Human and animal health businesses are helping drive Balchem Corporation's (NASDAQ:BCPC) top- and bottom-line growth and offsetting any weakness the company may see in industrials.

Fourth-quarter results released after the market closed on Tuesday showed a nice rise in sales and record results for 2016. Here's a look at the quarter's numbers and what investors should take from the results. 

A pile of various vitamins.

Image source: Getty Images.

Balchem Corporation results: The raw numbers

MetricQ4 2016Q4 2015Year-Over-Year Change 
Sales $140.8 million $132.7 million  6.1% 
Net income $15.9 million  $15.6 million  1.7% 
Adjusted EPS $0.50  $0.49  2% 

Data source: Balchem Corporation Q4 2016 earnings report.

What happened with Balchem Corporation this quarter? 

While the broad numbers are important, a look inside Balchem shows where the real industry trends are playing out. Here are a few highlights:

  • Human nutrition and health revenue was up 7.9% in the quarter to $75.9 million, helped by the acquisition of Albion. Earnings from operations were up 4% to $10.3 million, although if you pull out the impact of amortizing acquired intangible assets, the adjusted earnings from operations jumped 5.4% to $16.4 million. 
  • Animal nutrition and health revenue rose 2.6% to $42.5 million, and sales were up 3.9% sequentially. Year-over-year earnings for the segment were up 29% to $8.1 million as higher volumes helped drive operating results. 
  • Specialty product sales were up 24.3% to $16.2 million, but earnings from operations fell 13.8% to $5.3 million. An unfavorable mix of products and higher raw materials costs were blamed for the decline. 
  • Industrial product was the one weak spot, with sales down 22.1% to $6.2 million as volumes of choline and choline derivatives for oil and natural gas fracking declined. Despite the decline, earnings from operations rose $0.7 million to $0.09 million as the company focused on more profitable products. 

This completes a year where sales hit a record of $553.2 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 6.3% to $149.3 million. This gives management the freedom to acquire companies or improve the balance sheet with the cash generation going forward. 

What management said

CEO Ted Harris highlighted the company's financial improvement, despite some headwinds in 2016, mainly in energy markets. He sees human and animal health markets as growth drivers in the future through both organic growth as well as strategic acquisitions. 

It's possible that industrial revenue could be at a low point, too, with oil and natural gas drilling starting to pick up again. This will be an area to watch in 2017 because it could turn from a headwind to a slight tailwind. 

Looking forward

This year will build on the strategic moves management made to grow Balchem in 2016. The momentum we're seeing in operations isn't showing any signs of slowing, and with health a big focus for consumers, the growth trends should continue. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.