Balchem (BCPC -0.15%), a leading provider of nutritional ingredients and specialty chemicals, released its second quarter results on July 31, 2025. The key news: Balchem reported record GAAP revenue and non-GAAP profits, well surpassing analyst expectations for Q2 FY2025. Non-GAAP earnings per share stood at $1.27, compared to a projected $1.12. Revenue (GAAP) climbed to $255.5 million, beating projections of $250.3 million. Each core business segment posted growth, with notable efficiency gains and a significant capital investment announcement. The quarter underscored continued momentum after a robust start to the year.
| Metric | Q2 2025 | Q2 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.27 | $1.12 | $1.09 | 16.5% |
| Revenue | $255.5 million | $250.3 million | $234.1 million | 9.1% |
| Adjusted EBITDA | $69.2 million | $62.3 million | 11.1% | |
| Free Cash Flow | $40.7 million | $38.4 million | 6.0% |
Source: Analyst estimates for the quarter provided by FactSet.
About Balchem: Business Overview and Strategic Focus Areas
Balchem develops and manufactures a broad mix of nutritional ingredients, functional food components, and specialty performance chemicals. The business is organized into three main segments: Human Nutrition & Health (ingredients and supplements for people), Animal Nutrition & Health (feed ingredients for livestock), and Specialty Products (such as performance gases and plant nutrients).
The company's recent focus centers on innovation and differentiated products, such as choline and vitamin K2 nutrients, and building proprietary technologies around micro-encapsulation. Maintaining efficient production, navigating global trade and regulatory environments, and pursuing strategic acquisitions are also central to its growth. Success relies on balancing scientific research, supply chain reliability, compliance with regulation, and talent development to meet evolving customer and industry needs.
Quarter in Review: Financial and Strategic Milestones
During Q2 2025, Balchem recorded new highs in consolidated revenue, adjusted earnings, and cash generation. Revenue grew 9.1% compared to the prior year quarter, as all three segments contributed. Human Nutrition & Health revenue grew 8.7% to $160.8 million, driven by higher sales in both food ingredients and the nutrients portfolio. Both sub-segments contributed, reflecting increased demand for products such as choline nutrients and vitamin K2 supplements, which management identified as high-growth categories. Operating earnings for this segment climbed 14.9%.
Animal Nutrition & Health revenue increased 13.1% to $56.0 million. The segment saw a rebound in both the ruminant sector (such as dairy cattle) and monogastric species (like poultry), with operating earnings up 30.5%. Specialty Products, including performance gases and plant nutrition, grew revenue 6.0% to $37.2 million. However, earnings from operations for the Specialty Products segment edged up only 0.4%, as rising operating expenses compressed margins despite stronger sales.
Gross margin for the company (GAAP) improved to 36.4%, up 0.9 percentage points over the prior year. This improvement came mainly from a favorable product sales mix, even as manufacturing input costs and compensation-related expenses increased. Operating expenses rose to $41.7 million (GAAP), reflecting higher pay and professional services spending. Adjusted EBITDA, which measures operating profitability before accounting for certain expenses, reached $69.2 million, up 11.2% from the prior year quarter.
The company generated $40.7 million in free cash flow (non-GAAP), helped by $47.3 million in operating cash flow and disciplined capital spending. It repurchased $33.3 million of its own shares, maintained flat revolving loan balances at $190 million, and Ended the quarter with $65.4 million in cash. Net working capital at $226.7 million as of quarter-end underscores a stable and liquid balance sheet.
Key Developments: Capacity, Regulatory Gains, and R&D Initiatives
Innovation remained a core priority. Balchem announced a planned $36 million investment in a new micro-encapsulation facility. The new facility will more than double capacity, supporting growth in both food and supplement ingredient markets.
In its nutrients business, the company emphasized continued robust growth in choline and vitamin K2 product categories, with vitamin K2 sales rising more than 30% in 2024, while vitamin K2 is gaining interest as a specialty supplement. These categories benefit from long-term scientific and marketing efforts, as well as recent expansion of the nutrients portfolio through acquisitions.
A major regulatory win came with the European Commission's decision to impose provisional anti-dumping duties on choline chloride imports from China ranging from 95.4 % to 120.8 %. This action, effective July 1, 2025, should help offset China’s anti-competitive pricing practices and create a level playing field going forward.
No new acquisitions were closed in the quarter, but management continued to highlight integration benefits from prior deals such as Bergstrom Nutrition and Kappa Bioscience. These deals have expanded Balchem's range of science-backed ingredients and fortified its presence in human nutrition and health.
Looking Ahead: Guidance and Watch Points
Management did not provide quantitative guidance for fiscal 2025. Leadership, however, voiced confidence in sustained demand and highlighted that regulatory boosts and expanded capacity are expected to underpin growth over the longer term.
For the remainder of fiscal 2025, investors should keep an eye on input cost trends, the impact of new capacity expansions, and changing trade policies, especially in key markets like Europe. Other focus areas include ongoing innovation in the nutrients and food ingredients businesses, integration benefits from past acquisitions, and any emergence of further cost pressures that could affect margins.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
