BALCHEM CORP Q1 FY2025 earnings call

• First quarter 2025 saw record consolidated sales, adjusted EBITDA, and adjusted net earnings. • Continued positive momentum from 2024 performance. • Each segment had year-over-year growth. • Global trade environment being monitored; 85% of sales manufactured in same region as sold, global supply chain with little China reliance, robust U.S. manufacturing, strong free cash flows, and solid balance sheet. • Imported ~$100M raw materials annually, ~$20M impact from tariffs, offsetting half via alternate sources and pricing, and half via pricing. • Built extra inventory of imported products. • Exports from U.S. to other countries currently immaterial due to multi-country manufacturing. • Demand remains healthy but could change with worsened trade environment. • Human Nutrition & Health had record sales and earnings, driven by Food Ingredients/Solutions and Nutrients. • Animal Nutrition & Health saw growth in ruminant markets, recovery continuing, supported by ReaShure and AminoShure-XL. • Specialty Products had sales growth in Performance Gases and Plant Nutrition, driven by higher sales and lower expenses.

Human Nutrition & Health generated record sales of $158 million (63% of total revenue $251 million), with earnings from operations of $38 million. Animal Nutrition & Health had sales of $57 million (22.7% of total), earnings from operations of $5 million. Specialty Products had sales of $33 million (13.1% of total), earnings from operations of $10 million. Human Nutrition & Health's sales increased 3.7%, Animal Nutrition & Health's sales up 6.2%, and Specialty Products' sales up 5.3% compared to prior year.

• Confident in long-term growth outlook. • Believe business model resilient to evolving trade environment. • Expect segments to continue growing, with Animal Nutrition & Health having good momentum for 2025. • Anticipate healthy demand in Specialty Products' Performance Gases business to drive growth.

• Impact of tariffs on raw material imports, with ~$20M potential impact, partially offset by supply chain and pricing actions. • Potential recessionary conditions from prolonged trade disputes, which could impact demand. • Ongoing EU anti-dumping, anti-subsidy case review with EU expected to respond in 3-6 months.

Q: Could you add color to impacts of tariffs and where most exposed?

A: Tariffs on raw material imports are manageable via supply chain flexibility and pricing; most concern is potential impact on global demand due to trade disputes, but company has performed well in past similar environments.

Q: Update on European Chinese dumping ruling and impact of world economic chaos?

A: EU is reviewing anti-dumping case, expecting response in 3-6 months; current trade environment shouldn't impact EU's assessment of specific product allegations.

Q: Comment on tailwinds for 2025, including HNH subsegments and currency impact?

A: VitaCholine and K2 categories growing, food business performing well; FX translation from weakening dollar provides ~$10M-$15M annualized revenue tailwind, transactional impact muted.

Q: Debt paydown direction and effective tax rate expectation?

A: Prioritizing organic growth and M&A, will evaluate share buybacks; effective tax rate expected to be in 22%-22.5% range.

Q: Contribution breakdown of H&H segment and future outlook?

A: Food ingredients/solutions grew ~5%-5.5%, Nutrients business grew but at lower rate than prior blowout quarter, both parts contributing to growth and expected to continue.