BALCHEM CORP

Previous wording

As of March 31, 2025, we employed approximately 1,379 full time employees worldwide. We are seeing some improvement in the labor markets and we feel that our team has been successful in attracting and retaining skilled and experienced employees in a competitive landscape. Additionally, we continue to enhance and leverage our existing technology capabilities to further optimize productivity and performance, and explore new solutions to drive efficiencies.

Current wording

As of June 30, 2025, we employed approximately 1,364 full time employees worldwide. We are seeing some improvement in the labor markets and we feel that our team has been successful in attracting and retaining skilled and experienced employees in a competitive landscape. Additionally, we continue to enhance and leverage our existing technology capabilities to further optimize productivity and performance, and explore new solutions to drive efficiencies.

Previous wording

The following tables summarize consolidated net sales by segment and business segment earnings from operations for the three months ended March 31, 2025 and 2024:

Current wording

The following tables summarize consolidated net sales by segment and business segment earnings from operations for the three and six months ended June 30, 2025 and 2024:

Previous wording

(1) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of transaction and integration costs of $489 and $440 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(1) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of transaction and integration costs of $405 and $894 for the three and six months ended June 30, 2025, respectively, and $132 and $572 for the three and six months ended June 30, 2024, respectively.

Previous wording

•The increase in net sales within the Human Nutrition & Health segment for the first quarter of 2025 as compared to the first quarter of 2024 was driven by higher sales within both the food ingredients and solutions businesses and the nutrients business. Total sales for this segment grew 3.7%, with average selling prices contributing 3.6%, volume and mix contributing 0.6%, and the change in foreign currency exchange rates contributing -0.4%.

Current wording

•The increase in net sales within the Human Nutrition & Health segment for the second quarter of 2025 as compared to the second quarter of 2024 was driven by higher sales within both the food ingredients and solutions businesses and the nutrients business. Total sales for this segment grew 8.7%, with volume and mix contributing 8.4%, the change in foreign currency exchange rates contributing 0.5%, and average selling prices contributing -0.2%.

Previous wording

•The increase in net sales within the Animal Nutrition & Health segment for the first quarter of 2025 compared to the first quarter of 2024 was driven by higher sales in the ruminant species markets, partially offset by lower sales in the monogastric species markets. Total sales for this segment increased by 6.2%, with volume and mix contributing 4.5%, average selling prices contributing 2.3%, and the change in foreign currency exchange rates contributing -0.6%.

Current wording

•The increase in net sales within the Animal Nutrition & Health segment for the second quarter of 2025 compared to the second quarter of 2024 was driven by higher sales in both the ruminant and monogastric species markets. Total sales for this segment increased by 13.1%, with volume and mix contributing 7.7%, average selling prices contributing 4.1%, and the change in foreign currency exchange rates contributing 1.2%.

Previous wording

•The increase in net sales within the Specialty Products segment for the first quarter of 2025 compared to the first quarter of 2024 was due to higher sales in both the performance gases and plant nutrition businesses. Total sales for this segment increased by 5.3%, with volume and mix contributing 3.9%, average selling prices contributing 2.1%, and the change in foreign currency exchange rates contributing -0.7%.

Current wording

•The increase in net sales within the Specialty Products segment for the second quarter of 2025 compared to the second quarter of 2024 was due to higher sales in both the performance gases and plant nutrition businesses. Total sales for this segment increased by 6.0%, with average selling prices contributing 3.8%, the change in foreign currency exchange rates contributing 1.6%, and volume and mix contributing 0.6%.

Previous wording

Gross margin dollars increased in the first quarter of 2025 compared to the first quarter of 2024 due to higher sales and a favorable mix.

Current wording

Gross margin dollars increased in the second quarter of 2025 compared to the second quarter of 2024 due to higher sales and a favorable mix, partially offset by certain higher manufacturing input costs.

Previous wording

The decrease in operating expenses in the first quarter of 2025 compared to the first quarter of 2024 was primarily due to lower amortization expense of $2,287 and a decrease in compensation-related costs of $1,197, partially offset by higher professional services of $1,237.

Current wording

The increase in operating expenses in the second quarter of 2025 compared to the second quarter of 2024 was primarily due to higher compensation-related costs of $4,788 and higher professional services of $1,206, partially offset by lower amortization of $1,016.

Previous wording

Interest expense for the three months ended March 31, 2025 and 2024 was primarily related to outstanding borrowings under the 2022 Credit Agreement. The decrease in net interest expense is due to lower outstanding borrowings.

Current wording

Interest expense for the three months ended June 30, 2025 and 2024 was primarily related to outstanding borrowings under the 2022 Credit Agreement. The decrease in net interest expense is primarily due to lower outstanding borrowings.

