Operator: Hello, everyone. Thank you for joining us, and welcome to the Balchem Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1. To withdraw your question, press star 1 again. I would now like to hand the conference over to Martin Bengtsson, Balchem's CFO. Please go ahead.
Carl Martin Bengtsson: Good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending June 30, 2026. My name is Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our Chairman, President, and CEO. Following the advice of our counsel, auditors, and the SEC, at this time, I would like to read our forward-looking statement. Statements made in today's call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem's most recent Form 10-K, 10-Q, and 8-K reports. The company assumes no obligation to update these forward-looking statements. Today's call and commentary also include non-GAAP financial measures. Please refer to the reconciliations in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President and CEO.
Theodore L. Harris: Thanks, Martin. Good morning, and welcome to our conference call. We were extremely pleased with our second quarter performance reported this morning, which was once again driven by healthy broad-based growth across all three of our reporting segments. And continued solid execution on our strategic growth initiatives. Our healthy growth continues to be fueled by the ongoing market penetration of our unique portfolio of specialty nutrients and delivery systems, and the favorable better-for-you trends within the food and nutrition markets that are well aligned with our product offerings and capabilities. As a result, we delivered record quarterly consolidated sales, adjusted EBITDA, and adjusted net earnings, as well as solid cash flows. Before discussing our second quarter financial results in more detail, I would like to take a moment to comment on the broader operating environment within each of our business segments and highlight a few areas of progress in the quarter, particularly within our capital allocation strategy. Demand trends across our businesses remain healthy. Our unique portfolio, strong market positions, and focus on innovation continue to drive above-market growth. Within human nutrition and health, we delivered another very strong quarter, supported by solid demand across both our nutrients portfolio and our food ingredients and solutions businesses. Heightened interest in supplementation and healthier nutrient-dense, high-protein, high-fiber and lower-sugar products continues to create opportunities for our customers and subsequently our science-based ingredients, formulation expertise, and application capabilities. In animal nutrition and health, we continue to generate healthy growth as a result of both expanding adoption of our precision-release rumen-protected nutrient technologies within the dairy industry, as well as realizing higher year-over-year volumes and margins in our European monogastric business. We remain encouraged by the momentum across our animal nutrition and health portfolio, and the value our products provide to producers seeking greater efficiency, productivity, and sustainability. And specialty products also continues to drive healthy top and bottom line growth on solid volume and pricing growth, particularly within our performance gases business. So demand trends across our businesses remain healthy, and each of our reporting segments is performing well. On a consolidated basis, we delivered strong growth and healthy margins despite higher input costs related to the conflict in the Middle East, as a result of both mitigating actions and growth-driven operating leverage. And we remain confident in our ability to drive continued growth and margin performance going forward. On the capital allocation front, consistent with our balanced approach to capital allocation, we took several actions during the quarter to enhance financial flexibility and return capital to shareholders. First, we recently completed the refinancing of our revolving credit facility. The new amended agreement increases our borrowing capacity from $550 million to $650 million and extends the maturity of the facility into 2031. This transaction further strengthens our financial position and provides additional flexibility to support our growth strategy, including continued innovation, capacity expansion, and strategic acquisition opportunities. Second, we repurchased approximately $29 million of Balchem common stock during the second quarter and $114 million over the trailing 12 months. Reflecting our continued commitment to disciplined capital allocation and shareholder value creation. Now regarding the second quarter financial performance. This morning, we reported record quarterly consolidated revenue of $284 million, an increase of 11.2% versus the prior year. We delivered record quarterly GAAP earnings from operations of $59 million, an increase of 15.1% versus the prior year. Consolidated net income closed the quarter at a record $45 million, an increase of 16.6%. This quarterly net income translated to diluted net earnings per share of $1.39 on a GAAP basis. Up 18.8%. On an adjusted basis, we delivered record quarterly adjusted EBITDA of $78 million, an increase of 12.6%. Our quarterly adjusted net earnings were a record $48 million, an increase of 15.7%, which translated to $1.49 per diluted share, up 17.3%. Overall, we delivered an outstanding second quarter. Highlighted by record financial results, broad-based growth across our businesses, the strengthening of our balance sheet via our newly amended credit facility, and continued execution on our long-term strategic objectives. And with that, I am now going to turn the call back over to Martin to go through the second quarter financial results in more detail and the results for each of our business segments.
