BALCHEM CORPORATION

BALCHEM CORPORATION
May 2015
September 2014
BALCHEM CORPORATION

Founded in 1967, Balchem is engaged in the development, manufacturing and marketing of
specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical
and medical sterilization industries.

NASDAQ: BCPC
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Headquarters: New Hampton, NY
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Manufacturing Sites:
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Slate Hill, NY
Green Pond, SC
Verona, MO
Salt Lake City, UT
St. Gabriel, LA
Covington, VA
Marano Ticino, Italy
Approximately 845 Employees
Bridgeton, MO
Defiance, OH
Reading, PA
Marshfield, WI
Lincoln, NE
Sleepy Eye, MN
85
760
North America
Rest of World
2
BALCHEM AT A GLANCE
Food, Pharma & Nutrition
A technology-driven, food and beverage
solutions company developing complete
systems, including ingredients, flavor
bases and microencapsulation to control,
mask, fortify, protect and deliver
technologies, into finished products.
Medical Devices
ARC Specialty Products
Providing sterilization of medical
Devices, pasteurization &
Fumigation of nuts & spices.
Animal Nutrition & Health
Industrial Products
Choline, Microencapsulation,
Chelation – delivering optimal
Animal Nutrition and Health.
Industrial Choline Chloride –
Biodegradable, Environmentally
Responsible, Reduced or Chloride
Free.
3
BALCHEM TODAY
2014 Results
(Dollars in millions, except per share data)
REVENUE
$ 541.4
NET EARNINGS
$ 52.8
EBITDA
$ 112.2
NET EARNINGS PER SHARE
$ 1.69
EBITDA PER SHARE
$ 3.60
4
BALCHEM TODAY
2015 YTD Results
(Dollars in millions, except per share data)
REVENUE
$ 144.9
NET EARNINGS
$ 15.2
ADJUSTED EBITDA
$ 36.1
NET EARNINGS PER SHARE
$ 0.48
EBITDA PER SHARE
$ 1.15
5
BALCHEM CORPORATION
Net Revenue
(dollars in millions)
$600
$541
$500
$400
$292
$310
Animal
Nutrition and
Health
30%
$337
$300
SensoryEffects
47%
$200
$145
Industrial
Products
14%
ARC
Specialty
Products
9%
$100
$0
2011
2012
2013
2014
2015
2015 1st Qtr.
Net Revenue
$145
6
HISTORICAL CONSOLIDATED RESULTS
(Dollars in millions, except per share data)
Fully Diluted Earnings Per
Common Share
Net Earnings
$60
$531
$50
$40
$39
$40
$2.00
$1.691
$1.45
$45
$1.50
$1.28
$1.32
$1.00
$30
$0.48
$20
$15
$10
$0.50
$0.00
2011
$0
2011
2012
2013
2014
2012
2013
2014
2015
2015
1 Reflects certain one time pre-tax charges of $5.4 million relating to the May 2014 acquisition of SensoryEffects
7
SENSORYEFFECTS
Growth
Platforms
Products
Strategy
SENSORYEFFECTS
HIGHLIGHTS
•
($ in MM’s)
2013
2014
2015 YTD
Sales
$48
$206
$68
Op. Income
$11
$ 21
$8
SensoryEffects acquired May 7, 2014
9
SENSORYEFFECTS DIVISION PLATFORMS
(2011-2013 is PRE-ACQUISITION)
($ in millions)
($ in millions)
Revenue
Operating Income
$25
$250
$21.3
$206
$200
$20
$150
$15
$100
$50
$43
$44
$48
$68
$11.1
$11.3
$11.2
$10
$7.7
$5
$0
$0
2011
2012
2013
2014 2015 YTD
2011
SensoryEffects (Acquisition)
Protected Food Ingredients
($54.5 MM YTD; 80% of segment)
($7.5 MM YTD; 11% of segment)
Powders
Flavors
Cereal
Confecshure
Meatshure
2012
Bakeshure
2013
2014 2015 YTD
Nutritional Ingredients
($5.8 MM YTD 9% of segment)
Choline
Nutrients
Vitashure
Nutrients
10
SENSORYEFFECTS INGREDIENT SOLUTIONS
FLAVOR SYSTEMS
Customized wet- and dry-based
flavor systems.
