Balchem Corporation

New Hampton, NY, United States

Balchem Corporation

New Hampton, NY, United States

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NEW HAMPTON, N.Y., May 09, 2017 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) today reported for the first quarter 2017 net earnings of $15.5 million, compared to net earnings of $11.9 million for the first quarter 2016. Adjusted net earnings(a) were $18.9 million, compared to $18.4 million in the prior year quarter. Ted Harris, Chairman, President, and CEO of Balchem said, “Sales growth in three of our four reporting segments helped drive record first quarter earnings for the Company, more than offsetting headwinds we are facing, including higher raw material costs and weakening dairy economics.” (a) See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures. Segment Financial Results for the First Quarter of 2017: The Human Nutrition & Health segment generated record first quarter sales of $73.1 million, an increase of $1.6 million or 2.2% compared to the prior year quarter. This increase in sales was due to one additional month of sales from the acquisition of the Albion business, along with volume increases in Choline Nutrients, partially offset by softer volumes in Powder Systems. Record first quarter earnings from operations for this segment were $10.2 million, versus $8.4 million in the prior year comparable quarter, an increase of $1.8 million or 21.8%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for 2017 and 2016 of $5.6 and $5.8 million, respectively, and inventory valuation adjustments of $1.5 million relating to acquisition accounting in 2016, adjusted earnings from operations(a) for this segment of $15.8 million were slightly higher than the $15.7 million in the prior year quarter. The Animal Nutrition & Health segment sales of $38.1 million decreased 2.9%, or $1.2 million, on flat volumes compared to the prior year quarter. The reduced sales were primarily due to lower average selling prices for products in the monogastric markets, as well as lower volumes for aqueous choline products and ruminant species products. The lower monogastric average selling prices were primarily a function of reduced formula pricing resulting from lower raw material costs in previous months and increased competition. Global monogastric volumes were up modestly, while ruminant volumes declined on weakening dairy economics and a significant inventory correction at a large customer, offset partially by continued growth in ReaShure®. Earnings from operations for the ANH segment decreased 17.7% to $5.4 million as compared to $6.5 million in the prior year comparable quarter, an impact of the aforementioned lower sales and cost increases of key raw materials within the current quarter. The Specialty Products segment generated record quarterly sales of $18.8 million, a $1.7 million or 9.8% increase from the comparable prior year quarter, driven by strong domestic and international plant nutrition sales along with the extra month of sales from the acquisition of the Albion business. First quarter earnings from operations for this segment were $6.5 million, versus $5.3 million in the prior year comparable quarter, an increase of $1.2 million or 22.2%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for 2017 and 2016 of $0.8 and $0.6 million, respectively, and inventory valuation adjustments of $0.9 million relating to acquisition accounting in 2016, adjusted earnings from operations for this segment were $7.2 million compared to $6.8 million in the prior year quarter, an increase of $0.4 million or 6.3%. The Industrial Products segment sales increased $0.5 million or 6.9% from the prior year comparable quarter, primarily due to significantly higher sales of choline and choline derivatives used in shale fracking applications, partially offset by the prior year including sales to our St. Gabriel CC Company, LLC partner in advance of the joint venture becoming operational. Earnings from operations for the Industrial Products segment were $0.7 million, an increase of $0.5 million compared with the prior year comparable quarter, and was primarily a reflection of the aforementioned higher sales and stronger gross margins due to a more favorable customer mix and improved cost structure. Consolidated gross margin for the quarter ended March 31, 2017 increased 3.7% to $44.4 million, as compared to $42.8 million for the prior year comparable period. Gross margin as a percentage of sales increased to 32.3% as compared to 31.7% in the prior year comparative period. Adjusted gross margin(a) for the quarter ended March 31, 2017 decreased 1.4% to $45.1 million, as compared to $45.7 million for the prior year comparable period. For the three months ended March 31, 2017, adjusted gross margin as a percentage of sales was 32.7% compared to 33.8% in the prior year comparative period. The decrease was primarily due to higher raw material costs and increased competition. Operating (Selling, Research & Development, General & Administrative) expenses of $21.7 million for the first quarter were down $1.1 million from the prior year comparable quarter principally due to transaction and integration costs related to the Albion acquisition of $1.2 million in 2016 and reduced payroll and related costs, partially offset by a favorable legal settlement in 2016. Excluding non-cash operating expense associated with amortization of intangible assets of $6.5 million, operating expenses were $15.2 million, or 11.1% of sales. Interest expense was $1.8 million in the first quarter of 2017. Our effective tax rates for the three months ended March 31, 2017 and 2016 were 25.1% and 33.9%, respectively. The company’s effective tax rate for the three months ended March 31, 2017 is lower primarily due to excess tax benefits from stock-based compensation, due