Encapsulates company Balchem reported a 30 per cent increase in sales for 2002 this week, up to $60.2 million from $46.1million in the previous year. Growth in both its core units also brought a 45 per cent increase in its net income to $7.4 million, the Baltimore-based company said.
Both ARC Specialty Products, which packs and distributes chemicals, and the Encapsulated/Nutritional Products segment saw good sales in the fourth quarter, to end December 2002. ARC generated net sales of $5.7 million, up 9.5 per cent over the comparable quarter in 2001 and sales of encapsulated products also increased by 4.1 per cent to $6.2 million, largely due to growth in the international food market.
The domestic food market however was relatively flat during the quarter compared to the prior year, impacted by changes in customer purchasing patterns, according to Balchem.
Poorer performances came from Reashure, for animal nutrition in the dairy industry, which had flat sales due to the impact of low milk prices in the sector. Sales at Unencapsulated Feed Supplements also dropped from $2.9 million in the prior comparable quarter, to $2.4 million largely due to an end of the sodium benzoate tolling business, which occurred in the first quarter of 2002, said Balchem.
Consolidated gross profit in the quarter ended December 31, 2002 was up 3.2 per cent over the comparable period, due largely to growth in sales volume. Operating expenses also increased though, to 19.2 per cent of net sales, up a percentage point from last year's quarter.
This was due to increased rental expense and depreciation on leasehold improvements associated with the new headquarters and a significant overall increase in insurance premiums for the business, said Balchem.
The company ended the year with outstanding long-term debt, including the current portion, of $11.3 million, a 13 per cent reduction from previous year-end. Capital expenditure for 2002 reached $10 million which was funded from operating cash flows. Balchem said the increased investment is to position the company for continued growth. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $15.1 million for the full year.
Commenting on the outlook for 2003, Dino A. Rossi, president and CEO said: "At this early stage, due to the expected timing of and, in some cases uncertainties as to, new product launches in the Encapsulated/Nutritional Products and ARC Specialty Products segments, we anticipate moderate earnings growth for the year. We expect results of the Unencapsulated Feed Supplements segment to be relatively flat compared to 2002 performance."