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Chocolate systems
Juice and other drink bases
Ice cream bases and
variegates
Low-Melt Point Inclusions
ENCAPSULATES
& INCLUSIONS
POWDER SYSTEMS
Specialty spray-dried emulsified
powders and formulated dry-blended
systems.
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Specialty non-dairy and dairy
creamers
Whipped toppings
Nutritional beverage bases
Specialty powders including baby
formula and medical food
Encapsulates improve the texture,
taste, economics and shelf life of
food products via controlled released
technology.
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Dough's & Batters
Shelf-Stable Breads
Bakery Mixes
Tortillas
Cookies
Cakes
11
SENSORYEFFECTS
SPECIALTY BEVERAGE
CEREAL SYSTEMS
Specialty Beverage delivers the
formulation of applications for
single serve consumer convenience
technologies including dry blends,
spray drying and agglomeration.
Customized manufacturing of cereal
based systems.
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Innovation for convenience
Evolution of Single Serve:
- Consumer choice flavor
- Functionality
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Ready-to-eat cereals
Baby cereal food
Cereal snacks
Cereal ingredients
INFANT & TODDLER
NUTRITION
Development and manufacturing
Infant and Toddler formulas.
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Custom blends
Nutritional bases
Fortified Nutritional bases
All-in wet mixes
12
NUTRIENT APPLICATIONS
 Choline: a nutrient for general well-being,
with importance in:
 Prenatal development
 Lifelong cognitive function
 Metabolism, liver and cardiovascular
function
 Support of active, athletic lifestyles
 Included in a variety of supplement forms,
including tablets, capsules and chewables
 Easy to formulate into foods and beverages
 Recipient of nutrient health claims in multiple
markets worldwide
13
CHOLINE – “RDI” Pending
proposed new label
US Gov’t. recognizing that choline nutrition is important!
•
The newest edition of a key national dietary intake survey confirms that
90% of Americans are still not getting the choline they should be.
•
March 2014: FDA Proposed Rule includes provisions for an RDI for
choline and its voluntary inclusion on the Nutrition Facts panel, an
important first
•
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If adopted in the Final Rule (extremely likely), the full compliance
date is 1/1/18
•
Expect early adopters
March 2015: USDA Dietary Guidelines for Americans committee notes
choline as a shortfall nutrient
•
Industry and association comments support its further
consideration, urge mitigation of the intake gap
14
ANIMAL NUTRITION & HEALTH
Growth
Products
Highlights
NUTRITIONAL PRODUCTS
 Nutritional products for ruminants, predominately
dairy cows, to boost health and milk production.
 Feed grade choline chloride - an essential nutrient
for the poultry and swine industries.
16
ANIMAL NUTRITION AND HEALTH
HIGHLIGHTS
($ in millions)
Sales
2013
$156
2014
$176
2015 YTD
$43
Op. Income
$18
$24
$9
•
#1 supplier globally of choline chloride.
•
Multi-Plant Operational Benchmarking & Logistics.
•
Focused R&D, novel product introduction/ commercialization has
increased market penetration in ruminants.
17
ANH HEALTH PLATFORMS
2014 Revenue - $176 million
Protected Ingredients
Base Ingredients
(Shure™ Technology) ($60 MM; 34% of ANH)
($116 MM; 66% of ANH)
Ruminant
Health
Ruminant
Protein
Chelated
Minerals
Choline
Feed
18
ANIMAL NUTRITION & HEALTH
($ in millions)
($ in millions)
REVENUE
$200
$150
OPERATING INCOME
$30
$176
$142
$148
$156
$23.7
$25
$20
$15
$100
$43
$50
$14.8
$16.1
$18.2
$8.5
$10
$5
$0
$0
2011
2012
2013
2014
2015
YTD
2011
2012
2013
2014
2015
YTD
19
ARC SPECIALTY PRODUCTS
Growth
Products
Market
ARC SPECIALTY PRODUCTS
HIGHLIGHTS
($ in MM’s)
Sales
2013
$51
2014
$54
2015 YTD
$13.6
Op. Income
$20
$21
$5.7
•
Top provider of specialty gases.
