Balchem Corporation

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. We were extremely pleased with the financial results for the first quarter of 2025 and the strong performance of our company, fueled by the ongoing market penetration of our unique portfolio of specialty nutrients and delivery systems and the favorable better for you trends within the food and nutrition markets that are well aligned with our food ingredient formulation systems and capabilities. We delivered record quarterly consolidated sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS, with year-over-year sales and earnings growth in all three of our reporting segments. The third quarter of 2025 was the 25th consecutive quarter of quarterly year-over-year growth in adjusted EBITDA for BALCAM. We are very proud of this accomplishment, particularly in light of the market environment within which we have been operating over the last 25 quarters. I would like to take this opportunity to thank the entire Balchem team for their exceptional performance and contributions toward this significant achievement. Thank you all very much. Before we get into more detail on the quarter, I would like to make a few comments about the overall market environment including the evolving global trade situation, as well as some of the new science that has recently been published supporting our nutrients and the further expansion of our marketing efforts to help drive awareness and market penetration. We continue to see healthy demand across the vast majority of our end markets. Our human nutrition and health segment continues to perform extremely well. driven by strong demand for both our unique portfolio of minerals, nutrients, and vitamins, and our food ingredients and solutions, which are benefiting from trends toward nutrient-dense, high protein, high fiber, and lower sugar, or better-for-you foods, where our nutrient portfolio and our formulations expertise bring considerable value to our customers. In the animal nutrition and health segment, we delivered another quarter of year-over-year growth on improved demand in both our monogastric and ruminant businesses as a result of further market penetration of our rumen-protected precision-release encapsulates nutrient portfolio and mostly, or modestly, I'm sorry, improving market conditions in the European monogastric market. And we remain encouraged by the overall performance of our animal nutrition and health product portfolio. And within our specialty product segment, both our performance gases business and our plant nutrition business are performing well, driven primarily by higher demand as a result of healthier market conditions within performance gases and successful geographic expansion growth within plant nutrition. Year to date, on a consolidated basis, we have delivered strong growth, both on the top and bottom lines. while continuing to generate strong free cash flow. And our outlook for the remainder of the year remains positive. As discussed on the last few earnings calls, we believe we are relatively well positioned to effectively manage through the current global trade environment. To date, we have managed to fully offset the impact of tariffs associated with the U.S. administration's evolving trade policies. either through alternate supply chain options or subsequent pricing actions. And based on what we know today, we expect to similarly be able to offset any impact of future tariffs as the trade situation further evolves. Additionally, I would like to share some progress we have made in our scientific and clinical research pipeline, which continues to bolster our human nutrition and health segment. We continue to actively invest in the science behind our brands such as Vitacoline, K2 Vital, Opti-MSM, and Albion Minerals. These studies are integral to our strategy for entering new markets, expanding our ingredient categories, and building consumer awareness. I would like to highlight one of the studies published recently that is of particular importance. Late in 2017, we informed you that Valchem funded a pilot study. Dr. Steven Seisel, the former director for the University of North Carolina's Nutrition Research Institute received a $2.6 million grant from a unit of the National Institutes of Health or NIH to develop a blood-based test or biomarker to help measure choline status in humans. The NIH-funded choline biomarker study was known to be a lengthy study, only further delayed by the COVID-19 pandemic, that has now been completed and the results have been published as a preprint. This was an important study from our perspective since it promised to help more easily identify choline deficiency in humans by identifying a choline biomarker in order to ultimately help address deficiencies through supplementation. while also facilitating research on the benefits of choline supplementation in humans. The study was a double-blind, randomized, crossover-controlled feeding study in which all 101 subjects received 100%, 50%, and 25% of the choline-recommended daily intake in two-week segments separated by two-week washouts. The results of the study show that plasma choline and betaine when measured together are highly predictive of actual dietary choline intake. These findings offer a new opportunity to assess choline dietary adequacy and will likely be included in future clinical and population studies and ultimately be used as a common measurement in health screenings of choline intake versus daily recommended intake levels. On the marketing front, within our animal nutrition and health segment, We continue to expand our reach and impact through marketing. We have strengthened our marketing capabilities, and Valchem's real science exchange platform, now celebrating five years since its launch, has grown into a leading industry information and technology resource with webinars, podcasts, and symposiums that is attracting a strong following across the industry. with high-quality content across leading streaming platforms such as YouTube, Spotify, and Apple Podcasts. This channel to the industry gives Balchem a unique opportunity to reach and interact with an expanded target audience. We will continue to invest in our marketing capabilities, and we recently partnered with Progressive Dairy Magazine to introduce the Real Producer Exchange for practical insights for dairy farmers. And later this month, we are excited to expand into the companion animal sector with new webinars and podcasts, reinforcing our commitment to advancing animal science and industry collaboration. So some exciting progress being made on our strategic growth initiatives while at the same time delivering strong financial results. Now regarding the third quarter of 2025's financial performance. This morning, we reported record quarterly consolidated revenue of $268 million, which was 11.5% higher than the prior year quarter. We delivered record quarterly gap earnings from operations of $55 million, an increase of 13.7% versus the prior year. Consolidated net income closed the quarter at $40 million, an increase of 19.1%. This quarterly net income translated to diluted net earnings per share of $1.24 on a gap basis, up 21 cents or 20.4% compared to the prior year. On an adjusted basis, we delivered record quarterly adjusted EBITDA of $71 million, an increase of 11% compared to the prior year. Our record quarterly adjusted net earnings were $44 million, an increase of 19.1% from the prior year, which translated to $1.35 per diluted share, up 22 cents or 19.5% compared to the prior year. Overall, another excellent quarter for Balchem as we continue to deliver strong financial results while making good progress on our strategic growth initiatives. 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 in more detail and the results for each of our business segments. Thank you, Ted.

