Balchem Corporation · NASDAQ:BCPC
Balchem — Investor Presentation (June 2012)
44 slides from Balchem's investor presentation, June 2012
Slide 1: Balchem June 2012
BALCHEM June, 2012 _—_— ESS!
Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this prese
Slide 3: Balchem Corporation
Balchem Corporation • Founded in 1967 • NASDAQ: BCPC • Headquarters: New Hampton, NY • Sales Office: Amsterdam, The Netherlands • Manufacturing Sites: • Slate Hill, New York • Green Pond, South Carolina • Verona, Missouri • Salt Lake City, Utah • St. Gabriel, Louisiana • Marano Ticino, Italy 3
Slide 4: Balchem Corporation at a Glance
Balchem Corporation at a Glance Food, Pharma and Nutrition One of the world’s leading providers of microencapsulated ingredient solutions, and the leading human choline producer. Animal Nutrition and Health Serving Three Market Sectors • Ruminant Animals - Specialty nutritionals. • Monogastric Anima
Slide 5: Balchem – Growing Globally
Balchem – Growing Globally…. 34% 66% North America ROW 5
Slide 6: Acquisition History (2001 – Present)
Acquisition History (2001 – Present) Acquired Date Acquisition Description Sales DCV, Inc. - Choline animal feed, human choline nutrient and Jun-01 $16M encapsulated product lines. Loders Croklaan - Encapsulation, agglomeration and granulation Jun-05 $ 6M* business. *Divested calcium portion of
Slide 7: Segment Revenue
Segment Revenue (In millions) 2010 2011 $255M $292M Animal $42 Nutrition and $43 Health ARC Specialty $42 Products $48 $171 Food, Pharma $201 and Nutrition Up $37M - 14.5% 7
Slide 8: Historical Consolidated Results
Historical Consolidated Results (In millions) Net Revenue Net Earnings $400 $50 $292 $38.8 $300 $232 $255 $40 $33.3 $219 $26.8 $30 $200 $19.1 $20 $76 $9.3 $100 $10 $0 $0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 YTD YTD 8
Slide 9: Consolidated Quarterly Results
Consolidated Quarterly Results (In millions) Net Revenue Net Income $100 $15 $76.2 $73.0 $9.27 $8.91 $75 $10 $50 $5 $25 $0 $0 1st Qtr 2012 1st Qtr 2011 1st Qtr 2012 1st Qtr 2011 1st Qtr result were up 4% 9
Slide 10: Fully Diluted Earnings Per Common Share
Fully Diluted Earnings Per Common Share $1.50 $1.28 $1.25 $1.12 $0.93 $1.00 $0.67 $0.75 $0.50 $0.31 $0.25 $0.00 2008 2009 2010 2011 2012 YTD 10
Slide 11: Cash Flow
Cash Flow Our strong earnings have generated outstanding cash flow resulting in: (000’s) 2008 2009 2010 2011 2012 YTD Cash 3.4 46.4 77.3 114.8 121.3 Cap. Ex. 5.1 3.4 7.6 6.6 1.4 LT Debt 9.5 6.8 4.9 1.4 1.2 Acq. Cash .3 4.7 Our strong balance sheet positions us to continue investing in our existing i
Slide 12: Annual Cash Dividend Per Share
Annual Cash Dividend Per Share $0.40 $0.35 $0.30 •5-Year Cash Dividend Growth Rate – 24.6% $0.25 $0.20 •Current dividend yield ≈ 0.6% $0.15 $0.10 •$5.2M paid in 2012 $0.05 $0.00 12
Slide 13: Real People. Real Science. Real Results.
Real People. Real Science. Real Results.