to the of adoption of ASU 2016-09, being recognized as a reduction to the provision for income taxes (see Table 3), along with lower tax rates in certain jurisdictions. For the quarter ended March 31, 2017, cash flows provided by operating activities were $22.8 million, and free cash flow was $19.9 million. The $102.2 million of net working capital on March 31, 2017 included a cash balance of $37.0 million, which reflects scheduled and accelerated net principal payments on long-term debt and the revolving loan of $11.8 million, dividends paid of $12.1 million and capital expenditures of $2.9 million in the first quarter of 2017. The Company continues to invest in projects across all facilities to improve capabilities and operating efficiencies. Ted Harris said, “We delivered solid results in the first quarter while advancing our growth initiatives, most recently with the launch of our PetShure product line and the acquisition of the Chol-Mix Kft assets within the Animal Nutrition and Health segment, both of which help us strengthen our market position while providing greater access to higher growth market opportunities.” Mr. Harris went on to add, “Moving forward, while we expect macroeconomic headwinds to continue presenting top-line and margin challenges, at least in the short-term, we will continue to focus on driving our strategic growth initiatives, particularly in Human Nutrition & Health and Animal Nutrition & Health, through organic investments in new manufacturing capabilities and new product development. We will also continue to seek value creating acquisitions to augment our organic growth strategies.” Quarterly Conference Call A quarterly conference call will be held on Tuesday, May 9, 2017, at 11:00 AM Eastern Time (ET) to review First Quarter 2017 results. Ted Harris, President & Chief Executive Officer, and Bill Backus, Chief Financial Officer, will host the call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay two hours after the conclusion of the call through end of day Tuesday, May 23, 2017. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13661404. Segment Information Balchem Corporation reports four business segments: Human Nutrition & Health; Animal Nutrition & Health; Specialty Products; and Industrial Products. The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. The Industrial Products segment manufactures and supplies certain derivative products into industrial applications. Forward-Looking Statements This release contains forward-looking statements, which reflect Balchem’s expectation or belief concerning future events that involve risks and uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem’s expectations, including risks and factors identified in Balchem’s annual report on Form 10-K for the year ended December 31, 2016. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date. In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain unallocated equity compensation, and certain one-time or unusual transactions. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. The non-GAAP financial measures in this press release include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, and free cash flow. EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses and legal settlements, and the fair valuation of acquired inventory.  Adjusted income tax expense is defined as income tax expense adjusted for the impact of ASU 2016-09. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. 1 Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. 2 Amortization of intangible assets: Amortization of intangible assets consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, and other intangibles acquired primarily in connection with business combinations. We record expense relating to the amortization of these intangibles in our GAAP financial statements. Amortization expenses for our intangible assets are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. 3 Transaction costs, integration costs and legal settlement: Transaction and integration costs related to acquisitions are expensed in our GAAP financial statements. Legal settlements related to acquisitions are included as expense offset in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with each transaction, and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. 4 Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, and uses the Non-GAAP effective rate applied to both the GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3. The following table sets forth a reconciliation of Net Income calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the three months ended March 31, 2017 and 2016. The following table sets forth a reconciliation of GAAP income tax expense to adjusted tax expense for the three months ended March 31, 2017 and 2016. (5) In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which addresses the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017 prospectively (prior periods have not been restated).  The primary impact of adoption was the recognition during the three months ended March 31, 2017, of excess tax benefits as a reduction to the provision for income taxes and the classification of these excess tax benefits in operating activities in the consolidated statement of cash flows instead of financing activities.  The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the consolidated statement of cash flows, since such cash flows have historically been presented in financing activities. The Company also elected to continue estimating forfeitures when determining the amount of stock-based compensation costs to be recognized in each period. No other provisions of ASU 2016-09 had a material impact on the Company’s financial statements or disclosures. The following table sets forth a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2017 and 2016.


