Balchem Corporation · NASDAQ:BCPC
Balchem — Q2 2023 Earnings Presentation
34 slides from Balchem's earnings presentation, 2023
Slide 1: Investor Presentation Q2 2023
Investor Presentation Q2 2023 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement • During the course of this presentation, management may make forward-looking statements regarding financial performance and future events. • We will attempt to identify these statements by use of words such as expect, believe, anticipate, intend, and other words that denote fu
Slide 3: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliations 3
Slide 4: Balchem Corporation
Balchem Corporation Balchem develops, manufactures, and markets specialty ingredients that help make the world a healthier place Corporate Headquarters 22 Manufacturing Sites 7 Technology Centers 7 Regional Offices At a Glance Three Business Segments – 2022 Revenue • Founded in 1967 Human Nutrition
Slide 5: Executive Leadership
Executive Leadership Ted Harris | Chairman, President, and CEO • Joined Balchem in May 2015 • Prior to Balchem was a Senior VP of Ashland Inc. where he held a series of senior leadership roles over 10+ years • Independent director and member of the Board of Directors of Pentair plc. • MBA from Harva
Slide 6: Balchem's Value Proposition
Balchem’s Value Proposition Value to our Customers Enabling Technologies • High efficacy nutrients essential for life • Enhanced animal health and feed productivity Choline • Functional ingredient systems formulations and application expertise • Crop protection and yield improvement Encapsulation Co
Slide 7: Segment Overview
Segment Overview Leveraging Solutions Across Segments Segment Markets Served Solutions 14% Human Nutrition • Nutritional Supplements • Microencapsulation & Health • Food and Beverage • Choline, & Vitamin K2 98% Nutrition & Health • Infant & Toddler Formula • Chelated Minerals 56% 28% (% of sales) •
Slide 8: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliation
Slide 9: Our vision, our mission, our core values
Our vision Our mission is clear – to make the world a healthier place. is focused – to build a global nutrition and health company delivering trusted, innovative and science-based solutions to our customers. Our Core Values Always doing Thinking big Collaborating and Playing Staying focused the righ
Slide 10: How Do We Make the World a Healthier Place?
How Do We Make the World a Healthier Place? Improve nutrient bioavailability Help farmers grow Provide food, beverage, and dietary Power the day with plant & for animals, reducing feed crops that are hardier supplement ingredients that support animal proteins, healthy inputs and land required to whe
Slide 11: Strategic Focus
Strategic Focus • Strengthening Positions in Attractive, Growing Markets – Building scale, adding adjacent capabilities, expanding market and geographic reach, broadening our portfolio of solutions, investing in new science, enabling market awareness • Driving Organic Growth – Creating new demand th
Slide 12: Growth Platforms
Growth Platforms Multiple platforms to drive growth Human Nutrition & Health Animal Nutrition & Health Specialty Products • Realize Choline and Vitamin K2 market • Rumen-protected nutrients for Dairy • Plant micronutrients penetration and potential • Reashure® penetration application • Transition fr
Slide 13: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliation 13
Slide 14: Q2 2023 Financial Summary
Q2 2023 Financial Summary Solid quarter in challenging environment Sales Adj. EBITDA Adj. Net Earnings Adj. EPS ($M) ($M) ($M) ($/share) -2.3% 4.6% 0.0% -0.4% 236.7 34.4 34.4 1.07 1.06 231.3 56.5 59.1 2Q22 2Q23 2Q22 2Q23 2Q22 2Q23 2Q22 2Q23 • Lower volumes partially offset • Lower input costs
Slide 15: Full Year 2022 Financial Summary
Full Year 2022 Financial Summary Another strong year of growth Sales Adj. EBITDA Adj. Net Earnings Adj. EPS ($M) ($M) ($M) ($/share) 17.9% 13.8% 11.9% 12.9% 942.4 216.1 130.5 4.03 799.0 189.8 116.6 3.57 2021 2022 2021 2022 2021 2022 2021 2022 • Double-digit growth in all • Driven by sales gr
Slide 16: Historical Financials
Historical Financials Consistent performance over the years SALES ($M) ADJ. EBITDA ($M) 216 942 +9.6% +7.9% CAGR CAGR 190 799 174 704 159 160 644 644 148 595 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 ADJ. NET EARNINGS ($M) ADJ. EPS ($/share) +9.8% 131 +9.8% 4.03 CAGR CAGR 117 3.57
Slide 17: Historical Financials
