Earnings call transcript: Balchem Q2 2025 sees revenue growth, strategic expansions

Balchem Corporation reported a robust Q2 2025 with record revenues and significant year-over-year growth across key financial metrics. The company’s consolidated revenue reached $255 million, marking a 9.1% increase from the previous year. According to InvestingPro data, Balchem has maintained dividend payments for 39 consecutive years and raised them for 15 straight years, demonstrating consistent financial strength. Despite a slight dip in stock price post-announcement, Balchem’s strategic initiatives and strong market positioning highlight its potential for sustained growth.

Key Takeaways

• Record Q2 2025 revenue of $255 million, a 9.1% increase year-over-year.
• Net income rose by 19.4% to $38 million.
• Strategic expansion in microencapsulation capacity and new product launches.
• Stock closed at $143.11, down 0.55% after earnings release.

Company Performance

Balchem Corporation’s performance in Q2 2025 underscores its strong market position, particularly in the nutrition and health sectors. The company achieved record revenues and net income, driven by healthy demand in both human and animal nutrition segments. Balchem’s focus on innovation, such as the introduction of new products like Aminosure XL and Vitacholine Proflow, supports its growth trajectory. The company’s minimal reliance on the Chinese supply chain and robust U.S. manufacturing presence further bolster its competitive edge.

Financial Highlights

• Revenue: $255 million, up 9.1% year-over-year.
• Net income: $38 million, a 19.4% increase from last year.
• Diluted EPS: $1.17, reflecting a 19.4% rise.
• Adjusted EBITDA: $69 million, up 11.2%.
• Gross margin: 36.4% of sales, an increase of 90 basis points.

Market Reaction

Following the earnings announcement, Balchem’s stock experienced a slight decline, closing at $143.11, a 0.55% decrease from the previous close. InvestingPro analysis shows the stock trading near its 52-week low, with relatively low price volatility and a P/E ratio of 76.63, suggesting premium pricing relative to earnings. The company maintains a healthy current ratio of 1.68, indicating strong liquidity. Want deeper insights? InvestingPro offers exclusive access to detailed valuation metrics and 8 additional ProTips for Balchem, available in the comprehensive Pro Research Report.

Outlook & Guidance

Balchem anticipates continued growth across its segments, with double-digit expansion expected in its microencapsulation business. InvestingPro data reveals the company operates with moderate debt levels and maintains sufficient cash flows to cover interest payments, supporting its expansion plans. The company projects revenue forecasts for the upcoming quarters and fiscal years, with FY2025 expected to reach $5.161 billion and FY2026 $5.399 billion. Key strategic initiatives include the expansion of its microencapsulation facility, set to double current capacity by late 2027/2028.

Executive Commentary

CEO Ted Harris highlighted the company’s robust demand across end markets and emphasized Balchem’s strategic positioning amidst market challenges. He noted, "The lines between food, nutrition, and pharma are going to become increasingly blurred," underscoring Balchem’s focus on innovation and market adaptation.

Risks and Challenges

• Tariffs: European Commission’s anti-dumping duties on Chinese choline could impact costs, though Balchem plans to offset approximately 50% through supply chain adjustments.
• Supply Chain: While Balchem has minimal reliance on China, global supply chain disruptions remain a potential risk.
• Market Conditions: Broader economic uncertainties could affect demand and pricing power.

Q&A

During the Q&A session, analysts inquired about the impact of tariffs and the company’s strategic response. Balchem plans to mitigate tariff costs through supply chain shifts and emphasized its readiness to manage these challenges. The company also addressed strong growth in its K2 product line and the faster growth rate of its ruminant segment compared to monogastric.

Full transcript - Balchem Corporation (BCPC) Q2 2025:

Desiree, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time I would like to welcome everyone to the Balchem Corporation’s second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, again press STAR one. I would now like to turn the conference over to Martin Bengtsson, Chief Financial Officer. You may begin.