•
EO – Medical Device Sterilization
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PO – Spice & Nutmeat Fumigation
•
Top standards for safety, packaging, distribution.
•
Manage customer inventory with just-in-time delivery.
21
ARC SPECIALTY PRODUCTS
($ in millions)
($ in millions)
REVENUE
$60
$48
$48
$50
$51
OPERATING INCOME
$50
$54
$40
$30
$36
$20
$24
$18.6
$20.3
$20.2
$21.3
$14
$12
$10
$0
$5.7
$0
2011
2012
2013
2014
2015 YTD
2011
2012
2013
2014
2015 YTD
42% of
Sales
22
MEDICAL DEVICE MARKET
Sterilization by Method
Steam
2%
Radiation
40%
Other 1%
Ethylene
Oxide
57%
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Overall medical device market continues to
grow with aging demographics
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Ethylene Oxide utilization has historically
increased 3%-4% per year
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ARC repackages hazardous chemicals safely
and responsibly, from bulk tanks to aerosol
size cans
23
INDUSTRIAL PRODUCTS
Growth
Products
Joint Venture
Industrial Products
HIGHLIGHTS
($ in millions)
Sales
2013
$83
2014
$105
2015 YTD
$21
Op. Income
$16
$17
$3
•
Choline chloride and derivatives of choline chloride for numerous
industrial applications.
•
Multi-Plant Operational Benchmarking & Logistics.
•
Focused R&D, novel product introduction/ commercialization has
increased market penetration.
Products
•
Methylamines
•
Metam Sodium
•
Choline and choline
derivatives
for oil and gas
applications
25
Industrial Products
($ in millions)
($ in millions)
REVENUE
OPERATING INCOME
$50
$150
$40
$105
$100
$59
$69
$83
$30
$20
$50
$21
$11.7
$12.0
$15.9
$16.5
$10
$3.1
$0
$0
2011
2012
2013
2014
2015
YTD
2011
2012
2013
2014
2015
YTD
26
LOOKING AHEAD
Looking Ahead
Future Growth
Recognition
PUBLIC RECOGNITION
Nov. 1996
Forbes 200 Best Small Companies #193
Oct. 2007
Forbes 200 Best Small Companies #51
Nov. 1997
Forbes 200 Best Small Companies #116
Jun 2008
Balchem named to S&P 600
Oct. 2001
Forbes 200 Best Small Companies #128
July 2008
Fortune Small Business 100 Fastest
Growing Companies #60
Jun. 2003
Business Week 100 Hot Growth Companies #16
Sep. 2003
Fortune Small Business 100 Fastest Growing Companies #86
Oct. 2008
Forbes 200 Best Small Companies #31
Jul. 2004
Fortune Small Business 100 Fastest Growing Companies #44
July 2009
Fortune Small Business 100 Fastest
Growing Companies #62
Jul. 2005
Fortune Small Business 100 Fastest Growing Companies #62
Oct. 2009
Forbes 200 Best Small Companies #64
Jul. 2005
Balchem named to Russell 3000 and Russell 2000
Oct. 2010
Forbes 200 Best Small Companies #24
Oct. 2005
Forbes 200 Best Small Companies #72
Oct. 2011
Forbes 200 Best Small Companies #29
Oct. 2006
Forbes 200 Best Small Companies #116
Oct. 2012
Forbes 200 Best Small Companies #71
Jun. 2007
Business Week 100 Hot Growth Companies #80
Oct. 2013
Forbes 200 Best Small Companies #82
Oct. 2014
Forbes 200 Best Small Companies #83
Jul. 2007
Fortune Small Business 100 Fastest Growing Companies #95
28
FUTURE
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SensoryEffects is a growth engine
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Positioned for growth
– Organic
– Acquisitions / JV’s / Partnerships
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Highly skilled management team in place
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Building Global Animal Nutrition and Health Business
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Stability of ARC Specialty Products
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Positioning ourselves for participation in
emerging technologies
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Strong balance sheet
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September 2014

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