Balchem Corporation

Greetings and welcome to the Ballchem third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you should require any operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. And it is now my pleasure to introduce to you Martin Bengston, CFO. Thank you, Martin. You may begin.

Thank you, and good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balkem Corporation for the quarter ending September 30th, 2024. 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 also include non-GAAP financial measures. Please refer to the reconciliations 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 strong third quarter financial results with healthy growth in sales, record earnings from operations, and record adjusted EBITDA. Excellent results in our human nutrition and health and specialty product segments more than offset the softness we continue to experience within our animal nutrition and health segment. Our consolidated revenues of $240 million were higher by 4.3% versus the prior year. Our gross margin dollars grew 11.5% and we expanded our gross margin percentage by 230 basis points to 35.6%. Earnings from operations of $48 million were higher by 10% versus the prior year. And we delivered record quarterly adjusted EBITDA of $64 million, an increase of 7.6% with an adjusted EBITDA margin of 26.8% of sales, up 80 basis points from the prior year. Our third quarter net income of $34 million, an increase of 16.4%, resulted in earnings per share of $1.03 on a GAAP basis. On an adjusted basis, our third quarter non-GAAP net earnings were a record of $37 million, an increase of 9.3%, which resulted in earnings per share of $1.13 on a non-GAAP basis. Cash flows from operations were $51 million for the third quarter of 2024, with quarterly free cash flow of $42 million. Overall, a strong quarter for Balchem, with performance that highlights the strength and resilience of our business model. Before passing the call back to Martin to go over the financial results in more detail, I would like to make a few comments about the overall market environment and some of the new innovative products we have recently launched. In 2024, we have seen a stabilization of demand and customers returning to more normalized order patterns following the volatility we experienced in 2022 and 2023. When we look across our portfolio of businesses, we are seeing excellent performance in our human nutrition and health segment, and similar to what we shared on the last call, We continue to see healthy demand for our unique portfolio of minerals, nutrients, and vitamins in our minerals and nutrients business. And we continue to see a normalization and more steady end consumer demand in our food systems businesses. In the animal nutrition and health segment, we saw sequential improvement in the third quarter compared to the second quarter. And we believe we bottomed out in the first half of 2024. While we are not yet back to healthy demand levels, we do expect sequential improvement in the second half of 2024 compared to the first half on improving dairy economics, stabilization of the monogastric business in Europe, and the early contribution from our recent product launch of AminoSure XL. For our specialty product segment, our primary business, Performance Gases, continues to perform well in a stable market, and we expect this to continue. While Q4 is our seasonally weakest quarter, we believe the ongoing strength in human nutrition and health and specialty products and the continuation of sequential improvement in animal nutrition and health will allow for continued year-over-year growth as we look to close out what will have been another very strong year for Balcon. Additionally, I am excited to share that we continue to innovate and launch new and enhanced products to support our growth. Animal Nutrition and Health just recently launched a newly developed product, AminoSure XL, which is a next-generation, rumen-protected, precision-released lysine designed to consistently, reliably, and economically meet the lysine amino acid requirements of lactating dairy cattle. AminoSure XL offers leading performance when considering feed stability, lysine content, and bioavailability, and is a great addition to the animal nutrition and health segment's portfolio of high-performing encapsulated products focused on optimizing dairy cow productivity and sustainability. Our human nutrition and health segment also recently brought two innovative new products to market. The first is K2 Vital Delta Fermented, which is a vitamin K2 from fermentation in a patented microencapsulated form. The second, VitaColine ProFlow, which is an enhanced formulation of our existing VitaColine specifically designed for inclusion in multivitamins. I'm excited about these recent product launches in both our animal and human nutrition and health segments. which add to the previously announced launch of OptiFOLIN Plus earlier this year, as we continue to focus on bringing innovative solutions for the health and nutritional needs of the world. And with that, I'm now going to turn the call back over to Martin to go through the third quarter consolidated financial results for the company and the results for each of our business segments. Martin?