-setting softness in some U.S. markets. Raw material costs have had continued negative impact on certain segments, but we have begun experiencing relief on certain key raw materials. We will continue to closely monitor key economic drivers, stay customer focused, and take appropriate actions to improve operating margins and cash flow.
Year over year, we expect improved results in the Food, Pharma & Nutrition segment, particularly in the choline, calcium, domestic and international food products. The Animal Nutrition & Health segment realized some margin relief in the quarter, despite supply chain interruptions, that now appear to be behind us. Nevertheless, many end specie producers continue to have financial issues, so our focus on successful new product launches and continued production efficiencies are critical. The ARC Specialty Products segment continues its steady revenue growth and solid profit results with improved volumes and some price increases, as we continue to develop new market opportunities for specialized delivery of certain gases. There certainly is considerable volatility in the global economy, but we expect 2009 to be a year of improvements in sales and earnings, as we continue to implement lean programs, de-bottleneck production capabilities, and leverage our existing business and research infrastructure. Our healthy financial situation has us positioned to capitalize on opportunities that will likely arise from the current economic environment."
Quarterly Conference Call
A quarterly conference call will be held on Tuesday, February 24, at 2:00 PM Eastern Time (ET) to review fourth quarter and full year 2008 results. Dino A. Rossi, President and CEO, and Frank Fitzpatrick, 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 digital replay through Friday, February 27. To access the replay of the conference call dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use account #298 and replay ID#0313420. Both account and replay ID numbers are required for replay access.
Segment Information
Balchem Corporation consists of three business segments: ARC Specialty Products; Food, Pharma and Nutrition; and Animal Nutrition and Health. Through ARC Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries. The Food, Pharma and Nutrition segment provides proprietary microencapsulation, granulation and agglomeration solutions to a variety of applications in the human food, pharmaceutical and nutrition marketplaces. The Animal Nutrition and Health segment manufactures and supplies products to numerous animal health markets and certain derivative products into industrial applications.
Forward-Looking Statements
This release contains forward-looking statements, which reflect Balchem's expectation or belief concerning future events that involve risks and uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem's expectations, including risks and factors identified in Balchem's annual report on Form 10-K for the year ended December 31, 2007. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date.
Selected Financial Data
($ in 000's)
Business Segment Net Sales:
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Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
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ARC Specialty Products $ 9,271 $ 8,381 $ 35,835 $ 33,057
Food, Pharma & Nutrition 7,580 8,989 35,702 32,052
Animal Nutrition & Health 37,202 36,363 160,513 111,092
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Total $ 54,053 $ 53,733 $ 232,050 $ 176,201
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Business Segment Earnings Before Income Taxes:
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Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
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ARC Specialty Products $ 3,836 $ 2,932 $ 12,545 $ 11,824
Food, Pharma & Nutrition 706 1,852 5,469 4,144
Animal Nutrition & Health 2,936 1,798 11,334 9,938
Interest and other expense (175) (206) (917) (1,077)
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Total $ 7,303 $ 6,376 $ 28,431 $ 24,829
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Selected Balance Sheet Items
December 31, December 31,
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2008 2007
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Cash and Cash Equivalents $ 3,422 $ 2,307
Accounts Receivable 30,250 29,640
Inventories 16,618 15,680
Other Current Assets 4,961 4,842
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Total Current Assets 55,251 52,469
Property, Plant, & Equipment (net) 42,513 42,080
Other Assets 56,710 59,875
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Total Assets $ 154,474 $ 154,424
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Current Liabilities $ 25,685 $ 36,330
Long-Term Obligations 14,283 25,014
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Total Liabilities 39,968 61,344
Stockholders' Equity 114,506 93,080
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Total Liabilities and Stockholders' Equity $ 154,474 $ 154,424
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