Balchem Corporation Jefferies 2016 Industrials Conference

Transcription

1 Balchem Corporation Jefferies 2016 Industrials Conference August 2016

2 Forward Looking Statements This presentation contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of These forward-looking statements are based on management s reasonable expectations and assumptions as of the date of this presentation regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by Balchem Corporation; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact and other uncertainties of future acquisitions or divestitures or unanticipated contract terminations; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the impact of new or changed tax and other legislation and regulations in jurisdictions in which Balchem Corporation and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The company disclaims any obligation or undertaking to disseminate any updates or revisions to any forwardlooking statements contained in this presentation to reflect any change in the company s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forwardlooking statements are based. 2

3 Balchem Corporation Balchem develops, manufactures, and markets specialty ingredients for health and wellness markets. 3 Highlights NASDAQ: BCPC Founded in 1967 Headquarters: New Hampton, NY Approximately 1,000 Employees 17 Manufacturing Sites: - 16 in North America - 1 in Europe 5 Technology Centers 2015 Revenues of $553M 2015 Adj. EBITDA of $141M or 25.4% of sales

4 Key Investment Highlights Leading Positions in Attractive Growing Markets Creating New Demand Through Innovation Delivering Healthy Margins Generating Solid Free Cash Flow Available for Reinvestment Led by a Strong, Experienced Management Team 4

5 Balchem at a Glance HUMAN NUTRITION & HEALTH Markets Served Solutions ANIMAL NUTRITION & HEALTH Markets Served Solutions Food and Beverage Supplement Infant & Toddler Formula Organic Cereal Micro-encapsulation Choline Chelated Minerals Powder, Flavor, & Cereal Systems HUMAN NUTRITION 50% ANIMAL NUTRITION 30% Dairy Poultry Companion Animal Swine Aquaculture Micro-encapsulation Choline Chelated Minerals Amino Acids and Other Ruminant Nutrients SPECIALTY PRODUCTS Markets Served Medical Device Sterilization Nut and Spice Pasteurization Plant Nutrition Solutions Chelated Minerals Ethylene Oxide Propylene Oxide SPECIALTY PRODUCTS 10% INDUSTRIAL PRODUCTS 10% FY 2015 Net Revenue $553M INDUSTRIAL PRODUCTS Markets Served Oil & Gas Fracking Electronics Fertilizer Solutions Micro-encapsulation Choline Choline Derivatives 5

6 Acquisition of Albion Minerals Balchem acquired Albion International in February 2016 Revenue Highlights Synergistic with our Human Nutrition and Health segment, delivering customized food and beverage ingredient systems, and essential nutrients through the food, supplement and pharmaceutical marketplace. Facilitates growth and technological advancement of Balchem s existing Animal Nutrition & Health chelated mineral business. A premium brand with high margins providing high quality ingredients that are built on strong science and innovative technologies, and is recognized worldwide for their quality, efficacy and safety. Expands geographic footprint to create strong position as a technological leader in human health and wellness solutions. Key products include: Magnesium Iron Calcium Zinc Human Nutrition Ferrochel Creatine MagnaPower Plant Nutrition Key products include: Multi-element Calcium Zinc Potassium & Magnesium Metalosate 34% Human Nutrition 6 66% Plant Nutrition

7 Balchem Corporation Sales / Adj. EBITDA / Net Earnings (Dollars in Millions, except per share data) CAGR Sales $552.5 $ % Adjusted EBITDA % As a percent of sales 25.4% 23.7% Net Earnings % Diluted Net Earnings/Share $1.89 $ % FY 2015 Sales by Region 20% 80% United States 7 Adjusted EBITDA is defined as EBITDA plus Stock Based Compensation, transaction and integration costs, and FV of inventory expense.

8 Balchem Consolidated Results Q Results Q Q Revenue $ $ Gross Margin % 33.5% 31.1% Net earnings $ 14.2 $ 14.9 Adjusted EBITDA $ 39.5 $ 35.0 Adjusted EBITDA % 28.5% 26.0% Adjusted earnings per share $ 0.66 $ Note: Dollars in Millions, except percent and per share data Adjusted EBITDA is defined as EBITDA plus Stock Based Compensation, transaction and integration costs, and FV of inventory expense. Adjusted earnings per share is defined as GAAP net earnings plus the tax adjusted FV of inventory expense, amortization of intangible assets, transaction and integration costs

9 Balchem Consolidated Results Year to Date 2016 Results H H Revenue $ $ Gross Margin % 32.6% 30.4% Net earnings $ 26.0 $ 30.1 Adjusted EBITDA $ 75.0 $ 71.1 Adjusted EBITDA % 27.4% 25.4% Adjusted earnings per share $ 1.24 $ Note: Dollars in Millions, except percent and per share data Adjusted EBITDA is defined as EBITDA plus Stock Based Compensation, transaction and integration costs, and FV of inventory expense. Adjusted earnings per share is defined as GAAP net earnings plus the tax adjusted FV of inventory expense, amortization of intangible assets, transaction and integration costs