Previous wording

The higher effective tax rate was primarily due to lower tax benefits from stock-based compensation.

Current wording

The lower effective tax rate was primarily due to higher tax benefits from stock-based compensation.

Previous wording

During the three months ended March 31, 2025, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in our Annual Report on Form 10-K for the year ended December 31, 2024. We expect our operations to continue generating sufficient cash flow to fund working capital requirements and necessary capital investments. We are actively pursuing additional acquisition candidates. We could seek additional bank loans or access to financial markets to fund such acquisitions, our operations, working capital, necessary capital investments or other cash requirements should we deem it necessary to do so.

Current wording

During the six months ended June 30, 2025, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in our Annual Report on Form 10-K for the year ended December 31, 2024. We expect our operations to continue generating sufficient cash flow to fund working capital requirements and necessary capital investments. We are actively pursuing additional acquisition candidates. We could seek additional bank loans or access to financial markets to fund such acquisitions, our operations, working capital, necessary capital investments or other cash requirements should we deem it necessary to do so.

Previous wording

Cash and cash equivalents increased to $49,901 at March 31, 2025 from $49,515 at December 31, 2024. At March 31, 2025, the Company had $44,380 of cash and cash equivalents held by foreign subsidiaries. We presently intend to permanently reinvest these funds in foreign operations by continuing to make additional plant related investments, and potentially invest in partnerships or acquisitions; therefore, we do not currently expect to repatriate these funds in order to fund U.S. operations or obligations. However, if these funds are needed for U.S. operations, we could be required to pay additional withholding taxes to repatriate these funds. Working capital was $200,684 at March 31, 2025 as compared to $156,085 at December 31, 2024, an increase of $44,599. Significant cash payments during the three months ended March 31, 2025 included the payment of the 2024 declared dividend in 2025 of $28,263, capital expenditures and intangible assets acquired of $5,559, and repurchases of common stock of $5,325.

Current wording

Cash and cash equivalents increased to $65,427 at June 30, 2025 from $49,515 at December 31, 2024. At June 30, 2025, the Company had $53,040 of cash and cash equivalents held by foreign subsidiaries. We presently intend to permanently reinvest these funds in foreign operations by continuing to make additional plant related investments, and potentially invest in partnerships or acquisitions; therefore, we do not currently expect to repatriate these funds in order to fund U.S. operations or obligations. However, if these funds are needed for U.S. operations, we could be required to pay additional withholding taxes to repatriate these funds. Working capital was $226,718 at June 30, 2025 as compared to $156,085 at December 31, 2024, an increase of $70,633. Significant cash payments during the six months ended June 30, 2025 included repurchases of common stock of $38,589, the payment of the 2024 declared dividend in 2025 of $28,265, income taxes paid of $26,263, and capital expenditures and intangible assets acquired of $12,372.

Previous wording

The increase in cash flows from operating activities was primarily driven by the increase in net earnings, partially offset by the decrease of depreciation and amortization and the impact from changes in working capital.

Current wording

The increase in cash flows from operating activities was primarily driven by the increase in net earnings, partially offset by lower depreciation and amortization and the impact from changes in working capital.

Previous wording

We continue to invest in corporate projects, improvements across all production facilities, and intangible assets. Total investments in property, plant and equipment and intangible assets were $5,559 and $6,910 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

We continue to invest in corporate projects, improvements across all production facilities, and intangible assets. Total investments in property, plant and equipment and intangible assets were $12,372 and $13,788 for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

During 2025, we borrowed $29,000 to fund the 2024 dividend and bonus payments and made total loan payments of $29,000, resulting in $360,000 available under the 2022 Credit Agreement (see Note 7, Revolving Loan) as of March 31, 2025.

Current wording

During 2025, we borrowed $63,000 to fund the 2024 dividend, bonus payments and share repurchases. We made total loan payments of $63,000, resulting in $360,000 available under the 2022 Credit Agreement (see Note 7, Revolving Loan) as of June 30, 2025.

Previous wording

We have an approved stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 3,174,897 shares have been repurchased. We intend to acquire shares from time to time at prevailing market prices if and to the extent we deem it is advisable to do so based on our assessment of corporate cash flow, market conditions and other factors. Open market repurchases of common stock could be made pursuant to a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. We also purchase (withhold) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options, as applicable, under the Company's omnibus incentive plan. Share repurchases are funded with existing cash on hand.