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Good morning everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending June 30, 2025. My name is Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our Chairman, President, and CEO. Following the advice of our counsel, auditors, and the SEC, at this time I would like to read our forward-looking statements. Statements made in today’s call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem’s most recent Form 10-K, 10-Q, and 8-K reports. The company assumes no obligation to update these forward-looking statements. Today’s call and commentary also include non-GAAP financial measures.

Please refer to the reconciliations in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President, and CEO.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Thanks, Martin. Good morning and welcome to our conference call.

We were extremely pleased with the financial results for the second quarter of 2025 as well as the ongoing strong performance of our company. We delivered record second quarter consolidated sales, adjusted EBITDA, adjusted net earnings, and adjusted EPS with year-over-year sales and earnings growth in all three of our reporting segments. Before we get into more detail on the quarter, I would like to make a few comments about the overall market environment, including the evolving global trade situation as well as some of the new science that has recently been published supporting our various minerals, vitamins, and nutrients, and an important capacity expansion project that we are working on. We continue to see healthy demand across the vast majority of our end markets.

Our Human Nutrition and Health segment continues to perform extremely well, driven by strong demand for both our unique portfolio of nutrients and our food ingredients and solutions, which are benefiting from trends toward nutrient-dense, high-protein, high-fiber, and low-sugar or good-for-you foods where our nutrition and formulations expertise brings considerable value to our customers. In the Animal Nutrition and Health segment, we delivered another quarter of year-over-year growth on healthy demand in both our monogastric and ruminant businesses as market conditions continue to improve. We were very pleased with the European Commission’s recently announced provisional anti-dumping duties on Chinese choline of 95% to 120%, which is an important step in reestablishing a level playing field within Europe.

Final measures are expected by the end of the year, and after many years of injurious pricing by Chinese suppliers, these measures should undoubtedly help contribute positively to the overall growth of our Animal Nutrition and Health segment in the coming quarters. Within our Specialty Products segment, both our performance gases business and our plant nutrition business are performing well, driven primarily by higher demand. Our outlook for the second half of the year also remains positive. As discussed at length on the last earnings call, we believe we are relatively well positioned to effectively manage through the current global trade environment. As a reminder, we have several advantages of note including an intra-region manufacturing and sales model where approximately 85% of the company’s sales are manufactured in the same region where they are sold, a global supply chain with little reliance on China, a robust U.S.

manufacturing footprint, and strong market positions that historically have provided us with the ability to raise prices to offset rising costs. Given today’s global trade environment, we remain nimble and flexible to adjust accordingly as market conditions evolve. Additionally, I am excited to share some progress we have made in our scientific and clinical research pipeline, which continues to bolster our Human Nutrition and Health segment. Our current pipeline features over 20 active clinical studies focused on evaluating the benefits of certain nutrients including Vitacholine, K2, Vital, OptiMSM, and Albion minerals. These studies are integral to our strategy for entering new markets, expanding our ingredient categories, and building consumer awareness. In Q2 of this year, our sponsored research and collaborations resulted in six significant publications, and year to date we have had a total of nine research studies published.

I’d like to highlight two specific studies that we are particularly excited about. The first is focused on dietary choline and Alzheimer’s disease. This NIH-funded study examined the relationship between dietary choline intake and the risk of Alzheimer’s dementia. Data was gathered from 991 retirees participating in the Rush Memory and Aging Project in Chicago who were monitored for an average of seven and a half years, with 27% of participants developing Alzheimer’s disease. The study found that a daily intake of choline above 350 mg was linked to a 51% reduction in the incidence of clinical Alzheimer’s diagnoses when compared to those consuming less than 200 mg per day. These findings align with previous research such as the Framingham Heart Study, reinforcing the notion that higher choline intake is associated with a decreased risk of cognitive decline.

