Balchem Corporation · NASDAQ:BCPC
Balchem — Q3 2019 Earnings Presentation
32 slides from Balchem's earnings presentation, November 2019
Slide 1: Investor Presentation Q3 2019
Investor Presentation Q3 2019 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement • During the course of this presentation, management may make forward-looking statements regarding financial performance and future events. • We will attempt to identify these statements by use of words such as expect, believe, anticipate, intend, and other words that denote fu
Slide 3: Balchem Corporation
Balchem Corporation Balchem develops, manufactures, and markets specialty ingredients that improve and enhance the health and well being of life on the planet. Highlights • NASDAQ: BCPC • Founded in 1967 • Headquarters: New Hampton, NY • Approximately 1,200 Employees • 21 Manufacturing Sites: - 17 i
Slide 4: Key Investment Highlights
Key Investment Highlights • Proven Track Record of Growth • Leading Positions in Attractive Markets • Creating New Demand Through Innovation • Delivering Healthy Margins • Generating Cash Flow from Operations Available for Reinvestment 4
Slide 5: Balchem at a Glance
Balchem at a Glance HUMAN NUTRITION & HEALTH ANIMAL NUTRITION & HEALTH Markets Served Solutions Markets Served Solutions • Nutritional • Micro-encapsulation • Dairy • Micro-encapsulation Supplements • Choline • Poultry and Swine • Choline • Food and Beverage • Chelated Minerals • Companion Animal •
Slide 6: Recent Acquisitions
Recent Acquisitions Chemogas in May 2019 Highlights Specialty Products • Expands geographic reach into Europe and Asia Key technologies and products include: • ~$30M Revenue • Ethylene Oxide re-packaging and distribution Bioscreen Technologies in August 2018 Highlights Animal Nutrition and Health •
Slide 7: Five Year Financial Performance
Five Year Financial Performance FY 2018 FY 2013 CAGR Revenue 643.7 337.2 13.8% Gross Margin 204.3 97.4 16.0% As a % of Sales 31.7% 28.9% Operating Income 107.8 65.6 10.4% Net Earnings 78.6 44.9 11.9% Earnings Per Share 2.42 1.45 10.8% Adjusted EBITDA 159.9 79.9 14.9% As a % of Sales 24.8% 23.7% Adju
Slide 8: FY 2018 Financial Performance
FY 2018 Financial Performance FY 2018 FY 2017 Change Revenue 643.7 594.8 8.2% Gross Margin 204.3 189.0 8.1% As a % of Sales 31.7% 31.8% Operating Income 107.8 97.3 10.8% Net Earnings 78.6 90.1 -12.8% Earnings Per Share 2.42 2.79 -13.3% Adjusted EBITDA 159.9 147.8 8.2% As a % of Sales 24.8% 24.9% Adj
Slide 9: Q3 2019 Financial Performance
Q3 2019 Financial Performance Q3 2019 Q3 2018 Change Revenue 158.6 155.0 2.3% Gross Margin 54.0 48.0 12.5% As a % of Sales 34.1% 31.0% Operating Income 26.0 25.5 2.0% Net Earnings 20.7 19.2 7.6% Earnings Per Share 0.64 0.59 8.5% Adjusted EBITDA 40.4 38.4 5.0% As a % of Sales 25.5% 24.8% Adjusted Ear
Slide 10: Key Financial Metrics
Key Financial Metrics Q1 Q2 Q3 Q4 $800 Revenue ($M) $110 Net Income ($M) $100 $700 644 90 $90 595 42 $600 552 553 164 $80 79 541 159 65* 20 $500 163 133 141 $70 60 155 159 $60 53 56 $400 140 151 16 19 21 139 $50 16 160 19 $300 16 164 162 $40 14 135 147 14 20 20 139 $200 $30 15 17 132 15 161 $20 14 1
Slide 11: Cash Flow Generation and Balance Sheet
Cash Flow Generation and Balance Sheet Cash from Operations ($M) and Net Debt as a % of Adjusted EBITDA 131 232% 119 108 111 104 85 162% 152% 100% 121% 64% 2014 2015 2016 2017 2018 TTM* Cash From Operations Net Debt as a % of Adj. EBITDA *TTM (Trailing Twelve Months) – October 1, 2018 through Septem
Slide 12: Human Nutrition & Health
HUMAN NUTRITION & HEALTH “We make it healthy” 12
Slide 13: Human Nutrition and Health at a Glance
Human Nutrition and Health at a Glance ($M) Revenue $400 HUMAN NUTRITION & HEALTH $350 $300 $341 Markets Served Solutions $297 $316 $250 $278 • Nutritional • Micro-encapsulation $200 Supplements • Choline $206 $150 • Food and Beverage • Chelated Minerals • Infant & Toddler • Powder, Flavor, & $100 F
Slide 14: Human Nutrition & Health Performance