Current wording

We have an approved stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 3,379,862 shares have been repurchased. We intend to acquire shares from time to time at prevailing market prices if and to the extent we deem it is advisable to do so based on our assessment of corporate cash flow, market conditions and other factors. Open market repurchases of common stock could be made pursuant to a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. We also purchase (withhold) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options, as applicable, under the Company's omnibus incentive plan. Share repurchases are funded with existing cash on hand or borrowings against our 2022 credit agreement. Repurchases of common stock were $38,589 and $5,213 for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Proceeds from stock options exercised were $1,668 and $8,791 for the three months ended March 31, 2025 and 2024, respectively. Dividend payments were $28,263 and $25,555 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Proceeds from stock options exercised were $6,222 and $9,682 for the six months ended June 30, 2025 and 2024, respectively. Dividend payments were $28,265 and $25,568 for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

As of March 31, 2025 and December 31, 2024, we have a liability of $6,786 and $6,720, respectively, for uncertain tax positions, including the related interest and penalties, recorded in accordance with ASC 740-10, for which we are unable to reasonably estimate the timing of settlement, if any.

Current wording

As of June 30, 2025 and December 31, 2024, we have a liability of $6,852 and $6,720, respectively, for uncertain tax positions, including the related interest and penalties, recorded in accordance with ASC 740-10, for which we are unable to reasonably estimate the timing of settlement, if any.

Previous wording

We currently provide postretirement benefits in the form of two retirement medical plans, as discussed in Note 14, Employee Benefit Plans. The liabilities recorded in "Other long-term obligations" on the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 were $1,446 and $1,522, respectively, and the plans are not funded. Historical cash payments made under these plans have typically been less than $200 per year. We do not anticipate any changes to the payments made in the current year for the plans.

Current wording

We currently provide postretirement benefits in the form of two retirement medical plans, as discussed in Note 14, Employee Benefit Plans. The liabilities recorded in "Other long-term obligations" on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024 were $1,493 and $1,522, respectively, and the plans are not funded. Historical cash payments made under these plans have typically been less than $200 per year. We do not anticipate any changes to the payments made in the current year for the plans.

Previous wording

Chemogas has an unfunded defined benefit plan. The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees. The amounts recorded for this obligation on our balance sheets as of March 31, 2025 and December 31, 2024 was $690 and $613, respectively, and was included in "Other long-term obligations" on the condensed consolidated balance sheets.

Current wording

Chemogas has an unfunded defined benefit plan. The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees. The amounts recorded for this obligation on our balance sheets as of June 30, 2025 and December 31, 2024 was $773 and $613, respectively, and was included in "Other long-term obligations" on the condensed consolidated balance sheets.

Previous wording

We provide an unfunded, nonqualified deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees. Assets of the plan are held in a rabbi trust and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company. The deferred compensation liability was $11,653 as of March 31, 2025, of which $11,633 was included in "Other long-term obligations" and $20 was included in "Accrued compensation and other benefits" on our consolidated balance sheets. The deferred compensation liability was $11,470 as of December 31, 2024, of which $11,449 was included in "Other long-term obligations" and $21 was included in "Accrued compensation and other benefits" on our consolidated balance sheets. The related rabbi trust assets were $11,642 as of March 31, 2025, of which $11,622 was included in "Other non-current assets" and $20 was included in "Other current assets" on the condensed consolidated balance sheets. The rabbi trust assets were $11,465 as of December 31, 2024 and were included in "Other non-current assets" on the condensed consolidated balance sheets.

Current wording

We provide an unfunded, nonqualified deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees. Assets of the plan are held in a rabbi trust and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company. The deferred compensation liability was $12,107 as of June 30, 2025, of which $12,086 was included in "Other long-term obligations" and $21 was included in "Accrued compensation and other benefits" on our consolidated balance sheets. The deferred compensation liability was $11,470 as of December 31, 2024, of which $11,449 was included in "Other long-term obligations" and $21 was included in "Accrued compensation and other benefits" on our consolidated balance sheets. The related rabbi trust assets were $12,101 as of June 30, 2025, of which $12,080 was included in "Other non-current assets" and $21 was included in "Other current assets" on the condensed consolidated balance sheets. The rabbi trust assets were $11,465 as of December 31, 2024 and were included in "Other non-current assets" on the condensed consolidated balance sheets.

Previous wording

There were no changes to our Significant Accounting Policies, as described in our December 31, 2024 Annual Report on Form 10-K, during the three months ended March 31, 2025.

Current wording

There were no changes to our Significant Accounting Policies, as described in our December 31, 2024 Annual Report on Form 10-K, during the six months ended June 30, 2025.

Previous wording

We were engaged in related party transactions with St. Gabriel CC Company, LLC during the three months ended March 31, 2025. Refer to Note 17, Related Party Transactions.

Current wording

We were engaged in related party transactions with St. Gabriel CC Company, LLC during the three and six months ended June 30, 2025. Refer to Note 17, Related Party Transactions.