NEW HAMPTON, N.Y., Feb 15, 2005 /PRNewswire-FirstCall via COMTEX/ --
Record net sales were achieved for the quarter ended December 31, 2004 of $18.0 million. This is an increase of 9.4%, as compared to $16.4 million for the comparable prior year period. Net earnings for the fourth quarter were $2.0 million, an increase of $.7 million, or 46.6% as compared with the same period last year. This resulted in a diluted net earnings increase of 39.5% to $0.26 per share for the fourth quarter of 2004 versus $0.19 per share for the comparable quarter of the prior year.
In this fourth quarter of 2004, all three segments of the company reported improved sales and earnings versus the prior year comparable period. The ARC Specialty Products segment generated earnings from operations of approximately $2.9 million on record quarterly sales of $7.5 million. Net sales were 4.1% higher than the prior year comparable quarter and earnings from operations were 8.7% higher, driven principally by increased sales volume of packaged ethylene oxide and sales of single use ethylene oxide canisters for use in medical device sterilization. The BCP Ingredients segment realized record quarterly sales of approximately $4.3 million, increasing 35.7% over the prior year comparable quarter, due principally to increased sales volumes in dry and aqueous choline products for the poultry and swine industries. Earnings from operations for this sector improved to approximately $0.26 million as compared to $0.10 million in the prior year comparable quarter. Sales of the Encapsulated/Nutritional Products segment were $6.2 million in the period, an increase of 2.2% from the prior year comparable quarter, principally due to improvements in the domestic food market as well as sales in the most recent quarter of Nitroshure, which is being sold into the animal health industry. Earnings from operations for the encap segment were $0.09 million in the current quarterly period as compared to a $0.67 million loss in the prior year comparable quarter which had included $0.4 million of re-organization charges.
Consolidated gross profit for the quarter ended December 31, 2004 was $6.0 million, an increase of 11.1% compared to $5.4 million for the comparable year period, due to the above noted increase in sales. Although sales volumes and gross profit have increased during the quarter as compared to the comparable prior year period, our operating margins, in the three segments, were unfavorably impacted by rising raw material and energy costs. While we do not foresee near-term relief from these rising costs, we have initiated price increases to our various markets effective January 1, 2005 which should help to somewhat offset the noted cost increases. Operating (Selling, R&D, and Administrative) expenses were $2.7 million, approximately 15.0% of net sales, improving from 19.9% of net sales in the prior year comparable quarter, which had included the previously noted re-organization charges.
For the year ended December 31, 2004, net sales have increased 8.9% to a record $67.4 million compared to $61.9 million in the comparable prior year period. Net earnings have increased 42.4% to a record $8.0 million or $1.03 per diluted share, compared to net earnings of $5.6 million, or $0.75 per diluted share in the prior year comparable period.
In addition, our balance sheet ratios and cash flow continued to strengthen. During the quarter ended December 31, 2004, the Company pre-paid $7.8 million, the remaining balance of its term loan. Our cash balance closed the quarter at $12.7 million, an increase of $3.5 million over the previous year's December 31 level, reflecting the noted prepayment of the term loan.
Commenting on the outlook for 2005, Dino A. Rossi, President and CEO of Balchem, said, "Having closed-out a record year in sales and earnings, we believe Balchem is positioned, financially and strategically, to capitalize on growth opportunities. We expect modest double digit increases in sales and earnings from organic growth in the three segments. We will seek to continue to improve our operating cost structure with improved volumes and enhanced technology, easing the pressure of higher energy and raw material costs. We are cautiously optimistic that we will identify one or more new strategic alliance and/or acquisition opportunities that will compliment the organic growth expectations."
Balchem Corporation consists primarily of three business segments: ARC Specialty Products, Encapsulated/Nutritional Products, and BCP Ingredients. Through ARC Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries. The Encapsulated/Nutritional Products segment provides proprietary microencapsulation solutions to a variety of applications in the food and human nutrition marketplaces. BCP Ingredients manufactures and supplies choline chloride and derivatives used primarily in the poultry and swine industries.
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, 2003. 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.