NEW HAMPTON, N.Y., May 09, 2017 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) today reported for the first quarter 2017 net earnings of $15.5 million, compared to net earnings of $11.9 million for the first quarter 2016. Adjusted net earnings(a) were $18.9 million, compared to $18.4 million in the prior year quarter. Ted Harris, Chairman, President, and CEO of Balchem said, “Sales growth in three of our four reporting segments helped drive record first quarter earnings for the Company, more than offsetting headwinds we are facing, including higher raw material costs and weakening dairy economics.” (a) See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures. Segment Financial Results for the First Quarter of 2017: The Human Nutrition & Health segment generated record first quarter sales of $73.1 million, an increase of $1.6 million or 2.2% compared to the prior year quarter. This increase in sales was due to one additional month of sales from the acquisition of the Albion business, along with volume increases in Choline Nutrients, partially offset by softer volumes in Powder Systems. Record first quarter earnings from operations for this segment were $10.2 million, versus $8.4 million in the prior year comparable quarter, an increase of $1.8 million or 21.8%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for 2017 and 2016 of $5.6 and $5.8 million, respectively, and inventory valuation adjustments of $1.5 million relating to acquisition accounting in 2016, adjusted earnings from operations(a) for this segment of $15.8 million were slightly higher than the $15.7 million in the prior year quarter. The Animal Nutrition & Health segment sales of $38.1 million decreased 2.9%, or $1.2 million, on flat volumes compared to the prior year quarter. The reduced sales were primarily due to lower average selling prices for products in the monogastric markets, as well as lower volumes for aqueous choline products and ruminant species products. The lower monogastric average selling prices were primarily a function of reduced formula pricing resulting from lower raw material costs in previous months and increased competition. Global monogastric volumes were up modestly, while ruminant volumes declined on weakening dairy economics and a significant inventory correction at a large customer, offset partially by continued growth in ReaShure®. Earnings from operations for the ANH segment decreased 17.7% to $5.4 million as compared to $6.5 million in the prior year comparable quarter, an impact of the aforementioned lower sales and cost increases of key raw materials within the current quarter. The Specialty Products segment generated record quarterly sales of $18.8 million, a $1.7 million or 9.8% increase from the comparable prior year quarter, driven by strong domestic and international plant nutrition sales along with the extra month of sales from the acquisition of the Albion business. First quarter earnings from operations for this segment were $6.5 million, versus $5.3 million in the prior year comparable quarter, an increase of $1.2 million or 22.2%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets for 2017 and 2016 of $0.8 and $0.6 million, respectively, and inventory valuation adjustments of $0.9 million relating to acquisition accounting in 2016, adjusted earnings from operations for this segment were $7.2 million compared to $6.8 million in the prior year quarter, an increase of $0.4 million or 6.3%. The Industrial Products segment sales increased $0.5 million or 6.9% from the prior year comparable quarter, primarily due to significantly higher sales of choline and choline derivatives used in shale fracking applications, partially offset by the prior year including sales to our St. Gabriel CC Company, LLC partner in advance of the joint venture becoming operational. Earnings from operations for the Industrial Products segment were $0.7 million, an increase of $0.5 million compared with the prior year comparable quarter, and was primarily a reflection of the aforementioned higher sales and stronger gross margins due to a more favorable customer mix and improved cost structure. Consolidated gross margin for the quarter ended March 31, 2017 increased 3.7% to $44.4 million, as compared to $42.8 million for the prior year comparable period. Gross margin as a percentage of sales increased to 32.3% as compared to 31.7% in the prior year comparative period. Adjusted gross margin(a) for the quarter ended March 31, 2017 decreased 1.4% to $45.1 million, as compared to $45.7 million for the prior year comparable period. For the three months ended March 31, 2017, adjusted gross margin as a percentage of sales was 32.7% compared to 33.8% in the prior year comparative period. The decrease was primarily due to higher raw material costs and increased competition. Operating (Selling, Research & Development, General & Administrative) expenses of $21.7 million for the first quarter were down $1.1 million from the prior year comparable quarter principally due to transaction and integration costs related to the Albion acquisition of $1.2 million in 2016 and reduced payroll and related costs, partially offset by a favorable legal settlement in 2016. Excluding non-cash operating expense associated with amortization of intangible assets of $6.5 million, operating expenses were $15.2 million, or 11.1% of sales. Interest expense was $1.8 million in the first quarter of 2017. Our effective tax rates for the three months ended March 31, 2017 and 2016 were 25.1% and 33.9%, respectively. The company’s effective tax rate for the three months ended March 31, 2017 is lower primarily due to excess tax benefits from stock-based compensation, due to the of adoption of ASU 2016-09, being recognized as a reduction to the provision for income taxes (see Table 3), along with lower tax rates in certain jurisdictions. For the quarter ended March 31, 2017, cash flows provided by operating activities were $22.8 million, and free cash flow was $19.9 million. The $102.2 million of net working capital on March 31, 2017 included a cash balance of $37.0 million, which reflects scheduled and accelerated net principal payments on long-term debt and the revolving loan of $11.8 million, dividends paid of $12.1 million and capital expenditures of $2.9 million in the first quarter of 2017. The Company continues to invest in projects across all facilities to improve capabilities and operating efficiencies. Ted Harris said, “We delivered solid results in the first quarter while advancing our growth initiatives, most recently with the launch of our PetShure product line and the acquisition of the Chol-Mix Kft assets within the Animal Nutrition and Health segment, both of which help us strengthen our market position while providing greater access to higher growth market opportunities.” Mr. Harris went on to add, “Moving forward, while we expect macroeconomic headwinds to continue presenting top-line and margin challenges, at least in the short-term, we will continue to focus on driving our strategic growth initiatives, particularly in Human Nutrition & Health and Animal Nutrition & Health, through organic investments in new manufacturing capabilities and new product development. We will also continue to seek value creating acquisitions to augment our organic growth strategies.” Quarterly Conference Call A quarterly conference call will be held on Tuesday, May 9, 2017, at 11:00 AM Eastern Time (ET) to review First Quarter 2017 results. Ted Harris, President & Chief Executive Officer, and Bill Backus, Chief Financial Officer, will host the call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay two hours after the conclusion of the call through end of day Tuesday, May 23, 2017. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13661404. Segment Information Balchem Corporation reports four business segments: Human Nutrition & Health; Animal Nutrition & Health; Specialty Products; and Industrial Products. The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. The Industrial Products segment manufactures and supplies certain derivative products into industrial applications. Forward-Looking Statements This release contains forward-looking statements, which reflect Balchem’s expectation or belief concerning future events that involve risks and uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem’s expectations, including risks and factors identified in Balchem’s annual report on Form 10-K for the year ended December 31, 2016. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date. In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain unallocated equity compensation, and certain one-time or unusual transactions. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. The non-GAAP financial measures in this press release include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, adjusted EBITDA, adjusted income tax expense, and free cash flow. EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses and legal settlements, and the fair valuation of acquired inventory.  Adjusted income tax expense is defined as income tax expense adjusted for the impact of ASU 2016-09. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. 1 Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. 2 Amortization of intangible assets: Amortization of intangible assets consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, and other intangibles acquired primarily in connection with business combinations. We record expense relating to the amortization of these intangibles in our GAAP financial statements. Amortization expenses for our intangible assets are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. 3 Transaction costs, integration costs and legal settlement: Transaction and integration costs related to acquisitions are expensed in our GAAP financial statements. Legal settlements related to acquisitions are included as expense offset in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with each transaction, and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. 4 Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, and uses the Non-GAAP effective rate applied to both the GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3. The following table sets forth a reconciliation of Net Income calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the three months ended March 31, 2017 and 2016. The following table sets forth a reconciliation of GAAP income tax expense to adjusted tax expense for the three months ended March 31, 2017 and 2016. (5) In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which addresses the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017 prospectively (prior periods have not been restated).  The primary impact of adoption was the recognition during the three months ended March 31, 2017, of excess tax benefits as a reduction to the provision for income taxes and the classification of these excess tax benefits in operating activities in the consolidated statement of cash flows instead of financing activities.  The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the consolidated statement of cash flows, since such cash flows have historically been presented in financing activities. The Company also elected to continue estimating forfeitures when determining the amount of stock-based compensation costs to be recognized in each period. No other provisions of ASU 2016-09 had a material impact on the Company’s financial statements or disclosures. The following table sets forth a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2017 and 2016.


