Balchem Corporation Announces 2nd Quarter 2008 Results

NEW HAMPTON, N.Y., July 31, 2008 (PRIME NEWSWIRE) -- Balchem Corporation
(Nasdaq:BCPC) reported as follows (unaudited) for the period ended June 30, 2008

($000 Omitted Except for Net Earnings Per Share)

For the Three Months Ended June 30,
-----------------------------------

2008 2007
---- ----

Net sales $ 62,901 $ 44,371
Gross profit 12,951 12,182
Operating expenses 5,711 5,393
--------- ---------
Earnings from operations 7,240 6,789
Other expense (239) (422)
--------- ---------
Earnings before income tax expense 7,001 6,367
Income tax expense 2,277 2,302
--------- ---------
Net earnings $ 4,724 $ 4,065
========= =========

Basic net earnings per common
share $ 0.26 $ 0.23
Diluted net earnings per common
share $ 0.25 $ 0.22

Shares used in the calculation of
diluted net earnings per common
share 18,994 18,579

For the Six Months Ended June 30,
---------------------------------

2008 2007
---- ----

Net sales $ 119,762 $ 71,970
Gross profit 26,434 21,923
Operating expenses 11,790 9,792
--------- ---------
Earnings from operations 14,644 12,131
Other expense (452) (450)
--------- ---------
Earnings before income tax expense 14,192 11,681
Income tax expense 4,827 4,175
--------- ---------
Net earnings $ 9,365 $ 7,506
========= =========

Basic net earnings per common share $ 0.52 $ 0.42
Diluted net earnings per common share $ 0.50 $ 0.41

Shares used in the calculation
of diluted net earnings per
common share 18,916 18,487
New Record Quarter Results for Sales and Earnings

Record net sales of $62.9 million were achieved for the quarter ended June 30,
2008. This is an increase of 41.8% above the $44.4 million result of the prior
year quarter and was derived from both organic and acquisition growth.
Accordingly, record net earnings for the quarter were $4.7 million, an increase
of $0.7 million, or 16.2% as compared with the same period last year. The $4.7
million generated diluted net earnings of $0.25 per common share versus $0.22
per common share for the prior year comparable period, an increase of 13.6%.

Effective with the quarter ending March 31, 2008, the Company has realigned its
business segment reporting structure to more appropriately reflect the internal
management of the businesses, largely due to the impact of the acquisitions in
2007. Segment information from prior year periods contained herein has been
revised to reflect the realignment. The Company's reportable business segments
are: ARC Specialty Products; Food, Pharma and Nutrition; and Animal Nutrition
and Health.

Detailing the second quarter of 2008, the Animal Nutrition and Health segment
achieved record quarterly sales of $44.6 million, an increase of $16.5 million
over the prior year quarter. This result reflects incomparable sales due to the
acquisition of certain assets of Akzo Nobel Chemicals S.p.A. ("Akzo"), completed
in April 2007. This acquisition contributed approximately $7.8 million of the
incremental revenue increase over the prior year, with the balance, $8.7
million, equaling 40.7% of organic growth. On a quarterly sequential basis, this
business segment grew 14.0% or $5.5 million, largely as a result of increased
international sales, continued strong volumes from our specialty animal health
products and increases in our average selling prices. Our specialty animal
nutrition and health products, targeted predominantly for ruminant animals,
realized approximately 68.3% growth over the 2007 Q2 results with strong sales
of Reashure(r), Nitroshure(tm), and chelated minerals. Earnings from operations
for this entire segment did however decline 5.7% to $2.9 million as compared to
$3.0 million in the prior year comparable quarter, largely due to the continued
increases in petro-chemical commodities used to manufacture choline. These raw
material costs, again, continued to rise at a very swift pace in the quarter,
and while some were passed on to customers, our pricing initiatives in the
quarter were not enough to offset all of the cost increases. Additional price
increases have been, and will be, implemented where we are contractually able to
do so in the third quarter, as our businesses are likely to remain affected by
these higher costs for the balance of 2008. Sales of the Food, Pharma and
Nutrition segment were $9.5 million, an increase of 19.6% from the prior year
comparable quarter. This segment growth was organic, with strong sales of human
grade choline and pharma calcium products. Earnings from operations for this
segment improved to $1.7 million, as compared to $0.7 million in the prior year
comparable quarter. The ARC Specialty Products segment generated quarterly sales
of $8.8 million, a 5.4% increase over the prior year quarter principally from
increases in volume and selling price of ethylene oxide products sold. During
the second quarter, we did increase prices to help off-set cost increases, but
we did trail the rapid raw material increases, hence earnings in this segment
declined $0.3 million. We continue to monitor the seemingly constant
petro-chemical raw material price escalation and seek to implement price
increases within contractual guidelines.

Gross profit for the quarter ended June 30, 2008 was $13.0 million, an increase
of 6.3% compared to $12.2 million for the prior year comparable period. The
consolidated gross margin, as a percent of sales, at 20.6%, declined as a result
of the above noted acquisition related sales, which carry a lower gross margin,
and despite the implementation of price increases, we were not able to fully
recover the increases in certain petro-chemical raw materials, which continued
or trended up within the quarter. The current raw material environment remains
unpredictable. We are however, continuing to focus on implementing price
increases, productivity improvements, and, most importantly, growth through new
product development. Operating (Selling, R&D, and Administrative) expenses
increased 5.9% to $5.7 million, as compared to $5.4 million for the prior year
comparable quarter, but decreased as a percentage of sales to 9.1%, down from
12.2% in the prior year quarter. This increase in operating expenses, over the
prior year, was primarily due to higher research expenses for the pharmaceutical
initiatives, and higher G&A expenses due to increased fees for audit, tax
accounting, and non-cash stock-based compensation recognition.

