Balchem Corporation · NASDAQ:BCPC
Balchem — Investor Presentation (May 2014)
30 slides from Balchem's investor presentation, May 2014
Slide 1: May 2014
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Slide 2: Forward Looking Statement
Forward Looking Statement This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this prese
Slide 3: Balchem Corporation
Balchem Corporation Founded in 1967, Balchem is engaged in the development, manufacture and marketing of specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical and medical sterilization industries NASDAQ: BCPC Headquarters: New Hampton, NY Manufacturin
Slide 4: Balchem at a Glance
Balchem at a Glance Technology-driven, food and beverage solutions company developing complete systems, including ingredients and flavorings, to finished products 4
Slide 5: Historical Consolidated Results (In millions)
Historical Consolidated Results (In millions) Net Revenue 2013 $337M $400 $337 $292 $310 14% $300 $255 $82 15% $200 $88 $83 71% $100 $85 $86 $0 Animal Nutrition and Health 2010 2011 2012 2013 2014 YTD ARC Specialty Products Food, Pharma and Nutrition 5
Slide 6: Historical Consolidated Results (In millions)
Historical Consolidated Results (In millions) Net Earnings Fully Diluted Earnings Per Common Share $60 $1.45 $50 $45 $1.50 $1.32 $39 $40 $1.28 $0.35 $40 $33 $11 $1.12 $30 $1.00 $0.36 $12 $20 $0.38 $12 $0.50 $10 $0.36 $11 $9 $0.291 $0 $0.00 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 YTD 1 Refl
Slide 7: Nutritional Products
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. Industrial Products Choline chloride and derivatives of choline chloride for numerou
Slide 8: Animal Nutrition and Health
Animal Nutrition and Health Highlights 2012 2013 2014 YTD Sales $216.3 MM $238.5 MM $61.1 MM Op. Income $28.1 MM $34.1 MM $7.3 MM Targeting monogastric and ruminant production. Growing sales into industrial applications, particularly Oil & Gas fracking Operational Excellence #1 supplier global
Slide 9: ANH Division Platforms
ANH Division Platforms 2014 TTM Revenue - $239 million Protected Ingredients Base Ingredients (Shure™ Technology) ($45 MM; 19% of ANH) ($194 MM; 81% of ANH) Choline Industrial Ruminant Ruminant Chelated Feed Products Health Protein Minerals ($111 MM; ($83 MM; 46% of ANH) 35% of ANH) Nutritional Prod
Slide 10: Animal Nutrition and Health
Animal Nutrition and Health ($ in millions) ($ in millions) Revenue Operating Income $250 $239 $40 $216 $34.1 $201 $200 $32 $28.1 $171 $26.5 $24.1 $150 $24 $100 $16 $61 $7.3 $50 $8 $0 $0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 YTD YTD 10
Slide 11: Growing Industrial Opportunities
Growing Industrial Opportunities 2014 TTM ANH Revenue - $239 MM 2014 TTM Industrial Revenue - $83 MM Current Industrial Products • Methylamines Feed Grade Choline 35% • Metam Sodium 46% Specialty Animal Nutrition and • Choline and choline Health Products derivatives for oil and gas 19% Industrial Gr
Slide 12: Growth Market For Balchem
Growth Market For Balchem Horizontal drilling and multi-stage fracturing Potassium chloride (KCL) is commonly used in preventing the swelling of clay as a temporary clay stabilizer, but carries environmental concerns Choline chloride and choline bicarbonate offer an attractive, effective and m
Slide 13: Balchem/Taminco Joint Venture
Balchem/Taminco Joint Venture • Jointly expanding choline chloride production capacity • Supporting future growth of choline particularly for natural gas fracking in North America • Expected to be commissioned in second half of 2015 • Secured long term supply of critical raw material – TMA 13
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Slide 15: ARC Specialty Products
ARC Specialty Products Highlights 2012 2013 2014 YTD Sales $50.0 MM $51.1 MM $12.8 MM Op. Income $20.3 MM $20.2 MM $4.8 MM GDP revenue growth Operational Excellence Top provider of specialty gases Top standards for safety, packaging, distribution Manage customer inventory with just-in-time d
Slide 16: ARC Specialty Products
ARC Specialty Products ($ in millions) ($ in millions) Revenue Operating Income $60 $25 $50 $51 $20.3 $20.2 $48 $48 $20 $18.6 $42 $15.9 $36 $15 $24 $10 $13 $4.8 $12 $5 $0 $0 2010 2011 2012 2013 2014 YTD 2010 2011 2012 2013 2014 YTD 16
Slide 17: Medical Device Market