Dublin, May 19, 2017 (GLOBE NEWSWIRE) -- Research and Markets has announced the addition of the "Global Smart Food Market, Analysis & Forecast - 2017 to 2022 (Focus on Food Type, End Products & Region)" report to their offering. The Smart Food Market is Expected to Grow at a CAGR of 8.32% Through 2016 to 2022 In spite of the intense competition, the report has estimated that the industry will grow over $525.25 billion by 2022 at a single digit CAGR through 2015-2022, with Asia-Pacific leading the market due to the increasing disposable income among consumers, especially in countries such as India and China. Increasing consumer awareness about the rising health issues, growing emphasis on fitness, higher personal income and rapid urbanization of emerging economies are the major factors that have led the customers to become more conscious of their health and well being moreover, regular exercising and maintaining a healthy diet has become a priority for consumers which have voluntarily adopted healthy eating habits by consuming food products with high nutrition and also substituting products which are high in fat, calories and sugar with healthy alternatives. Considering the growing popularity of this market, the report titled, Global Smart Food Market, Estimation & Forecast 2016-2022 incorporating a comprehensive segmentation of the market into food type, end products, and geography and detailed analysis of the factors that are likely to influence and shape the market. The ongoing changes in the industry has led the study to incorporate a detailed chapter on the market dynamics including the key driving and restraining forces, along with the opportunities for the global smart food market through the forecast period. The market numbers play an important role in the industry, following which a proper market sizing & estimation by food type, by end products, and by geographical location has been done for the industry. The smart food industry is experiencing rapid growth and development coupled with the demand to protect the consumer's health and interest which has led to the foundation of various regulatory policies and frameworks across the globe. This industry faces major differences in the key terminologies across the global market, along with significant differences in the regulatory and policy environment. Various countries have developed their own policies, regulatory framework, labelling, agendas, novel food application procedure, nutritional content, health benefits and also various ways of enforcement of these regulations. Additionally, having identified the potential for further development in the form of agreements, collaborations, contracts, joint ventures & partnerships among others, the report has included a separate section of detailed competitive insights. The recent activities by the key players in this market have also been tracked in the form of company profiles. The report answers the following questions about the global smart food market: - What are the different factors driving the market and how will the impact change through the forecast period? - What are the major factors challenging the growth of global smart food market and how can they be addressed through the forecast period? - How will the market players leverage on key developments such as acquisitions, partnerships, and product launch among others? - Which region will lead the global smart food market by the end of the forecast period? - What are the prevalent food type and what is the market size for each of them? - What are the prevalent end products and what is the market size for each of them? - How will the competitive rivalry evolve through the forecast period? The report puts special emphasis on the market share of the services provided in smart food market, owing to the changing paradigms in the industry. In spite of this, due to the numerous instances of failed business models and financial pressure, a majority of potential new entrants resist from adopting smart food services. The reports further includes a thorough analysis of the impact of the five major forces to understand the overall attractiveness of the industry. This segment also focuses on the investments done in the smart food market by the market participants. The most often used strategy for developing a better hold on to the market has been through mergers & accquisition, followed by business expansion. Moreover, the company profile section highlights significant information about the key companies involved along with their financial positions, key strategies & developmental activities of recent years. Further, the report includes an exhaustive analysis of the geographical split into North America, Europe, Asia-Pacific (APAC), and Rest of the World (R.o.W.). Each geography details the individual push and pull forces in addition to the key players from that region. The prominent players operating in the global smart food market are Ingredion, Cargill Inc., Balchem Corporation, Sensient Technologies, Symrise, and Kerry group. Key Topics Covered: Executive Summary 1 Report Scope & Methodology 1.1 Scope of the Report 1.2 The Smart Food Market Research Methodology 2 Industry Analysis 2.1 Opportunity Matrix Analysis 2.2 Country Share Analysis 2.3 R&D Analysis of Key Market Players 2.4 Regulatory Framework Surrounding the Smart Food Market 3 Market Dynamics 3.1 Market Drivers 3.1.1 Increasing Health Conscious Population 3.1.2 Growing Research and Development in Food Preservatives 3.1.3 Introduction of Food Preservation Techniques 3.1.4 Rising Healthcare Costs 3.2 Market Restraints 3.2.1 Fragmented Nature of the Market 3.2.2 Lack of Awareness About Smart-Food Products 3.2.3 High Cost Restricting Mass Adoption 3.3 Market Opportunities 3.3.1 Government Support and Rising Economy in Developing Nations 3.3.2 Population Demographics Across the Globe 4 Competitive Landscape 4.1 Key Market Developments & Strategies 4.2 Industry Attractiveness 5 Smart Food Market by Food Type 5.1 Assumptions and Limitations for Analysis and Forecast of the Global Smart Food Market 5.2 Market Overview 5.3 Functional Food 5.4 Encapsulated Food 5.5 Genetically Modified Food 5.6 Others (Novel & Analogue Food) 5.6.1 Other Smart Foods 5.6.1.1 Novel Food 5.6.1.2 Analogue Food 6 Smart Food Market by End Products 6.1 Bakery Products 6.2 Confectionary 6.3 Dairy Products 6.4 Meat Products 6.5 Dietary Supplements 6.6 Beverages 6.7 Others 7 Smart Food Market by Geography 8 Company Profiles - Archer Daniels Midland Company - Arla Foods - Aveka - BASF - Balchem Corporation - Cargill Inc - Firmenich - GSK - Ingredion Inc - International Flavors & Fragrances Inc (IFF) - Kellogg - Kerry Group - Nestle - PepsiCo - Royal FrieslandCampina NV - Sensient Technologies Corporation - Symrise - Tate & Lyle - The Coca Cola Company For more information about this report visit http://www.researchandmarkets.com/research/xr9tnq/global_smart_food