The second publication that I would like to highlight is related to OptiMSM, our premier branded methylsulfonylmethane, and its favorable impact on exercise-induced oxidative stress. This study explored whether OptiMSM could offer protection against significant oxidative stress from intense exercise in experienced runners. Participants received 500 milligrams of OptiMSM or a placebo for 27 days, followed by 1,000 milligrams or a placebo for another three days just before participating in a half marathon. Blood samples taken before and after the exercise analyzed 785 mRNAs connected to 47 immune response pathways. The results showed favorable modulation of 29 mRNAs across four distinct immune response pathways within two to four hours post exercise. This suggests that OptiMSM could support faster muscle recovery and protect against oxidative stress triggered by strenuous physical activity.

We believe the research findings associated with these two studies, along with all of the findings from the other studies that have been published recently, will further strengthen the science behind our premium branded nutrients and continue to help advance our ability to expand market penetration. Additionally, I’d like to share that Balchem has announced its intent to build a new $36 million state-of-the-art food ingredient and nutraceutical microencapsulation manufacturing facility in Orange County, New York, just down the road from our legacy microencapsulation site. If approved by the county, the facility will ultimately more than double Balchem’s capacity for its fast-growing microencapsulation technologies and further support our continued growth. Some exciting progress is being made on our strategic growth initiatives. Now regarding the second quarter of 2025’s financial performance.

This morning we reported record quarterly consolidated revenue of $255 million, which was 9.1% higher than the prior year. This quarter we delivered record quarterly GAAP earnings from operations of $51 million, an increase of 12.3% versus the prior year. Consolidated net income closed the quarter at $38 million, an increase of 19.4%. This quarterly net income translated to diluted net earnings per share of $1.17 on a GAAP basis, up $0.19 or 19.4% compared to the prior year. On an adjusted basis, we delivered record quarterly adjusted EBITDA of $69 million, an increase of 11.2% with an adjusted EBITDA margin of 27.1%, up 50 basis points from the prior year. Our record quarterly adjusted net earnings were $42 million, an increase of 16.8% from the prior year, which translated to $1.27 per diluted share, up $0.18 or 16.5% compared to the prior year.

Overall, another excellent quarter for Balchem as we continue to deliver strong financial returns while making good progress on our strategic growth initiatives. With that, I’m now going to turn the call back over to Martin to go through the second quarter consolidated financial results for the company and the results for each of our business segments in more detail.

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Thank you, Ted. As Ted mentioned, overall the second quarter was a great quarter for Balchem Corporation with record sales, earnings from operations, adjusted EBITDA, adjusted net earnings, and adjusted earnings per share. Our second quarter net sales of $255 million were 9.1% higher than prior year, driven by strong performance in all three segments: human nutrition and health, animal nutrition and health, and specialty products. Our second quarter gross margin dollars were $93 million, up 12.2% compared to the prior year, and our gross margin percent was 36.4% of sales, up 90 basis points compared to the prior year. The increase in gross margin percent was primarily due to a favorable portfolio mix, which was partially offset by certain higher manufacturing input costs. Consolidated operating expenses for the second quarter were $42 million as compared to $37 million in the prior year.

The increase was primarily due to higher compensation-related costs and professional services, partially offset by lower amortization expense. GAAP earnings from operations for the second quarter were a record $51 million, an increase of 12.3% compared to the prior year on an adjusted basis. As detailed in our earnings release this morning, non-GAAP earnings from operations of $56 million were up 10% compared to the prior year. Adjusted EBITDA was a record $69 million, an increase of 11.2% compared to the prior year, with an adjusted EBITDA margin rate of 27.1%. Net interest expense for the second quarter was $3 million, a decrease of $1 million compared to the prior year, driven primarily by lower outstanding borrowings. Our net debt decreased to $125 million with an overall leverage ratio on a net debt basis of 0.5.

The effective tax rates for the second quarters of 2025 and 2024 were 21.9% and 22.2%, respectively. The decrease in the effective tax rate from the prior year was primarily due to higher tax benefits from stock-based compensation. Consolidated net income closed the quarter at $38 million, up 19.4% from the prior year. This quarterly net income translated into diluted net earnings per share of $1.17, an increase of $0.19 compared to the prior year. On an adjusted basis, our second quarter adjusted net earnings were a record $42 million, an increase of 16.8% from the prior year, which translated to $1.27 per diluted share. Cash flows from operations were $47 million with free cash flow of $41 million, and we closed out the quarter with $65 million of cash on the balance sheet.

