Personal Finance

Growth Streak Continues For Balchem Corporation

Supplements on a table.

Balchem Corporation (NASDAQ: BCPC) continues to be on a hot streak in 2018, helped by a growing economy and strong demand for its products in a variety of markets. After double-digit growth on the top and bottom line in the first quarter , the company accomplished the same feat again in the second quarter.

Here's a look at the high-level numbers as well as a breakdown of some key results in the quarter.

Supplements on a table.

Image source: Getty Images.

Balchem Corporation: The Raw Numbers

Metric Q2 2018 Q2 2017 Year-Over-Year Change
Sales $163.7 million $147.1 million 11.3%
Net income $19.7 million $16.5 million 19%
Diluted EPS $0.61 $0.51 19.6%

Data Source: Balchem Corporation Q2 2018 earnings release.

What Happened With Balchem Corporation This Quarter?

The headline numbers are strong, but Balchem operates in four distinct businesses, so the breakdown of operations in those segments is important. Here are the highlights from the quarter.

  • Human nutrition and health segment revenue rose 8.9% to $85.0 million and earnings from operations fell 11.1% to $10.1 million. An unfavorable mix of products sold and higher raw materials costs contributed to the decline in earnings.
  • Animal nutrition and health sales rose 13.5% to $42.0 billion and income from operations jumped 92.8% to $7.1 million. Both higher volumes and higher selling prices helped drive results for the quarter.
  • Specialty products revenue rose 10.1% to $22.9 million and segment earnings were up 7.8% to $8.7 million. Sales of plant nutrition products and ethylene oxide drove growth.
  • Industrial product sales rose 22.5% to $13.8 million and earnings from operations were up 68.1% to $2.7 million. Higher choline and choline derivative sales to fracking customers were the driver of better results.

You can see that each segment had revenue growth and there was earnings growth in three of four segments as well. In recent history, it's been rare that all four businesses performed well at the same time , but that's exactly what happened last quarter.

Balchem also recently paid off $210.8 million on its senior secured term loan A, which was due in May 2019 with proceeds from a revolving credit agreement for up to $500 million. The new debt facility is a senior secured revolving credit facility that's due in 2023, extending maturities for the company.

What Management Had to Say

There weren't many flaws in the second quarter. CEO Ted Harris was happy with the performance and financial adjustments that give the company more flexibility in the future:

We are very proud of the strong performance we reported in the second quarter of 2018. We delivered outstanding financial results, with quarterly sales growth in all of our four segments and all-time record adjusted net earnings, while progressing our strategic growth initiatives, and strengthening our financial profile through our new revolving credit agreement.

With the economy growing and human and animal nutrition more of a focus for consumers, Balchem looks positioned to keep the strong results going.

Looking Forward

Balchem doesn't give guidance, so we don't know what management is thinking for growth in the second half of the year. But I see the economic backdrop being strong and the expanded credit facility will allow for more acquisitions if management sees fit. All in all, it's tough to see many flaws in the second quarter for Balchem.

10 stocks we like better than Balchem

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Balchem wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Balchem. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BCPC

Other Topics

Stocks

Latest Personal Finance Videos

    #TradeTalks: A Holistic Financial Picture to Give a True Indicator of your Financial Health

    Harvest Founder Nami Baral joins Jill Malandrino on Nasdaq #TradeTalks to discuss the Harvest PRO Index, holistic financial picture to give a true indicator of your financial health, not just a credit score.

    Oct 9, 2020

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More