10 Balchem Consolidated Results $600 Net Revenue (Dollars in Millions) $500 $400 $300 $200 $100 $292 $310 $337 $541 $553 $139 $ Q2 Q1 $ YTD 10

11 Balchem Consolidated Results $160 $140 $120 $100 Adjusted EBITDA (Dollars in Millions) $80 $60 $122 $140 $ Q2 $40 $20 $69 $73 $80 $35 Q1 $ YTD 11

12 Historical Consolidated Results Adjusted Earnings Per Common Share $3.00 $2.50 $2.21 $2.51 $2.00 $1.50 $1.00 $0.50 $0.00 $1.37 $1.41 $0.66 $1.54 $0.67 $0.61 $0.34 $0.35 $0.37 $0.65 $0.38 $0.38 $0.40 $0.62 $0.66 $0.34 $0.35 $0.40 $0.53 $0.32 $0.33 $0.38 $0.34 $0.62 $

13 Human Nutrition & Health 13

14 Human Nutrition & Health at a Glance HUMAN NUTRITION & HEALTH Markets Served Food and Beverage Supplement Infant & Toddler Formula Organic Cereal Solutions Micro-encapsulation Choline Chelated Minerals Powder, Flavor, & Cereal Systems HUMAN NUTRITION 50% 14

15 Human Nutrition & Health Year to Date Performance and Growth Platforms Q Q YTD 2016 YTD 2015 Revenue ($M) $ 74.8 $ 67.2 $ $ Adjusted EBITDA ($M) $ 20.0 $ 17.2 $ 38.7 $ 33.1 Leveraging Growth Opportunities Across The Segment Growth Platforms FDA Recommended Daily Intake for Choline Curemark Delivery System Agglomeration Technology Albion International 15 Geographic Expansion

16 Animal Nutrition & Health 16

17 Animal Nutrition & Health at a Glance ANIMAL NUTRITION & HEALTH ANIMAL NUTRITION 30% Markets Served Dairy Poultry Companion Animal Swine Aquaculture Solutions Micro-encapsulation Choline Chelated Minerals Amino Acids and Other Ruminant Nutrients 17

18 Animal Nutrition & Health Year to Date Performance and Growth Platforms Q Q YTD 2016 YTD 2015 Revenue ($M) $ 38.4 $ 41.6 $ 77.6 $ 84.3 Adjusted EBITDA ($M) $ 9.4 $ 9.2 $ 17.9 $ 19.3 Science Based Nutritional Efficiency Growth Platforms Companion Animal & Aquaculture Market Penetration National Research Council Recommendation on Choline Geographic Expansion BASF Collaboration for Antibiotic Free Solutions 18

19 Specialty Products 19

20 Specialty Products at a Glance SPECIALTY PRODUCTS Markets Served Medical Device Sterilization Nut and Spice Pasteurization Plant Nutrition Solutions Chelated Minerals Ethylene Oxide Propylene Oxide SPECIALTY PRODUCTS 10% 20

21 Specialty Products Year to Date Performance and Growth Platforms Q Q YTD 2016 YTD 2015 Revenue ($M) $ 20.3 $ 13.8 $ 37.4 $ 27.4 Adjusted EBITDA ($M) $ 9.7 $ 7.1 $ 17.6 $ 13.6 Growth Platforms New Applications for Pasteurization/Fumigation Geographic Expansion of Plant Nutrition Expand Plant Micronutrient Product Line & Applications 21

22 Industrial Products 22

23 Industrial Products at a Glance INDUSTRIAL PRODUCTS 10% INDUSTRIAL PRODUCTS Markets Served Oil & Gas Fracking Electronics Fertilizer Solutions Micro-encapsulation Choline Choline Derivatives 23

24 Industrial Products Year to Date Performance and Growth Platforms Q Q YTD 2016 YTD 2015 Revenue ($M) $ 5.3 $ 12.1 $ 12.5 $ 32.9 Adjusted EBITDA ($M) $ 0.5 $ 1.5 $ 0.9 $ 5.1 Growth Platforms Green Clay Stabilization Solutions Low Cost Clay Stabilization 24

25 Looking Ahead 25

26 Future Positioned For Growth in Attractive Markets Organic Acquisitions/Partnerships Creating Demand Through Innovation Acquisition of Albion Adds Key Technologies, International Reach, and Synergistic Opportunities Building a Global Animal Nutrition & Health Business Expanding Human Nutrition & Health Business by Leveraging Synergistic Opportunities Across Product Lines and Markets Robust Acquisition Pipeline with Strong Balance Sheet to Execute Solid Free Cash Available for Reinvestment 26

27 At our core, we are a health and wellness company. Ted Harris, President and CEO 27