As we look at the second quarter from a segment perspective, our Human Nutrition and Health segment generated record sales of $161 million, an increase of 8.7% from the very strong results in the prior year driven by higher sales within both the food ingredients and solutions businesses and the nutrients business. Our Human Nutrition and Health segment delivered record quarterly earnings from operations of $38 million, an increase of 14.9% compared to the prior year. This was primarily driven by the aforementioned higher sales and a favorable mix, partially offset by an increase in certain manufacturing input costs and higher operating expenses. Second quarter adjusted earnings from operations for this segment were $41 million, an increase of 10.8%. We’re very pleased with the overall performance of our Human Nutrition and Health segment where we continue to experience solid end consumer demand for our unique portfolio of ingredients and solutions.

As mentioned on our last call, we’re seeing healthy growth once again across our food ingredients and solutions businesses, at least partly due to the good for you trends where our formulations expertise brings considerable value to our customers as well as continued growth of our nutrients business. We believe our product offering is well positioned to meet growing market demands and that our strong market positions will enable us to continue to deliver healthy growth. Our Animal Nutrition and Health segment generated quarterly sales of $56 million, an increase of 13.1% compared to the prior year. The increase was driven by higher sales in both the ruminant and monogastric species markets. Animal Nutrition and Health delivered earnings from operations of $4 million, an increase of 30.5% from the prior year.

The increase was primarily due to the aforementioned higher sales and a favorable mix, partially offset by an increase in certain manufacturing input costs and higher operating expenses. Second quarter adjusted earnings from operations for this segment were $4 million, an increase of 27.8%. We were once again pleased to see our Animal Nutrition and Health segment deliver both top and bottom line growth in the second quarter and the continuation of the stabilization and recovery of the business. The end markets for animal nutrition and health remain relatively stable at the moment, and we believe the animal nutrition and health business has good momentum and is well positioned to deliver solid growth in 2025. As Ted mentioned earlier, the European Commission’s recently announced provisional anti-dumping duties on Chinese choline will certainly provide further support for the animal nutrition and health segment’s growth outlook.

Our specialty product segment delivered record quarterly sales of $37 million, an increase of 6% compared to the prior year, driven by higher sales in both the performance gases and plant nutrition businesses. Specialty products also delivered record quarterly earnings from operations of $11 million, an increase of 0.4% versus the prior year, primarily driven by the aforementioned higher sales, partially offset by higher operating expenses. Second quarter adjusted earnings from operations for this segment were $12 million, an increase of 1.3%. We are very pleased with the performance of specialty products in the second quarter, both from a sales growth and margin perspective, and we expect healthy demand to drive another year of growth for the specialty products segment. Overall, the second quarter was another excellent quarter for Balchem, and we believe we are well positioned for continued growth as we head into the second half of the year.

I’m now going to turn the call back over to Ted for some closing remarks.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Thank you, Martin.

Once again, we’re extremely pleased with the.

Second quarter financial results reported earlier this morning.

As a company, we continue to show.

An ability to deliver results in a variety of market conditions given our strong market positions and our value-added portfolio of products, and we remain confident in the long-term growth outlook for Balchem as a company. I will now hand the call back over to Martin who will open up.

The call for questions.

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.

Desiree, Conference Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press Star one to join the queue. Our first question comes from the line of Bob or with CJS Securities. Your line is open.

Good morning. Congratulations on the recent anti-dumping news, and thanks for taking our questions.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Great, thanks Bob.

Thank you, Bo. Hopefully, obviously that’ll get things back on track in the even playing field, as you said. Could you give us, take a step back, give us an update on the macro environment? What’s European monogastric demand like, overall demand now, and how should that play out for you? Beyond the recovery in monogastric, which hopefully follows, what are the other drivers for growth in ANH that you see over the next 6 to 18 months?