Carl Martin Bengtsson: Thank you, Ted. The second quarter was another strong quarter. Our record second quarter net sales of $284 million were up 11.2% compared to prior year. Driven by strong performances across all three segments. Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. Our gross margin dollars were $104 million, up 11.4%. Our gross margin percent expanded to 36.5% of sales. Up 10 basis points. The gross margin performance was driven primarily by sales growth and manufacturing efficiencies, partially offset by certain higher manufacturing input costs. Consolidated operating expenses for the second quarter were $44 million as compared to $42 million in the prior year. The increase was primarily due to higher compensation-related costs. GAAP earnings from operations for the second quarter were a record $59 million, an increase of 15.1%. On an adjusted basis, as detailed in our earnings release this morning, record non-GAAP earnings from operations of $64 million were up 13.9%. Adjusted EBITDA was a record $78 million, an increase of 12.6%. With an adjusted EBITDA margin rate of 27.4%. Net interest expense for the second quarter was $2 million, a decrease of $1 million, primarily driven by lower outstanding borrowings and lower interest rates. Our net debt was $89 million with an overall leverage ratio on a net debt basis of 0.3. The effective tax rates for the second quarters of 2026 and 2025 were 22.8% and 21.9%, respectively. The increase in the effective tax rate from the prior year was primarily due to lower tax benefits from stock-based compensation. Consolidated net income closed the quarter at a record $45 million, up 16.6%. This quarterly net income translated into diluted net earnings per share of $1.39, an 18.8% increase. On an adjusted basis, our second quarter adjusted net earnings were a record $48 million, an increase of 15.7%, which translated to $1.49 per diluted share. Cash flows from operations were $47 million with free cash flow of $36 million, and we closed out the quarter with $63 million of cash on the balance sheet. As we look at the second quarter from a segment perspective, our Human Nutrition and Health segment saw record sales of $177 million, up 10%, driven by growth in both our nutrients business and our food ingredients and solutions businesses. Record earnings from operations of $42 million were up 10.5%, driven by the higher sales and favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Second quarter adjusted earnings from operations for this segment were a record $46 million, up 10.9%. We are excited about the growth outlook for Human Nutrition and Health. Where consumer demand for healthier nutritional solutions continues to support growth. Our differentiated ingredients, formulation expertise, and branded portfolio position us well to continue serving our customers and expanding our market opportunities. Our Animal Nutrition and Health segment delivered sales of $64 million, up 15%. The increase was driven by higher sales in both the monogastric and ruminant businesses. Animal Nutrition and Health delivered earnings from operations of $5 million, up 48.7%. Driven by the higher sales, partially offset by certain higher manufacturing input costs and higher operating expenses. Second quarter adjusted earnings from operations for this segment were $6 million, up 47.7%. We delivered another quarter of improved year-over-year performance in our Animal Nutrition and Health segment. Growth was driven by continued adoption of our encapsulated rumen-protected nutrient technologies in the dairy market, stable demand in our U.S. monogastric business, and ongoing improvement in our European monogastric business, following the implementation of EU antidumping duties. And we were also pleased with the year-over-year margin improvement delivered in the quarter within A&H. Despite higher input costs related to the conflict in the Middle East, as a result of both mitigating actions taken and growth-driven operating leverage. We are encouraged by the momentum across the Animal Nutrition and Health segment and remain confident in our ability to continue expanding adoption of our technologies and delivering long-term growth. Our Specialty Products segment delivered record quarterly sales of $41 million. Up 8.9%, driven by healthy growth in both Performance Gases and Plant Nutrition businesses. Specialty Products delivered record quarterly earnings from operations of $13 million. Up 14.4%. Driven primarily by higher sales, partially offset by certain higher manufacturing input costs and higher operating expenses. Second quarter adjusted earnings from operations for this segment were a record $14 million, up 12.1%. We were encouraged by the continued strong performance in Specialty Products, which once again delivered healthy, profitable growth. Supported by favorable market positions and disciplined execution, we believe this segment remains well positioned for continued success. Overall, our second quarter reflects all-time record financial performance, continued momentum across our businesses and strong execution across the organization. With that, I will turn the call back over to Ted for some closing remarks.
Theodore L. Harris: Thanks, Martin. We are very pleased with the results we reported earlier today. Our teams executed exceptionally well during the quarter. Delivering record financial performance, while continuing to advance our strategic priorities. The second quarter of 2026 was our 28th consecutive quarter of year-over-year growth in adjusted EBITDA. We believe this achievement reflects the strength of our unique portfolio, the resilience of our business model, and the consistent execution of our teams across a wide range of conditions. And as a team, we are extremely proud of these results and excited about the future of our company. I will now hand the call back over to Martin who will open up the call for questions.
Carl Martin Bengtsson: Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.
