NEW HAMPTON, N.Y., July 28, 2005 /PRNewswire-FirstCall via COMTEX/ --
Record net sales were achieved for the quarter ended June 30, 2005 of $19.5 million. This is an increase of 18.5%, as compared to $16.4 million for the comparable prior year period. Net earnings for the second quarter were a record $2.7 million, an increase of 36.4% as compared with the same period last year. This resulted in a diluted net earnings increase of 30.8 % to $0.34 per share for the second quarter of 2005 versus $0.26 per share for the comparable quarter of the prior year, again setting a new all-time quarterly record.
In this second quarter of 2005, all three segments of the company reported improved sales and earnings. The ARC Specialty Products segment generated earnings from operations of approximately $2.9 million on record second quarter sales of $7.6 million. Net sales were 6.8% higher than the prior year comparable quarter and earnings from operations were 16.0% higher, driven by increased sales volume of packaged 100% ethylene oxide and sales of single use ethylene oxide canisters for use in medical device sterilization. The BCP Ingredients segment recorded sales of approximately $5.1 million, increasing 72.3% over the prior year comparable quarter, with continued strong sales volumes in dry and aqueous choline products for the poultry and swine industries. Earnings from operations for this segment improved 281.7% to approximately $0.74 million as compared to $0.20 million in the prior year comparable quarter. Sales of the Encapsulated/Nutritional Products segment were $6.8 million in the period, an increase of 6.4% from the prior year comparable quarter, principally due to improvements in the domestic food market as well as Reashure(TM) and Niashure(TM), our animal nutrition and health products targeted for dairy cows. Earnings from operations for this segment improved to $0.61 million in the current quarterly period as compared to $0.47 million in the prior year comparable quarter.
Consolidated gross profit for the quarter ended June 30, 2005 was $7.1 million, an increase of 18.1% compared to $6.0 million for the prior year comparable period, due to the above noted increase in sales. Operating (Selling, R&D, and Administrative) expenses were $2.8 million, equal to the comparable quarter last year. Operating expenses were approximately 14.5% of net sales, improving from 17.2% of net sales in the prior year comparable quarter.
For the six months ended June 30, 2005, net sales have increased 21.0% to $38.8 million compared to $32.1 million in the comparable prior year period, while net earnings increased 38.8% to $5.3 million or $0.66 per diluted share, compared to net earnings of $3.8 million, or $0.50 per diluted share in the prior year comparable period.
Effective June 30, 2005, the company acquired certain assets of the Loders Croklaan USA, LLC encapsulation, agglomeration and granulation business for a purchase price of $9.85 million and approximately $1.5 million for certain product inventories and accounts receivable. Substantially, all of such payment was made on July 1, 2005 from the company's cash reserves. The June 30, 2005 balance sheet therefore reflects total cash and investments of $17.7 million and a short term obligation to the seller of $10.4 million, reflecting the deferred cash payment. Balance sheet ratios and cash flow continue to be strong. The company has no long-term debt and shareholder equity improved to $56.9 million.
Commenting on the outlook for 2005, Dino A. Rossi, President and CEO of Balchem, said "In this quarter ending June 30, particular strength was realized in our ARC Specialty Products, BCP Ingredients, and Encapsulated/Nutritional segments over the prior year comparable quarter. Volume improvements in all three of our business segments continue to drive our sales and net earnings growth with ARC Specialty Products and BCP Ingredients individually setting new sales and segment earnings records for the quarter, as noted in the following tables. We expect our consolidated results to continue posting modest double digit growth organically and that the Loders Croklaan acquisition will add immediate accretive earnings beginning in the third quarter. We believe the Loders Croklaan business to be a key strategic acquisition targeting enhanced technology capabilities that we can utilize to improve our product offerings in the food and nutritional markets while accelerating our initiatives into the pharmaceutical industry. We will continue to seek more strategic alliances, joint ventures or acquisitions for each of the segments to further complement our growth objectives."
Balchem Corporation consists 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.
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, 2004. 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.