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Thank you, Bob. On your question on monogastric demand in Europe, I would say the demand picture is relatively stable and has been stable for quite some time. If you think about it from an overall market, what we’ve seen is obviously that in terms of the Chinese supply, the market share that they have had over the years has gone up and down depending on what period you’re looking at. Now, with this anti-dumping provisional ruling, what will play out over the coming quarters is obviously what market share will they have as we establish a more level playing field. The Chinese suppliers have a relatively significant market share in Europe at the moment. If these provisional duties remain at this level, that puts their pricing sort of at par with the European producers.

Historically, we have seen sort of a preference to buy more local supply if the price is not too different. Right. We could see a scenario where we get a higher market share in Europe compared to where we are today, which would obviously be positive for the business. The overall market itself is more of a lower single-digit growth market for sort of feed grade choline, driven more by sort of protein production in the region. If you then take a step back and look at it more broadly in terms of growth, we do see quite a lot of growth ahead of us on the ruminant side. Think about our dairy business there, where there’s still a lot of market penetration, not just in the U.S. but also in Europe and elsewhere in the world where there is more innovation going on.

We are bringing new products to market. You may remember last year we launched the new Aminosure XL product, which is a rumen encapsulated lysine. The innovation funnel there continues to evolve as we work on bringing further products to market. You’ll see growth driven on the ruminant side. We also have the companion animal business, which provides quite a bit of growth opportunities for us based on the technologies we have. While the monogastric business will always be a little bit of a slower grower relative to the other parts of the portfolio, as it’s a more mature market, more fully penetrated. Hopefully that provides some insights.

Yes, that’s super, thank you. Kind of shifting to the U.S. and I guess New York, could you talk more about the investment in the manufacturing facility? How much capacity? I think it doubles the capacity. How much revenue does that add? How long will this take and what are the other benefits of standing up a new manufacturing facility as it relates to, I don’t know if it’s going to be margin or, you know, faster throughput or market share or, you know, what are you looking for from this new facility?

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Yeah, we’re excited about this new investment, Bob. It’s something that’s been honestly a little bit of a long time coming. As you know, kind of the foundation of Balchem was on microencapsulation technology and manufacturing. Our founders were scientists, technologists who invented a unique way to microencapsulate food ingredients and they bought a small dairy in Slate Hill, New York and hence that was the start of our company. We have been manufacturing microencapsulated products in Slate Hill, New York since that time, since back in the 1960s. We have since expanded to now make similar products in our Missouri site as well as overseas and in Italy. Slate Hill remains our primary site. As you can imagine, it’s a relatively old site and not very efficient because of the age of the site and the original construction and so forth. It’s very choppy and not ideal.

This is a purpose-built microencapsulation site that will come with significant efficiencies that we’re looking forward to, but most importantly, expansion of our production. We really have been a little bit tight on capacity for the last year or so and the business over the last couple years has been growing at, you know, 20%, 25% a year and doubling of the capacity is in order. I think that the primary way to think about this is that this investment will allow us to continue to grow that business at double-digit rates for the foreseeable future. Whereas if we didn’t make this investment, we would be restricted on our expansion. We have debottlenecked and stretched capacity as best we can and it’s time for a new footprint, but certainly it will also be more efficient just because.

Of the newness of it.

Fact that it’s not a retrofitted dairy, and it’s now a purpose-built microencapsulation facility.

Okay, super. That’s exciting. I’ll jump back in queue and let others ask questions, but thank you.

Thanks, Bob.

Desiree, Conference Operator: Our next question comes from the line of Raghuram Selvaraju with H.C. Wainwright & Co. Your line is open.

