Balchem Corporation Announces Fourth Quarter 2012 Results

In this fourth quarter of 2012, the Animal Nutrition & Health ("ANH") segment, including specialties, choline and industrial derivative products, realized record sales of $56.4 million, an increase of 18.1%, or $8.6 million over the prior year comparable quarter. Our global feed grade choline product sales were up 5.1% as volume increased 3.7%, particularly from our North American customer base, over the prior year quarter. Choline volumes sold, which track closely with broiler chick placements and egg sets, were higher in North America in the fourth quarter due to an increase in numbers of birds and their average weight. The current USDA forecast for broiler meat production has improved slightly over the previous estimate for 2013; however, such improvement is dependent on more normal crop and grain growing conditions resulting in steady or declining feed prices for broilers.

The ANH specialty ingredients sector, largely targeted to the ruminant animal markets, realized approximately 3.4% sales growth from the prior year comparable quarter. However, the comparative results in this sector were actually much stronger than the 3.4% suggests, as our results were adversely impacted by the previously announced suspension of sales of AminoShure®-L, 52% lysine, which were realized in Q4 2011. Sales of non-Aminoshure products were up 15.2% in the quarter, led by strong volume growth of Reashure ^® and Nitroshure ^™, which caused us to move into an allocation mode for these products. Dairy economics continue to support strong demand for our products despite the challenges of production animal feed/ration prices. Milk prices are currently forecasted to remain strong, and expectations of moderating feed prices have resulted in a slightly higher 2013 forecast for dairy cow numbers. These indicators should support greater utilization of our products as nutritionists and herd managers look to continue to maximize results of production animals. Also, as mentioned in a previous press release, a new manufacturing facility in Virginia has been constructed to support current and expected growth. This new facility more than doubles output capacity for our rumen-stable products, and we commenced production at this site in January 2013.

Sales of industrial grade products realized significant growth from the prior year comparable quarter, particularly due to volume, comprising approximately 32% of the sales in this segment for the quarter, up from 23% in the prior year comparable quarter. This improvement came from sales of various choline and choline derivatives for industrial applications, notably from natural gas fracking, as well as intermediate sales of our Italian-produced methylamines.

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