Press release·02/21/2025 22:53:24

Overview

BCPC, a leading specialty performance ingredients and products company, has reported its financial results for the fiscal year ended December 31, 2024. The company operates through three reportable segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products.

Financial Performance

In fiscal year 2024, BCPC reported consolidated net sales of $953.7 million, an increase of 3.4% compared to the prior year. This growth was driven by strong performance in the Human Nutrition and Health segment, which saw a 9.0% increase in net sales. The Specialty Products segment also grew 5.4%, while the Animal Nutrition and Health segment declined 9.9%.

Gross margin improved to 35.3% of net sales in 2024, up from 32.7% in 2023. This was primarily due to higher sales, a favorable product mix, and lower manufacturing input costs. Operating expenses increased 7.3% to $153.3 million, mainly due to higher compensation-related expenses, professional services, and the impact of favorable adjustments to transaction costs in the prior year.

Earnings from operations increased 14.9% to $182.9 million, with the Human Nutrition and Health segment driving the majority of the improvement. The Animal Nutrition and Health segment saw a 49.2% decline in earnings from operations, while the Specialty Products segment increased 15.4%.

Net earnings for the year were $128.5 million, an 18.4% increase from 2023. The effective tax rate rose to 22.8% in 2024 compared to 20.9% in the prior year, primarily due to an increase in certain foreign taxes.

Segment Performance

Human Nutrition and Health This segment saw a 9.0% increase in net sales, driven by higher sales in both the nutrients business and the food ingredients and solutions businesses. Earnings from operations for this segment increased 32.7% due to the higher sales, favorable product mix, and lower manufacturing input costs.

Animal Nutrition and Health Net sales in this segment declined 9.9%, with lower sales in both the monogastric and ruminant species markets. Earnings from operations decreased 49.2%, primarily due to the lower sales and a decrease in gross margin.

Specialty Products Net sales in this segment increased 5.4%, with higher sales in the performance gases market partially offset by lower sales in the plant nutrition business. Earnings from operations increased 15.4%, driven by the higher sales and lower manufacturing input costs, partially offset by higher operating expenses.

Liquidity and Capital Resources

As of December 31, 2024, BCPC had $49.5 million in cash and cash equivalents, down from $64.4 million at the end of 2023. The company has $44.2 million of cash and cash equivalents held by its foreign subsidiaries, which it currently intends to permanently reinvest in foreign operations.

Working capital decreased to $156.1 million from $165.8 million in the prior year. Significant cash outflows during the year included net payments on the revolving loan of $119.6 million, income taxes paid of $42.6 million, capital expenditures and intangible asset acquisitions of $35.7 million, the payment of the 2023 declared dividend of $25.6 million, and $24.2 million for an acquisition.

BCPC expects its operations to continue generating sufficient cash flow to fund working capital requirements and necessary capital investments. The company is actively pursuing additional acquisition opportunities and could seek additional bank loans or access to financial markets to fund such acquisitions, operations, or other cash requirements if deemed necessary.

Strengths and Weaknesses

Strengths

• Diversified product portfolio across the Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products segments
• Strong performance in the Human Nutrition and Health segment, which accounts for the majority of the company’s sales
• Improved gross margins due to favorable product mix and lower manufacturing input costs
• Healthy liquidity position with $49.5 million in cash and cash equivalents

Weaknesses

• Declining sales and profitability in the Animal Nutrition and Health segment
• Increasing operating expenses, particularly in compensation-related costs and professional services
• Higher effective tax rate due to an increase in certain foreign taxes
• Reliance on foreign cash holdings, which may be subject to repatriation challenges

Outlook

BCPC’s financial performance in fiscal year 2024 was mixed, with strong growth in the Human Nutrition and Health segment offset by weakness in the Animal Nutrition and Health segment. The company’s ability to maintain its momentum in the Human Nutrition and Health business and address the challenges in the Animal Nutrition and Health segment will be crucial for its future success.

The company’s liquidity position remains solid, with sufficient cash flow to fund working capital, capital investments, and potential acquisitions. However, the reliance on foreign cash holdings and the increasing operating expenses are areas that the management will need to closely monitor.

Overall, BCPC’s diversified product portfolio, focus on innovation, and strategic acquisitions provide a solid foundation for future growth. The company’s ability to navigate the changing market dynamics and effectively manage its costs will be key to delivering consistent financial performance and shareholder value.