Thanks very much for taking my questions and congratulations on another very solid quarter. Just to clarify on the previous point about the facility, I was wondering if you could just let us know specifically when you anticipate the facility fully coming online and how you are funding the facility construction costs. Just wanted to clarify that that’s all coming from existing cash resources.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Yes, Bob, I mean, I’m sorry Ram, thanks for the question and thanks for your comments. From a CapEx perspective, as you know, we’ve been spending $35 to $40 million a year on CapEx, and we really think that we can accomplish this new project within that sort of size CapEx spending because it will happen over the course of three years. We’re not expecting a significant increase in our CapEx spending. Yes, it will come from, you know, existing cash as well as our debt facility. We’re not concerned at all about funding this site. I sort of spoke to it, but we think that it will take a little over a couple of years to manufacture or build this manufacturing site. We’re expecting that we should be able to start production, you know, kind of, I’d say late in 2027 into 2028.

We feel like we have enough capacity in our existing facility with all that debottlenecking that I talked about to allow us to grow to that point. We really need this facility to come online in that time frame in order for us to continue to grow.

Thank you very much for that. A couple other items on the HnH front. Firstly, I was wondering if you could comment on the status of Vitacholine Proflow and the progress that’s been made on integrating that specific product offering into multivitamin products, product lines, and brands, and how you expect that to evolve over the course of the remainder of this year. I also wanted to ask about, in a general sense, Balchem’s strategic outlook on the human health front as opposed to nutrition. On this call, it seems that you struck a markedly different tone with respect to the kinds of clinical studies that are being embarked upon. I was just wondering whether this might mark the step of Balchem’s move more concertedly into the human health front, maybe into the medical food space, maybe even into the pharmaceuticals or more pharmaceutical-like nutraceutical domain.

If you could provide us with any insights on that front, that would be much appreciated.

Sure Ram, I’ll try to answer all of those questions. I think that this is both an industry trend as well as an ongoing evolution of our company. When I speak about an industry trend, the good for you nature of foods, greener labels, healthier eating, personalized nutrition has been a multi decade trend that we have benefited from. There certainly are some accelerators to that multi decade trend of late. I think the advent of the GLP1 drugs is certainly part of that, that has kind of risen to prominence very, very quickly and results in kind of changing needs from a nutritional perspective, maybe even, as you brought up, a medical foods perspective. We really are seeing our customers.

Launch new products that are specifically focused.

On people that are on GLP1 drugs that obviously have kind of protein intake issues potentially as well as liver health concerns and just broad reaching nutrition deficiencies that come with consuming less food and so forth. Our food ingredient formulation business I think plays well into that trend, and of course our nutrient portfolio plays well into that as well. The market trends are headed that way, and we are moving along our evolutionary path toward being able to better and better service that. We’ve been talking quite a bit lately about our investments in marketing, as you know, because that was sort of.

New to.

Kind of our capabilities, if you will. The investment in science and studies has really always been there. I wouldn’t want you to come away saying that this is, this is.

A shift relative to the clinical studies.

I think we’ve been highlighting the marketing element of our strategy. We’ve always tried to communicate that we wanted to add the marketing to our foundation that’s based on science. These studies are critical to the overall growth of the company, the overall penetration of markets, the building of awareness and so forth. We’re continuing to do that while investing in marketing. I do think that where the markets are evolving and where Balchem is evolving is a little bit more toward that health side as you describe it. We’re not focused on becoming a pharmaceutical company, we’re not focused on getting into pharmaceuticals, but I think those lines between food, nutrition and pharma are going to become increasingly blurred given the accelerators that are going on relative to that long standing trend.

I think that’s what you’re noticing and maybe some of our updates, and because we’ve been highlighting marketing so much, we wanted to remind everybody that we continue to invest in the science. Relative to the new products that we have launched, Vitacholine Proflo is, as we’ve talked about, an interesting new product that we have that facilitates the inclusion of choline into multivitamin solutions. We are starting to introduce that to customers and the reception is positive. I can’t report out on any very large successes there, but it is just adding to our portfolio of solutions. We were a little bit blocked out of the multivitamin component of the supplement market, and now we have something that we can really talk about there. We are excited about that.

