Balchem Corporation

Martin Bengtsson, Chief Financial Officer. Mr. Bengtsson, you may now begin.

Good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balcombe Corporation for the quarter ending September 30th, 2022. My name is Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our Chairman, President, and CEO. Following the advice of our counsel, auditors, and the SEC, at this time, I would like to read our forward-looking statement. Statements made in today's call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem's most recent Form 10-K, 10-Q, and 8-K reports. The company assumes no obligation to update these forward-looking statements. Today's call and commentary include non-GAAP financial measures. Please refer to their reconciliation in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President, and CEO.

Thanks, Martin. Good morning, and welcome to our conference call. This morning, we reported our third quarter results with both strong revenue and earnings growth. Our revenues of $244.3 million were up 23.4% and our adjusted earnings from operations were $44.8 million up 13.3% versus the prior year quarter. Our third quarter net income of $25.2 million, an increase of 0.9% resulted in earnings per share of 78 cents on a GAAP basis. On an adjusted basis, our third quarter non-GAAP net earnings were $32.4 million An increase of 8%, resulting in earnings per share of $1 on a non-GAAP basis. Cash flows from operations were $41.6 million for the third quarter of 2022, with quarterly free cash flow of $26.8 million. Overall, another solid growth quarter for Balchem, with performance that highlights the strength and resilience of our business model in a very challenging market environment. Before passing the call back to Martin to cover more detailed financial results, I would like to make a few comments about the overall market environment and our most recent acquisitions as well. The current market environment we find ourselves operating within is very challenging. Inflationary pressures, rising interest rates, the geopolitical and macroeconomic environment, and general market uncertainties are having an impact on costs, supply chain efficiencies, Thank you. Thank you. Thank you. how we have been able to raise prices to offset much of the inflationary impact on our costs. We are also pleased with the growth delivered in the third quarter and believe that despite the increased demand volatility and the ongoing challenges associated with the political and macroeconomic environment that the strength and resilience of our business model coupled with the contribution from our recent acquisitions will enable us to continue to deliver growth in Q4 and INTO 2023. I also wanted to spend a little time talking about our most recent acquisitions. On August 30th of this year, we completed the acquisition of Cardinal Associates Inc., operated as Bergstrom Nutrition, or simply Bergstrom, a leading science-based manufacturer of methyl sulfonyl methane, or MSM, based in Vancouver, Washington. Bergstrom which was privately owned by the founding family and other investors was a company that we had our eyes on for some time. So we were very pleased that we were able to acquire Bergstrom once the family decided to sell. MSM is a widely used ingredient with strong scientific evidence supporting its benefits for joint health, sports nutrition, skin and beauty, healthy aging, and pet health. Bergstrom's MSM brand Opti MSM delivers the highest quality and purity MSM on the market and is the only brand of MSM with a U.S. grass or generally regarded as safe designation. Bergstrom will be integrated into both our minerals and nutrients business unit within the human nutrition and health segment and our companion animal business unit within the animal nutrition and health segment. We acquired 100% of Bergstrom for an enterprise value of approximately $68 million prior to net debt and working capital adjustments funded out of our existing credit facility. In addition to the purchase price, the sellers have an opportunity to receive an additional earn out payment in 2024 ranging from zero to $16 million based on growth and other performance targets established for the 2023 calendar year. This transaction represents an enterprise value to EBITDA multiple of approximately 10 times based on the 2023 forecast EBITDA post synergies. Bergstrom's forecast 2023 revenues are approximately 25 million US dollars. I want to take this opportunity to welcome Bergstrom's approximately 25 employees into the Balchem team. We are excited to have you join our team and we are looking forward to the opportunities that lie ahead as a result of our expanded team and the expanded portfolio of nutritional product offerings for our customers. Additionally, we are now one quarter into the ownership of Kappa Bioscience. The reaction from both CAPA's and Balchem's legacy customers has been very positive as they see the clear fit between our two companies and the opportunity for a broader solution offering. Our teams are collaborating well together and we are identifying opportunities to drive additional growth. The business is experiencing some of the same demand volatility and destocking as other parts of the company But we remain excited about the long-term growth prospects for vitamin K2 and our differentiated K2 vital product offerings. And with that, I will now turn the call back over to Martin to go through the detailed financial results.