Balchem Corporation (NASDAQ:BCPC) reported record first-quarter earnings before the market opened on Tuesday, demonstrating broad growth throughout its business. Its human nutrition and health segment continued to drive results, and as the company's biggest segment, it's starting to dominate its finances.
The company also made an acquisition it hopes will help drive growth in Europe. Here are the highlights for the quarter.
Balchem results: The raw numbers
|Metric||Q1 2017||Q1 2016||Year-Over-Year Change|
|Sales||$137.7 million||$135.1 million||1.9%|
|Net income||$15.5 million||$11.9 million||30.6%|
What happened this quarter?
Top-line growth was tepid at 1.9%, and there were mixed results across the company's business segments. What was impressive was the margin expansion that took place across the board. Here are the segment highlights for the quarter.
- On March 24, the company agreed to buy assets of Chol-Mix Kft., a privately held manufacturer of dry choline chloride in Hungary. The acquisition is expected to lead to a geographic expansion in Eastern Europe, and help drive new products to market in animal nutrition and health.
- The human nutrition and health segment was the leader once again with a 2.2% increase in sales to $73.1 million. Earnings from operations were also up 21.8% to $10.2 million, helped by the acquisition of Albion.
- Animal nutrition and health sales fell 2.9% to $38.1 million as selling prices for monogastric products dropped, and lower volumes for other products hit the business. Earnings from the segment were also down 17.7% to $5.4 million.
- Specialty products sales rose 9.8% to $18.8 million on strong plant nutrition sales. Earnings from operations for the segment were up 22.5% to $6.5 million.
- Industrial products had a 6.9% increase in revenue to $7.7 million as sales of products for fracking applications picked up. And earnings from operations were $700,000, a strong margin for a recovering business.
What management had to say
Management was encouraged by the company's performance, and predicted that a new line of specialty nutrients and processing additives sold under the PetShure line will help drive further growth. The acquisition of Chol-Mix could leverage those products further globally.
Macroeconomic headwinds are expected to put pressure on the company's top-line growth and margins in the short term. But investments to drive growth in human and animal products markets are expected to drive results long term. And with consumers focused more on health for themselves and their animals, these should be great businesses to be in for the long haul.