I think that one thing that I’m almost more excited about right now is the predominance of choline being included in nutritional beverages and other food systems. The more that we can support the inclusion of choline in these nutritional beverages, any energy drinks and so forth, that’s a significant market opportunity for us and we’ve seen some real wins in that area of late and are very excited about that.

Great. Just two very quick things for Martin, as per usual. I just wanted to see if you could comment on the broader strategy with respect to debt reduction, what we might expect to see over the course of the remainder of this year if the issue goes or you expect to accelerate debt repayment. Also, if you could give us a sense of your perspective on where the effective tax rate might shake out for the second half of 2025.

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Yeah, absolutely. Ram, I think as you talk about debt reduction, you have to think about it in the broader context of our capital allocation strategy. Right. Where our primary focus is always to invest in our organic growth opportunities that we have internally and that you see us doing. We try to complement that with strategic M&A that we feel accelerates some of those growth initiatives. We focus on paying down debt with cash that we have on hand that we’re generating. Since we continue to generate strong free cash flows, we pay down that debt and we’ll continue to pay down that debt. At the same time, as you’ve seen over the last decade, maintaining and growing that dividend. You may have noticed if you look closely that we also occasionally do smaller share repurchases for anti-dilutive purposes. We try to keep our share count relatively flat.

We have done that as well to keep that. As you look forward, we will continue to generate good cash flows, we will continue to pay down debt and I think when we do our next M&A transaction, obviously that debt level will rise again and you’ll probably see a repeat of history of add-ons on debt and then we continue to pay it down. I don’t think you’ll see any change in strategy here. We’ll continue to pay down that debt for a little bit further until the next M&A transaction happens. On the effective tax rate, we’re sort of humming along those 22% so far this year. I think I’ve said before that we expect that to be between the 22% and the 23% for this year.

As you look into the second half, we’ll probably be towards the lower end of that range, so probably a little bit closer to the 22% than the 23% is what I would expect for the second half of the year here.

Thank you so much.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Thanks Rob.

Desiree, Conference Operator: Our next question comes from the line of Anthony Polak with Aegis Capital Corp. Your line is open.

Good morning. I want to know basically two questions on tariffs to the U.S. Does that affect you at all? An update on cure, Mark, if I may. Sure.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: On tariffs, it does affect us certainly. As we’ve said a few times, we really feel like we’re relatively well positioned. On the call last quarter, we talked about approximately a $20 million impact from tariffs, and that’s primarily on us buying raw materials for the U.S. from international locations. Obviously, it’s a little bit of a moving target, if you will. Since the last call, some new deals, I guess they’re called, have come into play, specifically Europe, but also some countries that are important to us like Indonesia, Malaysia, and the Philippines. If we look at that $20 million impact number that we talked about last time, it hasn’t changed significantly. It’s up to approximately $25 million today. As we said last time, we feel as though we can offset about half of that number through supply chain shifts and moves, alternate suppliers, alternate manufacturing, and so forth.

That’s continuing to play out as we expected. The other half will have to come from pricing, and we’re in the midst of executing on that and remain confident that we’ll be able to accomplish that. Overall, we feel as though, again, we’re relatively well positioned, we’re going to be able to manage through this. It’s certainly something that we’re having to work and manage, and it’s taking energy and time, but we’re not concerned about its overall impact on the company’s performance at this point in time, based on what we know. Relative to Curemark, we don’t have a whole lot new to report relative to Curemark. We do understand that they continue to prepare to file the BLA. That is really the next step. We have done everything that we need to do from a manufacturing perspective.

Validation perspective and so forth.

It really is today completely in the hands of the Curemark team to file what they need to file with FDA seeking ultimate approval and our understanding. Based on our regular calls with them, they are working hard on that with various consultants and so forth. We’re excited at some point in time in the future for them to reach that milestone of filing what they need to file with FDA. I really don’t have any insights into any more specificity on exactly where they are in that process other than knowing that they’re in the midst of it.