As Ted highlighted, the third quarter was a great quarter for Balchem with record sales, earnings from operations, adjusted EBITDA, adjusted net earnings and adjusted earnings per share. Our third quarter net sales of $268 million were 11.5% higher than prior year, driven by strong performance in all three segments, human nutrition and health, animal nutrition and health, and specialty products. Our third quarter gross margin dollars were $95 million, up 11.8% compared to the prior year. And our gross margin percent was 35.7% of sales, up 10 basis points compared to the prior year. Consolidated operating expenses for the third quarter were $41 million as compared to $37 million in the prior year. The increase was primarily due to an increase in professional services and higher compensation-related costs. Gap earnings from operations for the third quarter were a record $55 million, an increase of 13.7% compared to the prior year. On an adjusted basis, as detailed in our earnings release this morning, record non-gap earnings from operations of $60 million were up 12.1% compared to the prior year. Adjusted EBITDA was a record $71 million, an increase of 11% compared to the prior year, with an adjusted EBITDA margin rate of 26.7%. Net interest expense for the third quarter was $3 million, a decrease of $1 million compared to the prior year, driven primarily by lower outstanding borrowings. our net debt decreased to $89 million with an overall leverage ratio on a net debt basis of 0.3. The effective tax rates for the third quarters of 2025 and 2024 were 22.6% and 22.9% respectively. The decrease in the effective tax rate from the prior year was primarily due to certain lower state taxes. Consolidated net income closed the quarter at $40 million, up 19.1% from the prior year. This quarterly net income translated into diluted net earnings per share of $1.24, an increase of 21 cents compared to the prior year. On an adjusted basis, our third quarter adjusted net earnings were a record $44 million, an increase of 19.1% from the prior year, which translated to $1.35 per diluted share. Cash flows from operations were $66 million, with free cash flow of $51 million, and we closed out the quarter with $65 million of cash on the balance sheet. As we look at the third quarter from a segment perspective, our human nutrition and health segment generated record sales of $174 million, an increase of 14.3% from the prior year, driven by higher sales within both the nutrients business and the food ingredients and solutions businesses. Our human nutrition and health segment also delivered record quarterly earnings from operations of $41 million, an increase of 14.8% compared to the prior year. This was primarily driven by the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Third quarter adjusted earnings from operations for this segment were a record $44 million, an increase of 13.2%. We are extremely pleased with the overall performance of our human nutrition and health segment. And as Ted mentioned earlier, we continue to experience strong demand for our unique portfolio of ingredients and solutions. We believe our human nutrition and health businesses are well positioned to build on the momentum we're seeing across our end markets And as consumers increasingly favor better for you ingredients and solutions, we see significant opportunities ahead to leverage our formulation expertise, nutrient portfolio, and strong market positions to continue to deliver healthy growth in human nutrition and health. Our animal nutrition and health segment generated quarterly sales of $56 million, an increase of 6.6% compared to the prior year. The increase was driven by higher sales in both the ruminant and monogastric businesses. Animal Nutrition and Health delivered earnings from operations of $4 million, an increase of 5.2% from the prior year. The increase was primarily due to the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Third quarter adjusted earnings from operations for this segment were $4 million, an increase of 1.2% compared to the prior year. The end markets for animal nutrition and health remain relatively stable at the moment, and we were pleased to see another quarter of top and bottom line growth. We continue to see market penetration of our room and protected encapsulated nutrients for the dairy market, including our Reashore encapsulated choline and our more recently launched AminoShore XL encapsulated lysine. On the monogastric side, we see a relatively stable US end market at the moment and a modestly improved European market environment following the provisional anti-dumping duties on Chinese choline that were announced last quarter. As we look forward, we expect animal nutrition and health to continue to deliver growth over the long term. Our specialty product segment delivered quarterly sales of $36 million, an increase of 7.5% compared to the prior year, driven by higher sales in both the performance gases and plant nutrition businesses. Specialty products deliver a record quarterly earnings from operations of $12 million, an increase of 9.7% versus the prior year, primarily driven by the aforementioned higher sales. Third quarter adjusted earnings from operations for this segment were a record $13 million, an increase of 8.8%. We continue to be really pleased with the performance of specialty products, delivering another strong quarter of growth, both on the top and bottom line. Within performance gases, our international reach is creating value for our customers and helping to drive growth rates above historical levels. And similarly, within our plant nutrition business, we're having good success with our geographic expansion efforts, particularly in Latin America and Asia Pacific. Specialty products is performing well and going forward. We expect to be able to continue to drive solid growth for the specialty product segment. Overall, the third quarter was another excellent quarter for Balchem, and we believe we are well positioned for continued growth as we head into the remainder of the year. I'm now going to turn the call back over to Ted for some closing remarks.