For the six months ended June 30, 2008, net sales have increased 66.4% to $119.8
million compared to $72.0 million in the comparable prior year period. Net
earnings have increased 24.8% to $9.4 million, generating $0.50 per diluted
share, versus net earnings of $7.5 million, or $0.41 per diluted share, in the
prior year comparable period.

Balance sheet ratios and our cash flow continue to be strong. Late in the second
quarter of 2007, we borrowed $39 million; the proceeds of which were used to
complete the funding of the Chinook and Akzo acquisitions. At June 30, 2008, our
outstanding borrowings were $24 million reflecting accelerated payments of $12.5
million on our term loan. We will look to continue to aggressively reduce our
outstanding debt balance through the remainder of 2008.

Outlook

Commenting on 2008, Dino A. Rossi, President and CEO of Balchem, said, "This
record second quarter, despite difficult business conditions, demonstrates the
value of our diversified business. Our increasing global presence, with solid
overseas demand, is off-setting certain softness in some U.S. markets. While
rising raw material costs have had an impact on our results, and they are likely
to continue being a challenge in the near term, we will take appropriate actions
to improve operating margins and cash flow.

"We continue to see improved results of human grade choline, due to growing
consumer awareness, and of our calcium products for the pharmaceutical and
nutritional markets, with new calcium product launches scheduled for the fourth
quarter. The Animal Nutrition and Health segment is realizing excellent global
revenue growth in both the specialty and basic choline product lines. Our
pharmaceutical research efforts continue, and we expect to generate milestone
payments over the balance of the year. We continue to expect 2008 to be a year
of quality double digit improvements in sales and earnings, as we leverage our
production capacity and business infrastructure."

Quarterly Conference Call

A quarterly conference call will be held on Thursday, July 31, 2008 at 2:00 PM
Eastern Time (ET) to review second quarter 2008 results. Dino A. Rossi,
President and CEO, and Frank Fitzpatrick, CFO, will host the call. We invite you
to listen to the conference by calling toll-free 1-877-407-8289 (local dial-in
1-201-689-8341), five minutes prior to the scheduled start time of the
conference call. The conference call will be available for digital replay
through Wednesday, August 6. To access the replay of the conference call dial
1-877-660-6853 (local dial-in 1-201-612-7415), and use account #298 and replay
ID#291880. Both account and replay ID numbers are required for replay access.

Segment Information

Balchem Corporation consists of three business segments: ARC Specialty Products;
Food, Pharma and Nutrition; and Animal Nutrition and Health. Through ARC
Specialty Products, Balchem provides specialty-packaged chemicals for use in
healthcare and other industries. The Food, Pharma and Nutrition segment provides
proprietary microencapsulation, granulation and agglomeration solutions to a
variety of applications in the human food, pharmaceutical and nutrition
marketplaces. The Animal Nutrition and Health segment manufactures and supplies
products to numerous animal health markets and certain derivative products into
industrial applications.

Forward-Looking Statements

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, 2007. 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.

Selected Financial Data
($ in 000's)

Business Segment Net Sales:
---------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
---------------------------------------------------------------------
ARC Specialty Products $ 8,816 $ 8,367 $ 17,266 $ 16,428
Food, Pharma & Nutrition 9,471 7,922 18,760 15,134
Animal Nutrition & Health 44,614 28,082 83,736 40,408
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Total $ 62,901 $ 44,371 $119,762 $ 71,970
---------------------------------------------------------------------

Business Segment Earnings Before Income Taxes:

---------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
---------------------------------------------------------------------
ARC Specialty Products $ 2,720 $ 3,053 $ 5,318 $ 5,956
Food, Pharma & Nutrition 1,670 714 3,198 1,040
Animal Nutrition & Health 2,850 3,022 6,128 5,135
Interest and other expense (239) (422) (452) (450)
---------------------------------------------------------------------
Total $ 7,001 $ 6,367 $ 14,192 $ 11,681
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Selected Balance Sheet Items

June 30, December 31,
----------- -----------
2008 2007
---- ----
Cash $ 2,642 $ 2,307
Accounts Receivable 35,500 29,640
Inventories 19,398 15,680
Other Current Assets 3,792 4,842
----------- -----------
Total Current Assets 61,332 52,469

Property, Plant, & Equipment (net) 43,630 42,080
Other Assets 58,174 59,875
----------- -----------
Total Assets $ 163,136 $ 154,424
=========== ===========

Current Liabilities $ 38,450 $ 36,330
Long-Term Obligations 19,231 25,014
----------- -----------
Total Liabilities 57,681 61,344

Stockholders' Equity 105,455 93,080
----------- -----------
Total Liabilities and
Stockholders' Equity $ 163,136 $ 154,424
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CONTACT: Balchem Corporation
Karin McCaffery
845-326-5635