Human Nutrition & Health Performance Q3 2019 Q3 2018 YTD 2019 YTD 2018 Revenue ($M) $ 86.1 $ 85.9 $ 257.2 $ 254.0 Adjusted EBITDA ($M) $ 21.4 $ 22.2 $ 64.5 $ 63.3 Leveraging Growth Synergies Across The Segment FDA RDI for Choline and Expanding Choline Awareness Platforms Mineral Nutrition Growth Cur
Slide 15: Animal Nutrition & Health
ANIMAL NUTRITION & HEALTH “We make it nutritious” 15
Slide 16: Animal Nutrition and Health at a Glance
Animal Nutrition and Health at a Glance ($M) Revenue $200 ANIMAL NUTRITION & HEALTH $176 $176 $150 $166 $161 $158 Markets Served Solutions $100 • Dairy • Micro-encapsulation • Poultry and Swine • Choline • Companion Animal • Chelated Minerals $50 • Aquaculture • Amino Acids and Other Ruminant $0 ANI
Slide 17: Animal Nutrition & Health Performance
Animal Nutrition & Health Performance Q3 2019 Q3 2018 YTD 2019 YTD 2018 Revenue ($M) $ 42.3 $ 40.4 $ 129.1 $ 128.6 Adjusted EBITDA ($M) $ 8.0 $ 6.7 $ 22.0 $ 24.3 Rumen Protected Choline Penetration in Dairy Cows National Research Council Recommendations on Choline Platforms Companion Animal & Aquacu
Slide 18: Specialty Products
SPECIALTY PRODUCTS “We make it safe, we make it grow” 18
Slide 19: Specialty Products at a Glance
Specialty Products at a Glance Revenue ($M) $72 $76 $73 $70 $60 $48 $54 $54 $36 $24 $12 $0 2014 2015 2016 2017 2018 SPECIALTY ($M) SPECIALTY PRODUCTS PRODUCTS $35 Adj. EBITDA 12% $30 $32 $32 $32 Markets Served Solutions $25 $28 • Medical Device • Chelated Minerals $25 $20 Sterilization • Ethylene Ox
Slide 20: Specialty Products Performance
Specialty Products Performance Q3 2019 Q3 2018 YTD 2019 YTD 2018 Revenue ($M) $ 24.9 $ 17.6 $ 68.2 $ 58.2 Adjusted EBITDA ($M) $ 9.8 $ 7.5 $ 29.3 $ 24.5 Leveraging Synergies from the Chemogas Acquisition Capturing Medical Device Market Growth Platforms New Applications for Pasteurization/Fumigation
Slide 21: Industrial Products
INDUSTRIAL PRODUCTS “We make it green” 21
Slide 22: Industrial Products at a Glance
Industrial Products at a Glance ($M) Revenue $125 $100 $105 $75 $50 $54 $51 $48 $25 $25 $0 2014 2015 2016 2017 2018 ($M) INDUSTRIAL Adj. EBITDA PRODUCTS INDUSTRIAL PRODUCTS $20 8% $18 $19 $16 Markets Served Solutions $14 • Oil and Gas • Micro-encapsulation $12 Fracking • Choline $10 $10 • Electronic
Slide 23: Industrial Products Performance
Industrial Products Performance Q3 2019 Q3 2018 YTD 2019 YTD 2018 Revenue ($M) $ 5.3 $ 11.1 $ 22.7 $ 39.4 Adjusted EBITDA ($M) $ 1.1 $ 2.0 $ 4.1 $ 7.6 Capturing Recovery Volumes Green Clay Stabilization Solutions Platforms Low Cost Clay Stabilization Growth 23
Slide 24: Looking Ahead
ee Looking Ahead . + * e oe e ee bailchem
Slide 25: Future
Future • Positioned For Growth in Attractive Markets Organic Growth Growth through Strategic Acquisitions • Creating New Demand Through Innovation • Recent Acquisitions add new Technologies, International Reach, and Synergistic Opportunities • Building Global Human and Animal Nutrition & Health
Slide 26: At our core, we are a health and nutrition company
“At our core, we are a health and nutrition company.” Ted Harris, Chairman, CEO, and President 26
Slide 27: Appendix
Appendix 2 balchem
Slide 28: Leadership
Leadership Ted Harris, Chairman & CEO • Joined Balchem in May 2015 • Prior to Balchem was a Senior VP of Ashland Inc. where he held a series of senior leadership roles over 10+ years • Independent director and member of the Board of Directors of Pentair plc. • MBA from Harvard University and bachelo
Slide 29: Reconciliation of Non-GAAP Metrics – Q3 2019
Reconciliation of Non-GAAP Metrics – Q3 2019 Note 1: See Q3 2019 Press Release for additional details 29
Slide 30: Reconciliation of Non-GAAP Metrics - FY 2018
Reconciliation of Non-GAAP Metrics - FY 2018 Note 1: See Q4 2018 Press Release for additional details 30
Slide 31: Reconciliation of Net Earnings and EPS
Reconciliation of Net Earnings and EPS For the Year Ended December 31, 2017 2017 ($M) GAAP Net Earnings $ 90.1 Less: Impact of Tax Cuts and Jobs Act $ 24.9 Tax Cuts and Jobs Act adjusted net earnings $ 65.1 Tax Cuts and Jobs Act adjusted earnings per common share $ 2.02 Shares used in the calculatio
Slide 32: aH aE
aH aE oe eM: . balchem Solve Today. Shape Tomorrow. 32