Acquisitions, higher choline profile boost Balchem’s bottom line

By Hank Schultz contact

- Last updated on GMT

Acquisitions, higher choline profile boost Balchem’s bottom line
Balchem Corporation has ridden a string of acquisitions in human nutrition and a rising tide of choline awareness to record results in its most recent earnings statement.

In the year-end report for fiscal 2017 which was issued recently, the New Hampton, NY-based company reported a record $111 million in cash generated from operations in the year. Times have been so good for the company that it recently declared a $0.34 per share dividend, or about 11% per share based on the stock price at the time.

Food, supplement sectors a bright spot for company

Human Nutrition and Health was among the best performing divisions of the company, which also manufactures industrial chemicals.

“Our fourth quarter sales of $159.3 million were 13.2% higher than the $140.8 million result of the prior year comparable quarter. Sales growth in all four of our reporting segments contributed to the increase with Human Nutrition & Health, achieving an all time record quarter,​ said CEO Ted Harris in an earnings call with analysts. The call was posted in transcript form on the site seekingalpha.com​.

Two acquisitions made in the past couple of years have strengthened the bottom line in Balchem’s human nutrition division. In June of 2017 Balchem closed on a deal to acquire Innovative Food Processers​, based in Faribault, MN.IFP provides microencapsulated ingredients for food and beverage applications. Also in early 2016, Balchem completed the acquisition of Albion International, Inc​., based in Clearfield, UT, which supplies a line of chelated minerals. Balchem paid $111.5 million in cash for Albion, which had 2015 revenues of about $53.5 million.

Choline finally takes center stage

Among human nutrition ingredients, choline was a big driver of the division’s results. The company markets the ingredient under the VitaCholine brand name. Balchem officials have complained for years that this essential nutrient has languished in obscurity​. But that is changing; in mid 2017 the American Medical Association called for higher choline levels in prenatal vitamins​. That stance was bolstered by even more recent research showing how more choline intake during pregnancy boosts the cognitive capacity of newborns​. 

“Choline awareness is building and we are starting to experience accelerated growth with sales growth of 22% in 2017. We are also excited to report that after Balchem funded a pilot study, Dr. Steven Zeisel, Director for the University of North Carolina Nutrition Research Institute received a $2.6 million grant from the unit of The National Institutes of Health to develop a test to determine the proper levels of choline in humans​,​ Harris said.

“We believe that if a test were to be developed, it would significantly progress the ultimate supplementation of identified deficiency in humans. We will aggressively continue our VitaCholine market development activities through both consumer awareness initiatives and the strategic expansion of our sales channels,​ he said.

Full year details

For the full year, Balchem recorded sales of $594.8 million, an increase of 7.5% over the prior year. Net earnings hit a record $90.1 million, resulting in record earnings per share of $2.79, along with record adjusted net earnings of $81.7 million and record adjusted earnings per share of $2.53.

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