Balchem Corporation. (BCPC) Q1 2010 Earnings Call May 4, 2010 02:00 pm ET Executives Frank Fitzpatrick - CFO Dino Rossi - Chairman, President and CEO Analysts Daniel Rizzo - Sidoti & Company Greg Garner - Singular Research Jack Balsam - Private Investors Lawrence Goldstein - CNP Asset Management Brian Lawson - Morgan Capital Management Frank Armitrose - Stock Advisors Operator
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Dino RossiThanks Frank. Good afternoon ladies and gentlemen and welcome to our conference call. Throughout the downturns and ongoing challenges in the global economy Balchem has continued to deliver solid operational and financial performance. Thus this afternoon we are pleased to report achieving record net and earnings is $7 million. On consolidated record first quarter revenue particular $59.9 million for the quarter ended March 31 2010. These records of first quarter sales in $59.9 million were approximately 13.1% greater than the $53 million of the prior year comparable quarter. Disciplined management of our businesses enabled us to improve operating margins and deliver strong profitable and cash flow. All three segments achieved revenue growth this quarter with the animal nutrition and health segment up 12.2% due to the growth from our basic choline products in international market and strong specialty animal nutrition and health sales which were 24%. The Food, Pharma and Nutrition business close to 20% organic growth with particular strength in the domestic and international food market and human grade Choline products. The (inaudible) segment generated quarterly sales of $9.7 million, a 10% improvement over the prior year quarter principally a result of increases in sales of packaged propylene outside in the quarter. As previously noted, consolidated net income closed the quarter at $7 million up from approximately $6.1 million in the prior year quarter or an increase of approximately 15%. This quarterly net income translated into diluted earnings per share of $0.24, a 14% increase from the $0.21 we posted in the comparable quarter of 2009. Looking between the top and bottom line you will see there are consolidated gross profits of $17.4 million were equal to 29.1% of the sales in the quarter, this level is the 1.7 percentage point decline from the prior year quarter as we did on a comparative basis realized high cost levels in certain key raw materials that are largely petroleum based derivatives. These raw material increases unfavorably impacted both our animal nutrition and health and our specialty product segment.
We did however realize a small increase of sequentially from the fourth quarter of 2009 results even as we realized continued increases in key raw material cost as a gross margin percentage notably in our Food, Pharma and Nutrition segment which improved five percentage points on a sequential basis. Price increases due to the notable raw material cost increases have been and will be implemented where we are contractually able to do so in the second quarter of 2010. There are also some indications that we will see some relief from these higher raw material cost later in the second quarter.As a consolidated operating expenses level, you will note a $68,000 decrease to $6.9 million for the quarter which equaled 11.6% of the sales versus the prior year comparable spent which was approximately 13.2% of sales. Our spending level reflects a modest increase in sales and R&D employee as compared to 2009 and external R&D programs in support of existing and new products for all segments. In addition, in the first quarter of 2009, we have increased reserves relating to certain aging receivables for products sold in Central and South America which will finally reverse due to collections in this period. Overall it was another strong quarter, we are particularly pleased with the results from our human, food and choline product lines that generated the margin improvement previously discussed largely due to new product launches, increased volumes, production and logistics sufficiency. As mentioned above we did experience continued increases in certain petrochemical volunteers during the quarter that did particularly impact our ARC specialty products and animal and nutrition and health segment. Operating margins were slightly lower still remained strong for both of these segments and the consolidated earnings from operations at 17.5%. Read the rest of this transcript for free on seekingalpha.com