Dublin, May 19, 2017 (GLOBE NEWSWIRE) -- Research and Markets has announced the addition of the "Global Smart Food Market, Analysis & Forecast - 2017 to 2022 (Focus on Food Type, End Products & Region)" report to their offering. The Smart Food Market is Expected to Grow at a CAGR of 8.32% Through 2016 to 2022 In spite of the intense competition, the report has estimated that the industry will grow over $525.25 billion by 2022 at a single digit CAGR through 2015-2022, with Asia-Pacific leading the market due to the increasing disposable income among consumers, especially in countries such as India and China. Increasing consumer awareness about the rising health issues, growing emphasis on fitness, higher personal income and rapid urbanization of emerging economies are the major factors that have led the customers to become more conscious of their health and well being moreover, regular exercising and maintaining a healthy diet has become a priority for consumers which have voluntarily adopted healthy eating habits by consuming food products with high nutrition and also substituting products which are high in fat, calories and sugar with healthy alternatives. Considering the growing popularity of this market, the report titled, Global Smart Food Market, Estimation & Forecast 2016-2022 incorporating a comprehensive segmentation of the market into food type, end products, and geography and detailed analysis of the factors that are likely to influence and shape the market. The ongoing changes in the industry has led the study to incorporate a detailed chapter on the market dynamics including the key driving and restraining forces, along with the opportunities for the global smart food market through the forecast period. The market numbers play an important role in the industry, following which a proper market sizing & estimation by food type, by end products, and by geographical location has been done for the industry. The smart food industry is experiencing rapid growth and development coupled with the demand to protect the consumer's health and interest which has led to the foundation of various regulatory policies and frameworks across the globe. This industry faces major differences in the key terminologies across the global market, along with significant differences in the regulatory and policy environment. Various countries have developed their own policies, regulatory framework, labelling, agendas, novel food application procedure, nutritional content, health benefits and also various ways of enforcement of these regulations. Additionally, having identified the potential for further development in the form of agreements, collaborations, contracts, joint ventures & partnerships among others, the report has included a separate section of detailed competitive insights. The recent activities by the key players in this market have also been tracked in the form of company profiles. The report answers the following questions about the global smart food market: - What are the different factors driving the market and how will the impact change through the forecast period? - What are the major factors challenging the growth of global smart food market and how can they be addressed through the forecast period? - How will the market players leverage on key developments such as acquisitions, partnerships, and product launch among others? - Which region will lead the global smart food market by the end of the forecast period? - What are the prevalent food type and what is the market size for each of them? - What are the prevalent end products and what is the market size for each of them? - How will the competitive rivalry evolve through the forecast period? The report puts special emphasis on the market share of the services provided in smart food market, owing to the changing paradigms in the industry. In spite of this, due to the numerous instances of failed business models and financial pressure, a majority of potential new entrants resist from adopting smart food services. The reports further includes a thorough analysis of the impact of the five major forces to understand the overall attractiveness of the industry. This segment also focuses on the investments done in the smart food market by the market participants. The most often used strategy for developing a better hold on to the market has been through mergers & accquisition, followed by business expansion. Moreover, the company profile section highlights significant information about the key companies involved along with their financial positions, key strategies & developmental activities of recent years. Further, the report includes an exhaustive analysis of the geographical split into North America, Europe, Asia-Pacific (APAC), and Rest of the World (R.o.W.). Each geography details the individual push and pull forces in addition to the key players from that region. The prominent players operating in the global smart food market are Ingredion, Cargill Inc., Balchem Corporation, Sensient Technologies, Symrise, and Kerry group. Key Topics Covered: Executive Summary 1 Report Scope & Methodology 1.1 Scope of the Report 1.2 The Smart Food Market Research Methodology 2 Industry Analysis 2.1 Opportunity Matrix Analysis 2.2 Country Share Analysis 2.3 R&D Analysis of Key Market Players 2.4 Regulatory Framework Surrounding the Smart Food Market 3 Market Dynamics 3.1 Market Drivers 3.1.1 Increasing Health Conscious Population 3.1.2 Growing Research and Development in Food Preservatives 3.1.3 Introduction of Food Preservation Techniques 3.1.4 Rising Healthcare Costs 3.2 Market Restraints 3.2.1 Fragmented Nature of the Market 3.2.2 Lack of Awareness About Smart-Food Products 3.2.3 High Cost Restricting Mass Adoption 3.3 Market Opportunities 3.3.1 Government Support and Rising Economy in Developing Nations 3.3.2 Population Demographics Across the Globe 4 Competitive Landscape 4.1 Key Market Developments & Strategies 4.2 Industry Attractiveness 5 Smart Food Market by Food Type 5.1 Assumptions and Limitations for Analysis and Forecast of the Global Smart Food Market 5.2 Market Overview 5.3 Functional Food 5.4 Encapsulated Food 5.5 Genetically Modified Food 5.6 Others (Novel & Analogue Food) 5.6.1 Other Smart Foods 5.6.1.1 Novel Food 5.6.1.2 Analogue Food 6 Smart Food Market by End Products 6.1 Bakery Products 6.2 Confectionary 6.3 Dairy Products 6.4 Meat Products 6.5 Dietary Supplements 6.6 Beverages 6.7 Others 7 Smart Food Market by Geography 8 Company Profiles - Archer Daniels Midland Company - Arla Foods - Aveka - BASF - Balchem Corporation - Cargill Inc - Firmenich - GSK - Ingredion Inc - International Flavors & Fragrances Inc (IFF) - Kellogg - Kerry Group - Nestle - PepsiCo - Royal FrieslandCampina NV - Sensient Technologies Corporation - Symrise - Tate & Lyle - The Coca Cola Company For more information about this report visit http://www.researchandmarkets.com/research/xr9tnq/global_smart_food