Slide 14: Balchem Animal Nutrition and Health
Balchem Animal Nutrition and Health Manufactures and markets: • Nutritional products for ruminants, predominately dairy cows, to boost health and milk production. • Feed grade choline chloride - an essential nutrient for the poultry and swine industries. • Choline chloride and derivatives of choline
Slide 15: Global leader in choline and protection technology
Balchem Animal Nutrition & Health is the global leader in choline and protection technology Our protection technology products, also known as Shure™ Technology, for ruminant animals, are manufactured using proprietary microencapsulation, extrusion and chelation technologies. The global leader in aqu
Slide 16: Animal Nutrition and Health
Animal Nutrition and Health Highlights 2010 2011 Sales $170.8M $201.5M Operating Income $ 24.1M $ 26.5M Targeting U.S. poultry and dairy production and industrial industries. Growth opportunities for sales into ruminant and industrial applications. Stable margins on feed grade choline. Improve
Slide 17: ANH Division Platforms – 2011
ANH Division Platforms – 2011 Protected Ingredients Base Ingredients (Shure™ Technology) ($36MM; 18% of ANH) ($166MM; 82% of ANH) Choline Industrial Ruminant Ruminant Chelated Feed Products Health Protein Minerals ($107MM; ($58MM; 29% 53% of ANH) of ANH) Nutritional Products ($143MM; 71% of ANH) 17
Slide 18: Animal Nutrition and Health
Animal Nutrition and Health (In millions) Net Revenue Operating Income $250 $30 $26.5 $201.5 $21.4 $24.1 $200 $160.5 $170.8 $147.7 $20 $150 $11.3 $100 $53.2 $10 $6.2 $50 $0 $0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 YTD YTD 18
Slide 19: Animal Nutrition & Health – Quarterly Results
Animal Nutrition & Health– Quarterly Results (in millions) Net Revenue Operating Income $75 $53.2 $50.7 $8 $6.2 $6.4 $50 $6 $4 $25 $2 $0 $0 1st Qtr 2012 1st Qtr 2011 1st Qtr 2012 1st Qtr 2011 19
Slide 20: R&D activities – collaborative science
R&D activities – developing technology based upon credible collaborative science 2001-11 research activities include work at these universities/research institutes Cornell University U.C. Davis University of Wisconsin University of Minnesota Texas A&M Ag. Canada - Quebec University of
Slide 21: Animal Nutrition and Health
Animal Nutrition and Health 2010 Revenue - $171M 2011 Revenue - $201M Feed Grade Choline 26% 29% Ruminant Products 57% 53% 17% Industrial 18% Grade Products 17.5% Growth! 21
Slide 22: Growing Market Opportunity For Balchem
Growing Market Opportunity For Balchem Horizontal drilling and multi- stage fracturing has facilitated development of many shell formations. 22
Slide 23: Where Do We Fit?
Where Do We Fit? Choline is a quaternary compound, very effective as a clay stabilizer, fitting technical requirements, improved worker safety when compared to other clay stabilizers and is “uniquely” environmentally safer. Balchem produces the highest quality choline, the largest quantity worldwide
Slide 24: Growing Industrial Opportunities
Growing Industrial Opportunities 2011 ANH Revenue - $201M 2011 Industrial Revenue - $59M Current Industrial Products Feed • Methyl Amines Grade 29% Choline • Metam Sodium Specialty ANH • Choline and choline 53% derivatives for oil and gas 18% applications Industrial Grade Products 24
Slide 25: Food, Pharma and Nutrition
Food, Pharma and Nutrition 25
Slide 26: Food, Pharma and Nutrition
Food, Pharma and Nutrition Highlights 2010 2011 Sales $42.0M $42.5M Operating Income $9.7M $11.1M Human grade Choline positioned for double digit revenue growth Operational Excellence Building a premier specialty ingredient business utilizing microencapsulation and application expertise. Organic
Slide 27: Encapsulation: To Control, Protect & Deliver
