 NEW HAMPTON, N.Y., July 31, 2020 GLOBE NEWSWIRE -- Balchem Corporation NASDAQ: BCPC reported today record second quarter net earnings of 21.1 million for 2020, compared to net earnings of 19.8 million for the second quarter 2019. Record second quarter adjusted net earningsa were 27.6 million, compared to 25.2 million in the prior year quarter, and adjusted EBITDAa was an all-time record of 43.9 million, compared to 40.0 million in the prior year quarter. Second Quarter 2020 Financial Highlights: Net sales of 173.4 million, an increase of 11.8 million, or 7.3, compared to the prior year quarter, with year over year sales growth in Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. GAAP net earnings were 21.1 million, an increase of 1.3 million, or 6.5 from the prior year. These net earnings resulted in GAAP earnings per share of 0.65. Adjusted net earnings of 27.6 million increased 2.3 million or 9.2 from the prior year, resulting in adjusted earnings per sharea of 0.85. Adjusted EBITDA was 43.9 million, an increase of 3.9 million, or 9.8, from the prior year. Quarterly cash flows from operations were 44.6 million for the second quarter 2020, an increase of 69.5 from the prior year, with quarterly free cash flowa of 37.0 million, an increase of 83.9 from the prior year.Recent Highlights: Strong cash flows in the second quarter enabled the company to make 35.0 million of repayments of its revolving debt, lowering net debt to 142.2 million, with an overall leverage ratio on a net debt basis of 0.9. The COVID-19 response effort has been a primary focus for the company since early in the first quarter. Our focus has been on employee safety first, keeping our manufacturing sites operational, satisfying customer needs, preserving cash and ensuring strong liquidity, and responding to changes in this dynamic market environment as appropriate. To date, all of our manufacturing sites are operating at near normal conditions enabling us to supply our customers with the important products and services they need, our research and development teams are advancing our innovation efforts, and all of our other employees are effectively carrying on their responsibilities and functions remotely. We released our second annual Sustainability Report in April in support of our Environmental, Social, and Corporate Governance ideals. We are committed to providing solutions for the health and nutrition needs of the world, acting as strong stewards of all our stakeholders, and making the world a healthier place.Ted Harris, Chairman, CEO, and President of Balchem said, We are extremely pleased with these strong second quarter results which reflect record second quarter sales, net earnings, and earnings per share as well as sales growth in all three of our reporting segments.Mr. Harris added, Our strong second quarter and year to date results reported today are a direct result of the extraordinary talents and efforts of the Balchem team as well as the strength of our market positions and the resilience of our business model. Results for Period Ended June 30, 2020 unaudited Dollars in thousands, except per share data Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net sales 173,355 161,554 347,791 318,583 Gross margin 55,380 53,918 110,711 103,013 Operating expenses 28,463 27,516 57,516 50,131 Earnings from operations 26,917 26,402 53,195 52,882 Other expense 944 1,521 2,732 3,208 Earnings before income tax expense 25,973 24,881 50,463 49,674 Income tax expense 4,848 5,052 9,570 11,062 Net earnings 21,125 19,829 40,893 38,612 Diluted net earnings per common share 0.65 0.61 1.26 1.19 Adjusted EBITDAa 43,885 39,979 86,256 79,659 Adjusted net earningsa 27,562 25,246 54,003 48,976 Adjusted net earnings per common sharea 0.85 0.77 1.66 1.51 Shares used in the calculations of diluted and adjusted net earnings per common share 32,470 32,583 32,492 32,540 aSee Non-GAAP Financial Information for a reconciliation of GAAP and non-GAAP financial measures. Financial Results for the Second Quarter of 2020: The Human Nutrition Health segment generated quarterly sales of 97.4 million, an increase of 11.6 million or 13.5 compared to the prior year quarter. The increase was primarily driven by strong sales growth of chelated minerals and choline nutrients as well as increased sales into the food and beverage markets from both the legacy business and the Zumbro acquisition we closed in December 2019, partially offset by lower sales to food service related markets and the elimination of sales associated with the Reading, Pennsylvania manufacturing site that we divested in 2019. This segment generated quarterly earnings from operations of 15.5 million, an increase of 3.2 million or 25.6 compared to 12.3 million in the prior year quarter, primarily due to the aforementioned higher sales and lower selling expenses principally due to lower travel and a decrease in bad debt expense. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of 4.8 million and 4.9 million for the second quarter of 2020 and 2019, respectively, adjusted earnings from operationsa for this segment were 20.3 million, compared to 17.2 million in the prior year quarter.The Animal Nutrition Health segment generated sales of 46.3 million, an increase of 2.9 million or 6.6 compared to the prior year quarter. The increase was primarily the result of higher volumes in both the ruminant species and monogastric species markets. Second quarter earnings from operations for this segment of 6.4 million increased 1.4 million or 27.4 compared to 5.0 million in the prior year quarter, primarily due to the aforementioned higher sales, certain lower raw material costs, and lower selling expenses principally due to lower travel. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of 0.2 million in the second quarters of 2020 and 2019, adjusted earnings from operations for this segment were 6.6 million, compared to 5.2 million in the prior year quarter.The Specialty Products segment generated sales of 28.2 million, an increase of 3.3 million or 13.2 compared to the prior year quarter, primarily due to higher sales of ethylene oxide for the medical device sterilization market due to the incremental contribution of Chemogas, offset partially by lower legacy sales which were negatively impacted by reduced elective surgical procedures during the pandemic. Second quarter earnings from operations for this segment were 8.0 million, versus 8.9 million in the prior year comparable quarter, a decrease of 0.9 million or 9.8, primarily due to lower legacy ethylene oxide sales, product mix within plant nutrition, and 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 2020 and 2019 of 1.6 million and 1.1 million, respectively, adjusted earnings from operations for this segment were 9.6 million, compared to 10.0 million in the prior year quarter.Consolidated gross margin for the quarter ended June 30, 2020 of 55.4 million increased by 1.5 million or 2.7, compared to 53.9 million for the prior year comparable period. Gross margin as a percentage of sales was 31.9 as compared to 33.4 in the prior year period, a decrease of 143 basis points. The decrease was primarily due to mix and certain COVID-19 expenses, partially offset by certain lower raw material costs. Operating expenses of 28.5 million for the quarter increased 0.9 million from the prior year comparable quarter, primarily due to incremental operating expenses related to the Chemogas and Zumbro acquisitions and a goodwill impairment charge related to business formerly included in the Industrial Products segment, partially offset by lower selling expenses driven by reduced travel and a decrease in bad debt expense. Excluding non-cash operating expenses associated with amortization of intangible assets of 6.2 million, operating expenses were 22.2 million, or 12.8 of sales.Interest expense was 1.0 million in the second quarter of 2020. Our effective tax rates for the three months ended June 30, 2020 and 2019 were 18.7 and 20.3, respectively. The decrease in the effective tax rate from the prior year is primarily due to lower enacted tax rates from several states, certain higher tax credits, and excess tax benefits from stock-based compensation.For the quarter ended June 30, 2020, cash flows provided by operating activities were 44.6 million, and free cash flow was 37.0 million. The 195.9 million of net working capital on June 30, 2020 included a cash balance of 76.4 million, which reflects repayments of the revolving debt of 35.0 million, and capital expenditures and intangible assets acquired of 7.9 million.Ted Harris said, We are very proud of the strong performance reported in the second quarter of 2020. The Balchem team has continued to respond extraordinarily well to the challenges and uncertainties created by the pandemic, with the safety of our employees as our top priority. The progress we have made driving our business forward and advancing our key growth initiatives more than offset the headwinds we faced from the challenging macro-economic environment.Mr. 