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| Statement |
|---|
| We are pleased with Balchem's financial results reported earlier this morning for the fourth quarter of 2023, capping off another solid year for Balchem |
| We were very pleased with the overall performance of our Human Nutrition & Health segment, delivering record fourth quarter sales and earnings from operations |
| I am particularly pleased with our Human Nutrition & Health segment posting record fourth quarter sales and earnings |
| And we'll be able to return to growth for this business, that we really feel as though we've got a good position |
| Overall, 2023 was another solid year for Balchem, while full year 2023 net sales were down 2.1%, we delivered record earnings from operations of $159.2 million, an increase of 9.6% and record adjusted EBITDA of $231 million, an increase of 7.1% from the prior year |
| But we really feel good about our products |
| And we also generated record free cash flow, allowing us to further pay down our debt and reduce our leverage ratio on a net debt basis to 1.1 times |
| We also made good progress on our strategic initiatives |
| The addition of vitamin K2 and methylsulfonylmethane or MSM to our product portfolio is starting to play out as we expected, with our now broader portfolio indeed enhancing, our ability to provide a broader array of innovative solutions for the health and nutritional needs of our customers and the world at large |
| The other reason that we're seeing nice growth in that product line is some of these studies that we've talked about, that we're incredibly excited about are showing that ReaShure not only helps address fatty liver, yes, it does that, but it also helps growth rates, it helps the overall health of the cow, ability to fight disease, colostrum increases in the mothers |
| So we feel good about our position in all of this and certainly are hopeful that ultimately this biologics license application is filed and approved by FDA, because there's significant opportunity for us |
| I am particularly pleased with the progress we made in 2023 to more effectively market, communicate and promote the positive results from these studies to both our customers as well as the end consumers |
| We have clearly enhanced our marketing capabilities to leverage the strong science behind our products, so that we can build awareness and ultimately drive penetration |
| While there is clearly more work to be done here, we are making good progress |
| Overall, we are very excited about the opportunities that exist with our portfolio of products and we believe that as the library of science keeps growing and our marketing capabilities continue to be enhanced, the market opportunity for our unique portfolio of products and technologies will grow as well |
| We were excited to see that the data from their studies was published in JAMA in December, I think that was a really great step |
| Despite the protracted timeline of this initiative, we are encouraged by the progress made over the past year toward reaching the important milestone of filing their biologics license application with FDA, which we believe now will happen in 2024 and we remain excited about the potential for this collaboration |
| But that also is in part why we're so excited about the addressable market, the potential markets out there for us |
| So when we wrap all of that together, that really does give us confidence that we can continue the positive momentum that we've had for the last few years of earnings growth year-over-year, and that we will return to top line growth after the 2%-ish reduction in 2023 |
| We're taking some solace in the fact that for the last few quarters we've seen sequential improvement in that business, volumes were actually up nicely, sequentially in Q4 compared to Q3 in Animal Nutrition & Health |
| We are extremely pleased to report that we are already tracking ahead of our 2030 goal on greenhouse gas emissions reductions |
| But even there, we feel as though the second half of 2024 will be improved and we will be able to deliver year-over-year growth, part of that is just simply, we're going to lap the difficult quarters that we've been experiencing for a while |
| So we really feel like plant nutrition will have a much stronger year in 2024 than they did in 2023 |
| So much of the momentum that we saw in Q4, we really feel good about that continuing in 2024 |
| This most recent increase marked the 15th consecutive year of double digit growth of our dividend, which once again reinforced our commitment to our long-standing dividend strategy |
| All-in-all, another solid year both financially and strategically for Balchem |
| Now, regarding the fourth quarter of 2023, while our revenue of $229 million was down 1.6%, we delivered strong profitability with growth in gross margin, earnings from operations and net income on expanded margin percentage rates in the quarter |
| We delivered earnings growth in two of our three reporting segments with the Human Nutrition & Health segment posting record fourth quarter sales and earnings |
| We were pleased with the financial results for the fourth quarter of 2023, which capped off another solid year for Balchem |
| Our Human Nutrition & Health business really is performing well |
| Statement |
|---|
| The European animal feed market continues to show soft market demand and continued competition from low cost Chinese products |
| Our fourth quarter net sales of $229 million were 1.6% lower than the prior year |
| Our specialty product segment delivered quarterly sales of $31 million, a decrease of 2.6% compared to the prior year, due to lower sales in both the performance gases business and the plant nutrition business |
| The area where we expect to see some continued challenges is in our Animal Nutrition & Health segment, where the competitive dynamics internationally combined with poor U.S |
| dairy economics will continue to challenge this segment in the near term |
| Our Animal Nutrition & Health segment generated quarterly sales of $58 million, a decrease of 10.2% compared to the prior year |
| But last year, the plant nutrition portion of that business had a very poor start to the year with all the rains in California and kind of the wet fields and so forth |
| Similar to what we discussed in our Q3 earnings call, our Animal Nutrition & Health segment is experiencing challenging market conditions, particularly in Europe, but also in the North American dairy market |
| The decrease in sales was driven by lower sales in both the ruminant and monogastric markets |
| Fourth quarter adjusted earnings from operations for this segment were $6 million, a decrease of 44.5% |
| Obviously, as we talked about in the prepared statements, Animal Nutrition health is a bit more difficult |
| We're down more in 20s and 30s, and so that's really our challenge |
| But last year, certainly the weather was a negative and this year we don't see that reoccurring based on what we see right now |
| milk and milk protein prices, impacting demand for our rumen-protected encapsulated nutrients in North America |
| And the North American dairy market is still experiencing low U.S |
| The situation in Europe really isn't getting any worse |
| So that business was materially impacted negatively in 2023 |
| And that element of our product portfolio is the one that has really been impacted the most by the lower dairy prices |
| current market growth, so that was lacking for a year or so, and so we really feel like that is back |
| The awareness is relatively low |
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