Operator: And we are now opening the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow optimum sound quality. If you are muted locally, please remember to unmute your device. Now please stand by while we compile the Q&A roster. Your first question comes from the line of Bob Labick with CJS Securities. Your line is open. Please go ahead.
Bob Labick: Good morning. Congratulations on continued strength and record results.
Theodore L. Harris: Thanks, Bob. Yeah.
Bob Labick: You have been really successful in growing minerals and nutrients, in particular, choline, K2, magnesium, and more. Question is, how do you evaluate new products? Is it based on where you can improve bioavailability or markets or what? And so how do you evaluate new products for that area? And then how do you decide if it is a build versus buy opportunity to enter markets for new products.
Theodore L. Harris: Yeah. Thanks for the question, Bob. Yeah. We are really pleased with the performance of the nutrients business as well as the food ingredients and solutions part of H&H, both contributing to very, very strong results in our Human Nutrition and Health business. And specifically, and as you know, over the years we have developed our own products. Sometimes with outside partners. In the case of Optifolin+ that we launched a year or so ago, that is a good example of kind of an internal development with external support. And then we have acquired technologies like we did with VitaCholine buying CureMark. And I think it has to do with how you select which path to go down. It has to do with how close is that technology to our core. And for example, in Optifolin+, the backbone of that technology is choline. And so we were able to use our expertise to expand into that technology with an outside partner. And so that was more sort of ripe for internal development if you will, whereas the VitaCholine is very different technology and so it made sense to do that through acquisition. But when we step back and look at the marketplace, how do we decide which nutrients we want to invest in and we think would be valuable as part of our portfolio? Certainly one thing we start with is the science. We wanna make sure there is already good existing sound science behind the products that we are bringing in. And I think that clearly has been true with all of the additions to our portfolio over the years. So the science is really important. And then kind of as you touched on, I think it is the what is our point of differentiation that is going to make our product different and more special and so forth. I think that is also a very, very important aspect to the product. For example, when we bought Kappa Solutions and VitaCholine, it was very important to us that one of the primary forms of K2 that Kappa Solutions had was an encapsulated K2 that was protected with patent, was very different, very unique, and very special in the marketplace. So lots of points of differentiation there and moats, if you will, on that product. So differentiation, I think, is another key point. The other thing we like to look at is how well penetrated is that nutrient. Our nutrients, still, even after many years of efforts, still are relatively well known. They are increasing in awareness. And increasing in market penetration. But it is a very different dynamic if you have a nutrient that from your perspective is fully penetrated in the marketplace, very high awareness like for example, I will say vitamin D3. Our nutrients tend to be lesser known, more nichey, and we have a real opportunity with that science and that differentiation to drive awareness, drive market penetration, and really drive above-market growth rates. And I think you can see evidence of that on all of their products that are part of our nutrient portfolio. I think those are sort of the key elements we look at, and we are excited by the fact that we do see opportunities in the marketplace to add additional products to our nutrient portfolio and we are working hard on that.
Bob Labick: Okay, great. And you mentioned, you know, the science as part of the differentiation and everything. Maybe this is not an every quarter question because I know it is not this fast. But I know you have a number of trials out there. Was wondering if you could give us any updates on some of the trials that may come to fruition in this year and then, I guess, just more broadly, how you use that information once you get it to help grow the business.
Theodore L. Harris: Yes. Certainly, clinical studies and, as I have referred to it, the science behind our products is really an important part of what we do. It is how we help our customers have claims for their own products. Is an important part of marketing. So fairly significant investment. At any one time, we have 20 to 25 ongoing studies out there. And you are right, some of these take many years, some are a little bit shorter. There were four studies of note in the last quarter, one on OptiMSM, two on K2VITAL, and one on VitaCholine that are all really good studies and further enhance our already kind of broad library of studies on the products. It just kind of gives you a feel this is ongoing and these are all a little bit different, but kind of add to that and add to that science behind our products. The one that I am excited about and unfortunately I do not have an update today, but I am very excited about is one that I have talked about in the past, that is the MD Anderson, University of Texas MIT pilot clinical study that has people in the study that have the APOE4 gene, which is really the gene that leads to Alzheimer's. And so it is an adult cognition study that I am excited to ultimately get the results about and hopefully be able to talk significantly about. Because if we can from this study, see clear evidence that high doses of choline have an impact on the development of dementia and Alzheimer's, that would be really an important finding and an important part of the science behind the cognitive benefits of choline. I do think that study, once it is published, will lead to another bigger study that will further reinforce those findings. But we do know that study is completed. And we do expect that study should be published in the next couple of months. So I am really hopeful that with the next quarterly update, I will be able to talk about the results of that study. So that is an exciting study that is going on that I am particularly interested in along with the four that I talked about that were published in the last quarter and the others that are ongoing.