Thanks. Appreciate it.

Thank you, Tony.

Desiree, Conference Operator: Our last question comes from the line of Daniel Scott Harriman with Sidoti & Company. Your line is open.

Thanks. Good morning, guys. Thank you for taking my questions. Just a couple quick ones for me here. First, within H.N., the 8.7% year over year growth. I was hoping you might be able to break that down between nutrients and ingredients. Then, Martin, I know you just discussed this, but I wanted to confirm, you know, obviously quite a large step up in stock repurchases versus the second quarter of 2024. I just wanted to confirm from you that that is just, you know, an opportunistic repurchase due to valuation and not a shift towards more of an active return strategy.

Martin Bengtsson, Chief Financial Officer, Balchem Corporation: Yeah, absolutely, Daniel.

Yeah.

Maybe starting with the second part of the stock repurchase. Yeah, no, that’s really just in line with sort of historic. We repurchased share for anti-dilutive purposes in 2022 and in 2021 and in 2023, in the early part of the year. We took a little bit of a break from doing that after the last two acquisitions we did and focused on lowering the debt instead. Now we sort of a little bit opportunistically saw a good opportunity to buy back some stock for anti-dilutive purposes. It’s not any larger change in strategy. It’s truly sort of the same, just for anti-dilutive purposes. Yeah, on your question on A, I mean overall, the overall A and H sales growth was obviously 13% in the quarter. Actually there was growth on both sides.

If you take the monogastric, more mature business, it was up about 7% on the monogastric side, while the ruminant side was up around 30%. On a relative scale, ruminant growing much faster than monogastric, which is also what we would expect to see over time as it is a higher growth business compared to the monogastric side.

I apologize, Martin. I was actually asking about HNH and nutrients versus ingredients.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Okay, you got some good insights into A and H as well?

Yeah, that’s fantastic. That’s fantastic.

We are pleased that monogastric, being a stable business, continues to grow. Of course, ruminant we view as a growth business, and 30% growth is really good to see as well. On HH, we grew about 9%, and once again, a little bit like A and H, both.

The food business.

As well as the nutrients business grew.

Actually, similar percentages.

The nutrients business grew at 8.8% organically, and the Food Ingredient Solutions business grew at 8.6% organically. Very pleased with the growth that we’re seeing in both of those. I would say pretty much played out as we expected last year. We saw double-digit growth in our nutrients business last year and quite low single-digit growth in food. We thought that the growth in nutrients would moderate a little bit given the accelerated growth that we’d seen.

We would continue to grow.

That’s exactly what’s happening. The food solutions business would pick up, and really pleased with that. In the nutrients business, sort of stand out. I would say our K2 product line is growing at high double-digit type growth, very pleased with that, in the 30% to 40% type range. Our MSM business growing at solid double digits, and our minerals business continues to grow very nicely, with kind of a standout continuing to be magnesium with growing awareness of that important mineral. In the food business, it’s really across the portfolio. Our encapsulated acidulents, I talked a little bit earlier about the need to expand, manufacturing has been growing at 20% plus, but generally our good-for-you formulations, whether they be in our powders or cereal systems businesses, are growing quite well. Hopefully that gives you a little bit of an insight into the H and H growth.

Yeah, it’s really helpful. I’m sorry for the earlier confusion, but thank you so much.

No problem.

Really appreciate the question.

Desiree, Conference Operator: That concludes the question and answer session. I would like to turn the call back over to our Chief Executive Officer, Ted Harris, for closing remarks.

Ted Harris, Chairman, President, and CEO, Balchem Corporation: Thank you all very much again for joining the call today. We really appreciate the time today as well as your ongoing support, and we look forward to reporting out our Q3 2025 results in October. We will be participating in the H.C. Wainwright & Co Investment Conference in New York on September 9, so we certainly hope to see some of you there.

Thank you again for joining.

Desiree, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining, and you may now disconnect.

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