Encapsulation: To Control, Protect & Deliver Encapsulation controls undesirable chemical interactions in foods, supplements and pharmaceutical actives, thereby improving product quality and extending shelf life. 27
Slide 28: Food, Pharma and Nutrition
Food, Pharma and Nutrition (in millions) Net Revenue Operating Income $50 $12 $11.1 $42.0 $42.5 $35.7 $9.7 $40 $35.4 $10 $30 $8 $5.5 $6 $5.0 $20 $10.7 $4 $2.7 $10 $2 $0 $0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 YTD YTD 28
Slide 29: Food Pharma & Nutrition – Quarterly Results
Food Pharma & Nutrition– Quarterly Results (in millions) Net Revenue Operating Income $15 $4 $10.7 $11.0 $2.7 $2.5 $3 $10 $2 $5 $1 $0 $0 1st Qtr 2012 1st Qtr 2011 1st Qtr 2012 1st Qtr 2011 29
Slide 30: The European Food Safety Authority Choline Opinion
The European Food Safety Authority Choline Opinion 30
Slide 31: Choline In the Diet
Choline In the Diet Key Target Messages Audience Liver Health People of all ages People of all ages Synergy with Folic Acid Especially Pregnant Women Improve Life Long Memory Pre-natal, infant, children Athletic Performance/Recovery Age 18+ Improve cognitive function People of all ages CV Health 31
Slide 32: VitaCholine Scientific Summaries
VitaCholine Scientific Summaries 32
Slide 33: Major Brands Fortified with Choline
Major Brands Fortified with Choline 33
Slide 34: Recent International launches with Choline
Recent International launches with Choline 34
Slide 35: ARC Specialty Products
ARC Specialty Products SPECIALTY PRODUCTS 35
Slide 36: ARC Specialty Products
ARC Specialty Products Highlights 2010 2011 Sales $42.2M $47.9M Operating Income $15.9M $18.6M Steady revenue and income growth Operational Excellence Top provider of specialty gases Top standards for safety, packaging, distribution Manage customer inventory with just-in-time delivery and uniq
Slide 37: ARC Specialty Products
ARC Specialty Products (in millions) Net Revenue Operating Income $47.9 $50 $42.2 $18.6 $20 $35.8 $36.4 $15.9 $40 $14.3 $15 $12.5 $30 $10 $20 $12.3 $4.7 $10 $5 $0 $0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 YTD YTD 37
Slide 38: ARC Specialty Products – Quarterly Results
ARC Specialty Products – Quarterly Results (in millions) Net Revenue Operating Income $15 $12.3 $6 $4.7 $11.3 $4.4 $10 $4 $2 $5 $0 $0 1st Qtr 2012 1st Qtr 2011 1st Qtr 2012 1st Qtr 2011 38
Slide 39: Ethylene Oxide Market
Ethylene Oxide Market Overall medical device market continues to grow. Ethylene Oxide sterilization market continues to grow as well. EO shipments have historically increased 2%-3% per year. No major shifts in market share between sterilization technologies in 2011. 39
Slide 40: Medical Device Sterilization Market Share
Medical Device Sterilization Market Share Sterilization by Method Other Steam 1% 2% Radiation 40% EO 57% 40
Slide 41: Propylene Oxide Update
Propylene Oxide Update ABERCO, Inc – Acquisition Completed June 3, 2010 EPA FIFRA regulated for fumigation Sole registrant Spice Nutmeats (except peanuts) Crops Almond is main crop, then spices Pistachios & walnuts Peanuts require residual study for EPA approval Business performing very nicely as bo
Slide 42: Public Recognition
Public Recognition Nov. 1996 Forbes 200 Best Small Companies #193 Nov. 1997 Forbes 200 Best Small Companies #116 Oct. 2001 Forbes 200 Best Small Companies #128 Jun. 2003 Business Week 100 Hot Growth Companies #16 Sep. 2003 Fortune Small Business 100 Fastest Growing Companies #86 Jul. 2004 Fortune Sm
Slide 43: The Future
The Future • Positioned for growth • Highly skilled management team in place • Focusing our research efforts • Stability of ARC Specialty Products • Building Global Animal Nutrition and Health Business • Food, Pharma and Nutrition continues as growth engine • Solid balance sheet 43
Slide 44: Balchem
BALCHEM