DUBLIN--(BUSINESS WIRE)--Research and Markets has announced the addition of the "Global Smart Food Market, Analysis & Forecast - 2017 to 2022 (Focus on Food Type, End Products & Region)" report to their offering. The smart food market is expected to grow from $ 325.26 billion in the year 2016 to $525.25 billion by 2022, at a CAGR of 8.32% This growth is attributed to the increasing awareness among consumers about health and balanced diet and also the changing dietary patterns according to modern lifestyle. Moreover, rising healthcare costs have also driven the growth of this market. The trends of the smart food market varies with different geographical regions. The competitive landscape for the smart food market demonstrates an inclination towards companies adopting strategies such as mergers & acquisitions and business expansions. The major established players in the market are focusing more on mergers & acquisitions to introduce new forms of innovations and different sets of food products. Ingredion, Cargill Inc., Balchem Corporation, Sensient Technologies, Symrise, and Kerry Group were the most prominent names that surfaced in 2016 in this regard. These companies underwent a range of mergers & acquisitions and launched various new products. For more information about this report visit http://www.researchandmarkets.com/research/s4nxsp/global_smart_food


NEW HAMPTON, N.Y., July 25, 2017 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) today announced that a conference call will be held on Friday, August 4, 2017 at 11:00 AM Eastern Time (ET) to review second quarter 2017 results. Ted Harris, Chairman of the Board, CEO and President, and Bill Backus, Chief Financial Officer, will host the call. Second quarter results will be published prior to the market opening on Friday, August 4, 2017. The press release, and its accompanying financial exhibits, will also be available on the Company website, www.balchem.com, prior to the conference call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay two hours after the conclusion of the call through end of day Friday, August 18, 2017. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13667775. About Balchem Corporation Balchem Corporation reports four business segments: Human Nutrition & Health; Animal Nutrition & Health; Specialty Products; and Industrial Products. The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. The Industrial Products segment manufactures and supplies certain derivative products into industrial applications.


Patent
Balchem Corporation | Date: 2016-06-02

The present disclosure relates to choline salt compositions, and methods of preparing the same, containing choline salts, sugar alcohols, alginates, phosphate salts, or combinations thereof. The compositions are free flowing and compatible in various manufacturing processes.


The present disclosure relates to food compositions and methods of preparing the same containing an encapsulated calcium source and a biocompatible polymer. In particular, the present disclosure relates to an improved pasta dough and a method of preparing the same containing an encapsulated calcium salt and an alginate. The encapsulated calcium source and biocompatible polymer can be used for the partial or complete replacement of whole eggs or egg whites in pasta.


