Balchem Corporation · NASDAQ:BCPC
Balchem — Q4 2019 Earnings Presentation
30 slides from Balchem's earnings presentation, Feb 21, 2020
Slide 1: Investor Presentation Q4 2019
Investor Presentation Q4 2019 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: Balchem Corporation
Balchem Corporation Balchem develops, manufactures, and markets specialty ingredients that help make the world a healthier place Highlights • NASDAQ: BCPC • Founded in 1967 • Headquarters: New Hampton, NY • Approximately 1,400 Employees • 21 Manufacturing Sites: - 17 in North America - 3 in Europe -
Slide 4: Leadership
Leadership Ted Harris, Chairman 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 Harvard University and bache
Slide 5: Balchem at a Glance
Balchem at a Glance INDUSTRIAL PRODUCTS 4% SPECIALTY PRODUCTS 14% 82% HUMAN NUTRITION & HEALTH Nutrition & Health (% of sales) 54% ANIMAL NUTRITION & HEALTH 28% 82% Of Revenues Focused On Nutrition And Health 5
Slide 6: Segment Overview
Segment Overview Segment Markets Served Solutions 4% 14% Human Nutrition • Nutritional Supplements • Micro-encapsulation 82% & Health • Food and Beverage • Choline Nutrition & Health (% of sales) 54% • Infant & Toddler Formula • Chelated Minerals 28% • Organic Cereal • Powder, Flavor, & Cereal Syste
Slide 7: Vision and Mission
Vision and Mission Our vision is clear; to make the world a healthier place Our mission is to build a global nutrition and health company delivering trusted, innovative, and science based solutions to our customers Committed To Building A Global Nutrition And Health Company 7
Slide 8: 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 9: Balchem Growth Platforms
Balchem Growth Platforms Human Nutrition & Health Animal Nutrition & Health HUMAN NUTRITION & HEALTH ANIMAL NUTRITION & HEALTH • Leveraging Synergies Across Segment • ReaShure® Penetration • FDA RDI for Choline and Expanded Choline • NRC Recommendation on Choline Awareness / Science • Rumen Protecte
Slide 10: Growth Vectors
Growth Vectors Growth over 5 years Key Platforms Driving Growth Above Market • Choline and Mineral Nutrition for Mother & Child, Adult Cognition, Energy & Fitness, Liver Health, Diabetes Complications • ReaShure® Penetration Strategic Acquisitions • Rumen Protected Delivery Systems • Companion Anima
Slide 11: 2020 Market Outlook
2020 Market Outlook Market External Metrics 2019 Comments 2020 Food and • GDP • Food and Bev. Demand relatively stable Beverage • Food and Bev. Growth • Nutritional beverage/bar markets growing faster Supplements • Vitamin/mineral growth • Personalized nutrition on the rise • Magnesium and Choline a
Slide 12: 2020 Potential Challenges
2020 Potential Challenges • COVID-19 Virus – Global uncertainty around how this will impact global supply chains along with supply/demand balances – Balchem taking precautionary actions and closely monitoring situation • African Swine Fever – Potential spread from Asia into Western Europe and U.S. c
Slide 13: Historical Financials
Historical Financials SALES ($M) ADJ. EBITDA ($M) 644 644 159 160 149 148 595 140 541 552 553 122 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 ADJ. NET EARNINGS ($M) ADJ. EPS ($/share) 3.19 104 3.01 98 2.51 2.52 2.53 80 80 82 2.21 69 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2
Slide 14: Segment Financials
Segment Financials SALES ($M) ADJ. EBITDA ($M) 159 160 644 644 149 5 26 148 10 595 51 3 140 7 552 553 48 92 541 7 39 76 32 25 32 54 122 73 32 IP 105 70 28 54 178 IP 19 176 SP 54 158 37 29 33 33 166 161 SP 25 35 ANH 176 ANH 30 341 347 80 84 83 316 78 297 71 278 HNH 206 HNH 48 2014 2015 2016 2017 2018
Slide 15: Q4 2019 Financial Summary
Q4 2019 Financial Summary Sales Adj. EBITDA Adj. Net Earnings Adj. EPS Up 1.8% Up 1.0% Up 13% Up 14% 163.5 166.5 40.0 28.4 39.6 25.1 0.88 0.77 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 4Q18 4Q19 • Growth in HNH, ANH, SP • Gross Margin% • Lower tax rate driven by • Flat share count YoY • Improved Dairy Improveme
Slide 16: Capital Allocation Strategy and M&A
Capital Allocation Strategy and M&A Capital Allocation Strategy Annual Cash Flow ($M) and Debt Leverage Ratio • Prioritize organic growth investments • Augment organic growth with targeted M&A 2.3x 1.1x 0.6x 124 • Pay Down Debt 1.5x 1.6x 1.2x 119 108 111 104 • Continue to pay and grow dividend 85 •
Slide 17: Recent Acquisitions
Recent Acquisitions Rationale Key Offering Zumbro River Brands Market consolidation and expanded High protein extrusion and December 2019 product offering agglomeration Chemogas Adds leadership position in Europe to Ethylene Oxide re-packaging and May 2019 already existing U.S. leadership distributi
Slide 18: Free Cash Flow Conversion
Free Cash Flow Conversion 130% Free Cash Flow as % of Non-GAAP Net Income 120% 110% 105% 105% 102% 102% 100% 93% 90% 79% 80% 70% 60% 50% 2014 2015 2016 2017 2018 2019 Free Cash Flow Conversion Solid Free Cash Flow Conversion, Turning Profits Into Cash 18
Slide 19: Dividends
Dividends • Yearly double-digit dividend growth for the last decade • Consistency in execution 0.52 0.47 0.42 0.38 0.34 0.30 ($/share) 0.26 0.22 0.18 0.15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Consistent Dividend Policy 19
Slide 20: Our Sustainability Framework
Our Sustainability Framework Every day, Balchem is delivering trusted solutions that enhance health and well-being through science. The two objectives of our sustainability strategy directly support our mission of making the world a healthier place: • providing innovative solutions for the health an
Slide 21: Our Sustainability Framework
Our Sustainability Framework People Planet Profit 10.2 billion – number of animals reached per year 27.6% – revenue from products developed in the past 1.3 billion – number of people reached per year five years 0.61 GJ – energy intensity (GJ of energy per ton of 1.06 – total recordable injury rate (
Slide 22: What Makes Balchem Unique?
What Makes Balchem Unique? Proven Track Record Of Growth Protected Positions ✓ Proven ability to grow in in all economic ✓ Consolidated position in Choline conditions ✓ EPA Registrations for EO and PO ✓ Steady and thoughtful capital allocation ✓ Patent portfolio and premium branded ✓ Continued innov
Slide 23: Summary / Wrap Up
Summary / Wrap Up • Leading Positions in Attractive Markets • Creating New Demand Through Innovation • Delivering Healthy Margins • Generating Cash Flow from Operations Available for Reinvestment • Proven Track Record Reasons To Invest 23
Slide 24: Solve Today. Shape Tomorrow.
- baichem * Solve Today. Shape Tomorrow. Confidential 24
Slide 25: Appendix
Appendix 25
Slide 26: 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
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