Balchem Corporation (NASDAQ:BCPC) had a nearly flawless quarter, with only one segment shrinking versus a year ago. And even that weakness will likely be short-lived.

As growth gains steam, the bottom line is improving rapidly, as well. Here's what you need to know about the second quarter of 2017 at Balchem.

Supplement pills sitting on a wood-grain table.

Image source: Getty Images.

Balchem Corporation: The Raw Numbers

Metric Q2 2017 Q2 2016 Year-Over-Year Change
Sales $147.1 million  $138.8 million  6% 
Net income $16.5 million  $14.2 million  16.9% 
Diluted EPS $0.51  $0.44  15.9% 

Data Source: Balchem Corporation Q2 2017 earnings release. EPS = earnings per share.

What Happened With Balchem Corporation This Quarter? 

The broad numbers showed a lot of growth for Balchem, but the segment information is really what investors should be looking at. 

  • Human nutrition and health segment had a 4.3% increase in sales, to $78.0 million, and earnings from operations jumped 25.4%, to $11.3 million. The segment also added Innovative Food Processors in the quarter after Balchem bought out the privately held company. 
  • Animal nutrition and health sales were up 3.6%, to $37.0 million, and earnings from operations fell 49.5%, to $3.7 million, as higher costs and greater competition hit the business. 
  • Specialty products rose 2.1%, to $20.8 million in revenue, and segment operating income rose 14.8%, to $8.1 million in the quarter. 
  • Industrial product segment had a 113.9% increase in sales, to $11.2 million, and operating income jumped from $258,000 to $1.6 million. 
  • Debt repayment was $13.3 million in the quarter. 

What Management Had to Say

Growth was really the highlight for the quarter and "offset margin pressures, primarily from higher raw material costs in all segments," according to CEO Ted Harris. There was particular weakness in the animal nutrition and health segment because of an inventory correction at a large customer and challenging dairy sales. 

Management said that, overall, "We are progressing our strategic growth initiatives and are pleased with the IFP acquisition and its contribution to our company as we continue to seek value creating acquisitions to augment our organic growth strategies." Even where there were short-term headwinds, the long-term picture appears to be bright. 

Looking Forward

Small, strategic acquisitions are helping drive Balchem's growth and the company is willing to add more of these kind of acquisitions as they become available. But the momentum in the core business is also strong, which will continue to drive financial results higher in 2017.

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