Medical Device Market Overall medical device market Sterilization by Method continues to grow with aging demographics Other 1% Ethylene Oxide utilization has Steam historically increased 2%-3% per 2% year ARC has the resources to Radiation 40% Ethylene repackage hazardous chemicals Oxide safel
Slide 18: Introducing: SensoryEffects
Introducing: QSensorytffects’ + BALCHEM ENCAPSULATES
Slide 19: Food, Pharma and Nutrition
Food, Pharma and Nutrition Highlights 2012 2013 2014 YTD Sales $44.1 MM $47.6 MM $12.2 MM Op. Income $11.3 MM $11.2 MM $2.6 MM Human grade choline positioned for double digit revenue growth Operational Excellence Premier specialty ingredient business utilizing microencapsulation and application
Slide 20: FPN Division Platforms
FPN Division Platforms (Pre-Acquisition) ($ in millions) ($ in millions) Revenue Operating Income $60 $15 $48 $11.3 $48 $44 $12 $11.1 $11.2 $42 $43 $9.7 $36 $9 $24 $6 $12 $2.6 $12 $3 $0 $0 2010 2011 2012 2013 2014 YTD 2010 2011 2012 2013 2014 YTD Protected Food Ingredients Choline Ingredients ($27 M
Slide 21: SensoryEffects Acquisition
SensoryEffects Acquisition • Announced on March 31, 2014, Balchem completed the acquisition on May 7, 2014. SensoryEffects is a supplier of customized food and beverage ingredient systems, headquartered in St. Louis, Missouri. • SensoryEffects was a privately held entity, founded in 2005 by Charles
Slide 22: Transaction Rationale
Transaction Rationale SensoryEffects provides customized, technology-driven food and beverage solutions including ingredients, bases and finished food systems for leading multinational and emerging high-growth food and beverage customers The acquisition of SensoryEffects accelerates Balchem’s (a
Slide 23: Strategic Rationale of the Acquisition
Strategic Rationale of the Acquisition ■ Expand SensoryEffects business model domestically and internationally Significant Growth ■ Ability to cross-sell and penetrate the enhanced customer base Opportunities ■ Leverage SensoryEffects’ technique on selling a larger bundle product ■ Potential to leve
Slide 24: Business Segments
Business Segments ■ Customized wet- and dry- ■ Specialty spray-dried emulsified ■ Customized manufacturing of based flavor systems powders and formulated dry- cereal based systems blended systems ■ Chocolate systems ■ Specialty non-dairy and dairy ■ Ready-to-eat cereals ■ Juice and other drink bases
Slide 25: Efficient Manufacturing
Efficient Manufacturing SensoryEffects’ Asset Base Characterized By: ■ Production equipment designed for shorter runs with fast change-over times and processes ■ Ability to do longer runs to enhance efficiency and plant utilizations as desired ■ Suitable for customized products including organic, gl
Slide 26: Pro-Forma Results (In millions)
Pro-Forma Results (In millions) Net Revenue 2013 Pro-Forma Revenue $585M $800 SensoryEffects Balchem $585 $600 27% $475 $248 $400 $165 50% 14% $147 9% $200 $337 $310 $61 Animal Nutrition and Health $86 $0 Industrial 2012 2013 2014 YTD ARC Specialty Products Pro-Forma Food, Pharma and Nutrition 26
Slide 27: Nutrient Applications
NUTRIENT APPLICATIONS Benefits of VitaCholine Continually builds and rebuilds cell health Facilitates nervous systems function and communication Helps maintain proper metabolic balance on the cellular level Helps controls the deposition of fat Develops the memory center of the brain in inf
Slide 28: Choline – Anticipated RDI Designation
Choline – Anticipated RDI Designation In March, the FDA proposed an RDI for choline The RDI of 550mg was part of a proposed labeling rule The proposed rule could be final as early as H1 2015 Recognition of the high incidence of choline deficiency at 90% Currently in comment period until Ju
Slide 29: Public Recognition
Public Recognition Nov. 1996 Forbes 200 Best Small Companies #193 Jun 2008 Balchem named to S&P 600 Nov. 1997 Forbes 200 Best Small Companies #116 Jul 2008 Fortune Small Business 100 Fastest Growing Companies #60 Oct. 2001 Forbes 200 Best Small Companies #128 Oct. 2008 Forbes 200 Best Small Companie
Slide 30: Future
Future Positioned for growth Organic Acquisitions / JV’s / Partnerships Highly skilled management team in place Focusing research efforts Building Global Animal Nutrition and Health Business Food, Pharma and Nutrition is a growth engine Stability of ARC Specialty Products Strong ba