NEW HAMPTON, N.Y., Feb. 17, 2017 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) today announced that a conference call will be held on Tuesday, February 28, 2017 at 11:00 AM Eastern Time (ET) to review fourth quarter 2016 results. Ted Harris, Chairman of the Board, CEO and President, and Bill Backus, Chief Financial Officer, will host the call. Fourth quarter and full year results will be published prior to the market opening on Tuesday, February 28, 2017. The press release, and its accompanying financial exhibits, will also be available on the Company website, www.balchem.com, prior to the conference call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay two hours after the conclusion of the call through end of day Tuesday, March 14, 2017. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13655593. About Balchem Corporation Balchem Corporation consists of four business segments: Human Nutrition and Health; Animal Nutrition and Health; Specialty Products; and Industrial Products. The Human Nutrition and Health segment provides customized food and beverage ingredient systems and proprietary microencapsulation solutions to a variety of applications in the human food, pharmaceutical and nutrition marketplaces.  The Animal Nutrition and Health segment manufactures and supplies products to numerous animal health markets.  Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and the Industrial Products segment, provides certain derivative products into industrial applications, predominately as a component for hydraulic fracturing of shale natural gas wells.


NEW HAMPTON, N.Y., Feb. 28, 2017 (GLOBE NEWSWIRE) -- Balchem Corporation (NASDAQ:BCPC) today reported for the fourth quarter 2016 net earnings of $15.9 million, compared to net earnings of $15.7 million for the fourth quarter 2015. Adjusted EBITDA(a) was $37.7 million, compared to adjusted EBITDA of $33.7 million for the prior year quarter. For the full year ended December 31, 2016, net earnings were $56.0 million with record adjusted EBITDA of $149.3 million, compared to net earnings and adjusted EBITDA of $59.7 million and $140.5 million, respectively, in the prior year. Ted Harris, Chairman, CEO, and President of Balchem said, “We are very proud to report these fourth quarter results as well as another full year of sales and adjusted earnings growth.  While we faced certain headwinds in 2016 we are pleased with the strategic progress we have made as a company, highlighted by the acquisition of Albion International, Inc. which strengthened our health and nutrition portfolio, the earnings growth we delivered in three of our four business segments, and the record free cash flow we generated.” (a)See “Non-GAAP Financial Information” for a reconciliation of GAAP and non-GAAP financial measures. (b)Beginning in fiscal year 2016, the Company has renamed its SensoryEffects segment Human Nutrition & Health, as this segment now includes encapsulates, choline, mineral amino acid chelates, specialized mineral salts, mineral complexes, and customized food and beverage solutions (the aforementioned three mineral product lines are contributions from the Albion International, Inc. acquisition). The Company believes that this segment name change provides more clarity as to the segment’s core businesses and strategies. (c)Beginning in fiscal year 2016, the Specialty Products segment now also includes chelated minerals for the micronutrient agricultural market (this plant nutrition product line is a contribution from the Albion International, Inc. acquisition). Segment Financial Results for the Fourth Quarter of 2016: The Human Nutrition & Health(b) (HNH) segment generated record quarterly sales of $75.9 million, an increase of $5.5 million or 7.9% compared to the prior year quarter. Net sales increased due to the acquisition of the Albion business along with volume increases in certain market sectors, partially offset by an unfavorable mix and continued softness in Powder Systems. Sequentially from the third quarter 2016, without the impact of Albion, volumes in HNH increased 1.4%, driven primarily by a sequential improvement in Powder Systems, Inclusions, and Choline Nutrients. Fourth quarter earnings from operations for this segment were $10.3 million, versus $9.9 million in the prior year comparable quarter, an increase of $0.4 million or 4.0%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of $6.1 million, adjusted earnings from operations for this segment were $16.4 million compared to $15.5 million in the prior year quarter, an increase of $0.8 million or 5.4%. Earnings from operations for the quarter were driven by the inclusion of Albion and volume growth in certain market sectors, partially offset by the previously noted softness in the Powder Systems business. The Animal Nutrition & Health (ANH) segment sales of $42.5 million increased $1.1 million, or 2.6%, on a 4.8% increase in volumes compared to the prior year quarter. Sequentially from the third quarter 2016, sales increased $1.6 million, or 3.9%, on a 5.0% increase in volumes. The increased sales were primarily due to increased volumes related to both ruminant species and monogastric species products. This was partially offset by lower average selling prices for monogastric species products related to certain lower raw material costs, mix and increased competition. Earnings from operations for the ANH segment increased 29.0% to $8.1 million as compared to $6.2 million in the prior year comparable quarter, an impact of the aforementioned higher sales volumes, favorable mix and cost decreases of key raw materials. The Specialty Products(c) segment generated quarterly sales of $16.2 million, a $3.2 million or 24.3% increase from the comparable prior year quarter, primarily due to the Albion plant nutrition contribution. Quarterly earnings from operations for this segment were $5.3 million, versus $6.2 million in the prior year comparable quarter, a decrease of $0.8 million or 13.8%. Excluding the effect of non-cash expense associated with amortization of acquired intangible assets of $0.8 million, adjusted earnings from operations for this segment were $6.1 million compared to $6.3 million in the prior year quarter, a decrease of $0.2 million or 3.2%. Earnings from operations for the quarter were impacted primarily by an unfavorable mix and certain higher raw material costs. Earnings from operations for the Specialty Products segment increased on a sequential basis from the third quarter 2016 by $0.1 million. The Industrial Products segment sales declined $1.7 million or 22.1% from the prior year comparable quarter, primarily due to significantly reduced volumes sold of choline and choline derivatives for oil and natural gas fracking in North America. Earnings from operations for the Industrial Products segment were $0.9 million, an increase of $0.7 million compared with the prior year comparable quarter, and were