Ingredient solution and microencapsulation company Balchem achieved record third quarter net sales of $75.1 million, up 1% from the $74.4 million result, and record net earnings of $10.9 million, also up 1%.
The company noted the positive impact of the dairy market, with milk prices forecast to remain strong, and the pace of dairy herd contraction occurring at a slower rate than projected earlier in the year. Balchem said that current feed and milk price indicators should support greater utilisation of its products as nutritionists and herd managers look to continue to maximise results of production animals.
Sales in the Food, Pharma & Nutrition segment were $10.9 million, effectively equal to the $11.0 million of the prior year comparable quarter. Balchem said that it realised continued strength in sales of its human choline products; however, it also saw a comparative quarter decline in the international food sector of encapsulated ingredients for the prepared food, preservation and confection markets, which had experienced a particularly strong third quarter in 2011.
Earnings from operations for this segment decreased by approximately 8.0%, or $0.25 million, to $2.9 million, reflecting an unfavourable product mix and slightly lower volumes sold. Consolidated gross margin for the quarter ended September 30, 2012 improved to $23.4 million, as compared to $22.6 million for the prior year comparable period.
Gross margin percentage improved slightly to 31.1% of sales as compared to 30.4% in the prior year comparative period, principally due to raw material cost decreases and favourable product mix.
“These record third quarter achievements are a reflection of strong underlying focus on generating sustainable sales growth in our core business segments, and the value of our diversified portfolio,” said Dino A. Rossi, chairman, CEO and president of Balchem.
“As noted previously, certain fluctuations of any particular segment or product line will occur, like our food encapsulates or feed grade choline, which were neatly offset by continued strength in [our other businesses]. Staying focused on macro-economic market trends allows us to respond to cautious actions by our customers in these economically challenging times, but also gives us insight to focus on development efforts of pipeline products and prospects.”
“We continue to focus on operating expense management, new production and supply chain capabilities, including but not limited to logistics and currency, to deliver cost competitive or advantaged solutions to our customers. Our balance sheet has continued to strengthen, as we continue to seek out strategic acquisitions or partnership ventures to complement the organic growth.”