Historical Financials Solid contribution from all reporting segments SALES ($M) 942 ADJ. EBITDA ($M) 22 216 131 2 799 12 190 0 44 704 175 117 644 644 8 159 160 42 104 262 595 26 148 5 39 51 10 92 7 47 48 227 76 39 32 37 73 192 464 32 115 4 39 176 178 65 33 24 158 33 29 126 23 527 123 443 112 400 97
Slide 18: Balchem's Capital Allocation Strategy
Balchem’s Capital Allocation Strategy Capital allocation Priorities Annual Cash Flow and Net Debt Leverage Ratio 2.3 • Support organic growth opportunities 180 2.5 160 1.7 1.6 2.0 • Augment growth with targeted M&A 140 1.5 1.2 1.1 1.5 1.5 120 • Diligent debt service 100 0.6 0.5 1.0 80 161 153 • Cont
Slide 19: Free Cash Flow Conversion
Free Cash Flow Conversion Translating profits into cash, 2022 impacted by significant cost inflation 140% Free Cash Flow as % of Non-GAAP Net Earnings 120% 109% 107% 105% 102% 102% 100% 93% 88% 79% 80% 60% 69% 40% 20% 0% 2015 2016 2017 2018 2019 2020 2021 2022 Q2'23 YTD 19
Slide 20: Recent Acquisitions
Recent Acquisitions Augmenting organic growth with targeted acquisitions close to core Albion Minerals Bioscreen Kappa Bioscience • Adjacent product • Geographic expansion • Portfolio extension in high offering in high growth and processing growth specialty vitamin market technology market • Chelate
Slide 21: Dividends
Dividends Consistent dividend policy ($/share) • Annual double-digit dividend growth for the last decade 0.71 • Consistency in execution 0.64 0.58 +12.4% 0.52 CAGR 0.47 0.42 0.38 0.34 0.30 0.26 0.22 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 21
Slide 22: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliation 22
Slide 23: Sustainability at Balchem
Sustainability at Balchem Our Sustainability Objectives & Framework Provide innovative solutions for the health & nutritional needs of the world. Company Making the world People Planet Profit a healthier place Operate with excellence as strong Culture stewards of our employees, customers, shareholde
Slide 24: Sustainability At Balchem
Sustainability At Balchem Supporting a future for all • As a signatory to the United Nations (UN) Global Compact, Balchem supports the Ten Global Principles in the areas of human rights, labor, environment and anti- corruption. • We are committed to advancing the broad goals of the UN across our are
Slide 25: Our 2030 Sustainability Goals and Priorities
Our 2030 Sustainability Goals and Priorities 2030 Sustainability Goals Our Priority Sustainable Development Goals Balchem commits to reducing our GHG emissions use by 25% Balchem commits to reducing our Learn more global water use about our by 25% sustainability programs 25
Slide 26: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliation 26
Slide 27: Balchem
Balchem A global nutrition and health company delivering trusted, innovative and science-based solutions to our customers • Leading positions in attractive markets • Creating new demand through innovation • Strong financial performance, delivering healthy margins and cash flows available for reinves
Slide 28: Agenda
• Balchem Overview Agenda • Vision and Strategic Focus • Financial Performance & Capital Allocation • Corporate Social Responsibility • Wrap Up • Appendix − GAAP to Non-GAAP reconciliation 28
Slide 29: Non-GAAP Financial Information
Non-GAAP Financial Information 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 a
Slide 30: Non-GAAP Financial Information - Continued
Non-GAAP Financial Information - Continued Table 1 Reconciliation of Non-GAAP Measures to GAAP (Dollars in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Reconciliation of adjusted gross margin GAAP gross margin $ 77,349 $ 71,8
Slide 31: Non-GAAP Financial Information - Continued
Non-GAAP Financial Information - Continued Table 2 (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income - as reported $ 30,110 $ 29,782 $ 52,820 $ 58,712 Add back: Provision for income taxes 8,290 9,476 14,699 18,176 Other expense 4,436 662 9,725 1,368 Dep
Slide 32: Non-GAAP Financial Information - Continued
Non-GAAP Financial Information - Continued Table 3 (unaudited) Three Months Ended June 30, Effective Tax Effective Tax 2023 Rate 2022 Rate GAAP Income Tax Expense $ 8,290 21.6 % $ 9,476 24.1 % (7) Impact of ASU 2016-09 448 120 Adjusted Income Tax Expense $ 8,738 22.8 % $ 9,596 24.4 % Six Months Ende
Slide 33: Non-GAAP Financial Information - Continued
Non-GAAP Financial Information - Continued (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 ma
Slide 34: Thank you
“SSI balchem: e.° Solve Today. Shape Tomorrow. Thank you