primarily a reflection of stronger gross margins due to a more favorable customer mix and improved cost structure. Earnings from operations for the Industrial Products segment increased on a sequential basis from the third quarter 2016 by $0.4 million. Consolidated gross margin for the quarter ended December 31, 2016 increased 17.5% to $46.9 million, as compared to $39.9 million for the prior year comparable period. Gross margin as a percentage of sales increased to 33.3% as compared to 30.1% in the prior year comparative period. Adjusted gross margin(a) for the quarter ended December 31, 2016 increased 18.6% to $47.6 million, as compared to $40.1 million for the prior year comparable period. For the fourth quarter 2016, adjusted gross margin as a percentage of sales was 33.8% compared to 30.2% in the prior year comparative period. The improvement was primarily due to a favorable product mix and lower raw material costs. Operating (Selling, Research & Development, General & Administrative) expenses of $22.3 million for the fourth quarter were higher than the prior year comparable quarter principally due to the inclusion of Albion operating expenses and amortization expense related to the aforementioned acquisition. Excluding non-cash operating expense associated with amortization of intangible assets of $6.9 million, operating expenses were $15.4 million, or 11.0% of sales. Interest expense was $1.7 million in the fourth quarter of 2016, all of which related to the debt financing of the SensoryEffects and Albion acquisitions. Our effective tax rates for the three months ended December 31, 2016 and 2015 were 30.2% and 24.1%, respectively. The increase in the effective tax rate is related to discreet events and the timing of certain tax credits. The Company continues to build on its solid financial structure. Fourth quarter free cash flow was $23.6 million for the quarter ended December 31, 2016, and diligent working capital controls continue to contribute strongly to the business performance. The $87.4 million of net working capital on December 31, 2016 included a cash balance of $38.6 million, which reflects scheduled and accelerated net principal payments on long-term debt and the revolving loan of $17.8 million and capital expenditures of $4.2 million in the fourth quarter of 2016. The Company continues to invest in projects across all facilities to improve capabilities and operating efficiencies. Ted Harris said, “Our strong fourth quarter and full year results once again highlight the strength and resilience of our business model in what has proved to be a challenging business environment.” Mr. Harris went on to add, “As we focus now on 2017, we will continue to drive strategic growth initiatives, particularly in Human Nutrition & Health and Animal Nutrition & Health, through both organic investments in new manufacturing capabilities and new product development, as well as by pursuing strategic acquisitions.” Quarterly Conference Call A quarterly conference call will be held on Tuesday, February 28, 2017, at 11:00 AM Eastern Time (ET) to review Fourth Quarter 2016 results. Ted Harris, President & Chief Executive Officer, and Bill Backus, Chief Financial Officer, will host the call. We invite you to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in 1-201-689-8341), five minutes prior to the scheduled start time of the conference call. The conference call will be available for replay two hours after the conclusion of the call through end of day Tuesday, March 14, 2017. To access the replay of the conference call, dial 1-877-660-6853 (local dial-in 1-201-612-7415), and use conference ID #13655593. Segment Information Balchem Corporation reports four business segments: Human Nutrition & Health (formerly SensoryEffects); Animal Nutrition & Health; Specialty Products; and Industrial Products. The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the micronutrient agricultural market. The Industrial Products segment manufactures and supplies certain derivative products into industrial applications. Forward-Looking Statements This release contains forward-looking statements, which reflect Balchem’s expectation or belief concerning future events that involve risks and uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem’s expectations, including risks and factors identified in Balchem’s annual report on Form 10-K for the year ended December 31, 2015. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other forward-looking statements as of any future date. In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, and certain unallocated equity compensation. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. The non-GAAP financial measures in this press release include adjusted gross margin, adjusted earnings from operations, adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, adjusted EBITDA and free cash flow. EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, other expense/income, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses and legal settlements, and the fair valuation of acquired inventory.  Free cash flow is defined as net cash provided by operating activities less capital expenditures. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. 1 Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. 2 Amortization of intangible assets: Amortization of intangible assets consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, and other intangibles acquired primarily in connection with business combinations. We record expense relating to the amortization of these intangibles in our GAAP financial statements. Amortization expenses for our intangible assets are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. 3 Transaction costs, integration costs and legal settlement: Transaction and integration costs related to acquisitions are expensed in our GAAP financial statements. Legal settlements related to acquisitions are included as expense offset in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with each transaction, and are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. 4 Unallocated equity compensation: Unallocated equity compensation is one-time equity compensation expense related to the retirement from the Company of the former CEO and current Chairman of the Board of Directors, Dino A. Rossi.  As this is a one-time expense, our non-GAAP adjustments exclude this expense to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. 5 Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. The following table sets forth a reconciliation of Net Income calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the three months and year ended December 31, 2016 and 2015. The following table sets forth a reconciliation of net cash provided by operating activities to free cash flow for the three months and year ended December 31, 2016 and 2015.

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