NEW HAMPTON, N.Y., November 3, 2019 – Shares of Balchem Corporation (NASDAQ: BCPC) inclined 2.06% to $103.29. The stock traded total volume of 112.412K shares higher than the average volume of 109.30K shares.
Balchem Corporation (BCPC) reported for the second quarter 2019 net earnings of $19.80M, compared to net earnings of $19.70M for the second quarter 2018. Second quarter adjusted net earnings were $25.20M, compared to $24.50M in the prior year quarter. Second quarter adjusted EBITDA was $40.00M, compared to $40.50M in the prior year quarter.
Financial Results for the Second Quarter of 2019:
The Human Nutrition & Health segment generated second quarter sales of $85.90M, an increase of $0.90M or 1.0% compared to the prior year quarter. The increase was driven by higher sales within our Human Nutrition & Pharma and Ingredient Solutions businesses, partially offset by a decrease in Cereal Systems sales. Quarterly earnings from operations for this segment of $12.30M increased $2.70M or 27.4% compared to $9.70M in the prior year quarter, primarily due to the aforementioned higher sales, mix, and lower operating expenses. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for the second quarter of 2019 and 2018 of $4.90M and $5.40M, respectively, adjusted earnings from operations for this segment were $17.20M, compared to $15.10M in the prior year quarter.
The Animal Nutrition & Health segment generated quarterly sales of $43.50M, an increase of $1.40M or 3.4% compared to the prior year quarter. The increase was primarily the result of higher sales of ruminant animal feed market products. Second quarter earnings from operations for this segment of $5.00M were down from the prior year comparable quarter of $7.00M, primarily due to lower feed grade choline volumes and margins in the European monogastric business as a result of increased competitive activity. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for the second quarter of 2019 and 2018 of $0.20M and $0.10M respectively, adjusted earnings from operations for this segment were $5.20M, compared to $7.10M in the prior year quarter.
The Specialty Products segment generated second quarter sales of $24.90M, an increase of $2.00M or 8.9% compared to the prior year quarter, primarily due to higher sales of ethylene oxide for the medical device sterilization market due to both the contribution of Chemogas and higher legacy volumes, partially offset by lower volumes in the plant nutrition business. Second quarter earnings from operations for this segment were $8.90M, versus $8.70M in the prior year comparable quarter, an increase of $0.20M or 2.4%, primarily due to the aforementioned higher sales, partially offset by higher operating expenses due to the acquisition of Chemogas. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for the second quarter of 2019 and 2018 of $1.10M and $0.70M, respectively, adjusted earnings from operations for this segment were $10.00M, compared to $9.40M in the prior year quarter.
The Industrial Products segment sales of $7.30M decreased $6.50M or 47.0% from the prior year comparable quarter, primarily due to reduced sales volumes of choline and choline derivatives used in shale fracking applications. Earnings from operations for the Industrial Products segment were $0.90M, a decrease of $1.70M or 65.1% compared with the prior year comparable quarter, primarily due to the aforementioned lower sales volumes.
Consolidated gross margin for the quarter ended June 30, 2019 of $53.90M increased by $0.50M or 0.8%, compared to $53.50M for the prior year comparable period. Gross margin as a percentage of sales was 33.4% as compared to 32.7% in the prior year period. The increase was primarily due to mix, partially offset by lower feed grade choline volumes and margins in the European monogastric business. Operating expenses of $27.50M for the quarter increased $1.20M from the prior year comparable quarter, primarily due to incremental operating expenses related to the Chemogas acquisition and increased bad debt expense. Excluding non-cash operating expenses associated with amortization of intangible assets of $6.10M, operating expenses were $21.40M, or 13.2% of sales.
Interest expense was $1.50M in the second quarter of 2019. Our effective tax rates for the three months ended June 30, 2019 and 2018 were 20.3% and 21.5%, respectively. The decrease in the effective tax rate from the prior year is primarily due to discrete items.
For the quarter ended June 30, 2019, cash flows provided by operating activities were $26.30M, and quarterly free cash flow was $20.10M. The $169.80M of net working capital on June 30, 2019 included a cash balance of $41.70M, which reflects second quarter 2019 revolving loan and acquired debt payments of $32.20M and capital expenditures of $6.20M. The Company continues to invest in projects across all facilities to improve capabilities and operating efficiencies.
BCPC has the market capitalization of $3.34B and its EPS growth ratio for the past five years was 10.50%. The return on assets ratio of the Company was 7.70% while its return on investment ratio stands at 10.10%. Price to sales ratio was 5.25 while 88.80% of the stock was owned by institutional investors.