Bob Labick: Super. Alright. Thanks so much. I will jump back in and let others ask questions.
Theodore L. Harris: Thanks, Bob.
Operator: Your next question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Your line is open. Please go ahead.
Raghuram Selvaraju: Thanks so much, and congratulations on once again an excellent quarter. I was wondering if you could provide us with some additional granularity regarding how you expect sales and promotional strategies to shift over the course of the remainder of 2026 just based on trends that you are seeing in the market and product lines, products, product initiatives that you expect are likely to be most resonant with the consumer base, particularly within the H&H segment. And then secondly, on the financial front, Martin, maybe you could refresh my memory as to what you expect the effective interest rate to be on the new credit facility funds as and when you draw them, you know, that have the maturity date of 2031. As well as how you expect the effective tax rate to trend over the course of the remainder of 2026. Thank you.
Theodore L. Harris: Thanks, Raghuram, for your questions and your opening comment. Really appreciate it. Obviously, we have been investing significantly in marketing particularly in the Human Nutrition and Health business over the last few years. And, you know, our goal has been, we have a little internal saying that is always on, and we have really tried to establish a scalable, always-on consumer engagement model for all of our branded ingredients over the last few years. Really based on combining sort of omnichannel marketing, influencer engagement, consumer PR, and sports partnerships to drive ultimately that consumer awareness and market penetration of our products. And that effort alone in just the last year and a half or so has, you know, generated well over a billion consumer impressions, which is a really big number for a company of our size. Across our branded ingredients and really at the end of the day accelerating our brand awareness and demand generation. You know, the influencer marketing. You know, you kind of asked how we shift in that. It was certainly invested in certain influencer relationships. And changed those over time with shifts in consumer behavior, certainly something that is trending more today than it was couple years ago. It is around targeting GLP-1 users for, you know, snacks and meal replacements and so forth. And so kind of shifting your influencer marketing dollars to target those audiences more and the followership of the influencers more in line with that targeted audience is just an example of the shift that we do make. Sports as well, I mean we have been kind of all in on soccer or kind of European football of late, you know, World Cup was part of that role, but that is a kind of shift in focus and attention of the community. And so we have been sort of doubling down in our sports partnerships in that area. So it is a dynamic investment in marketing and shift in focus. But overall, really a, you know, kind of foundational goal of kind of establishing this scalable consumer engagement model via all of those mediums. So we are really excited about this addition. Ram, you know us well. Five or six years ago, we were not really talking a lot about marketing, and I really feel like today we have really one of the leading nutrient marketing teams in the world and it is really helping us drive the type of growth rates that we have been able to achieve over the last couple of years.
Carl Martin Bengtsson: Yeah. I think on your questions on interest rate and tax rate, on the interest rate with the amendment and extension of the credit facility, the structure is the same as the past, so there are no significant changes. Obviously, we increased the size of it from $550 million to $650 million in terms of how much we could draw under it. Currently, we have drawn $150 million as of the end of Q2. That is sort of what is on the debt on our balance sheet. The rate is variable or floating as it has been for the last two agreements. So it is not a fixed rate. It is a floating rate. So it gets reset with SOFR. And then we pay a spread based on that. So at the moment, we are paying sort of around 4.5%. But you can think about it as should the Fed do a rate hike of 25 basis points, then we will pay 25 basis points more. So it is a variable rate that we pay. It is worth mentioning that we did improve on the spread that we pay above SOFR with this refinancing. So our pricing improved across the board by 10 basis points. And for the higher leverage tiers, where we are not in them right now since we have very low leverage, it improved by 22.5 basis points. It is a better pricing grid for us than the earlier ones, but it will vary with the market interest rates. On the tax rate, we are sort of at 23% year-to-date effective tax rate. I think we will be in that 22.5% to 23% as we wrap up the year, is my best guess at the moment. So it is somewhere there in the 22.5% to 23% effective tax rate.
Raghuram Selvaraju: Thank you very much.
Theodore L. Harris: Thanks, Raghuram.
Operator: Your next question comes from the line of Daniel Harriman with Sidoti and Company. Your line is open. Please go ahead.
Daniel Harriman: Hey. Good morning, guys. Thanks so much for taking my questions. I have just got a couple today. Thinking more about A&H, and Martin, obviously, the performance is well above what we were expecting. Can you help delineate that a little bit between how much of that acceleration was volume versus the pricing actions that you took in April? And then if you would not mind just providing us with more of an update on what is going on in the European monogastric trends, you talked about that last quarter, and it seems like things are really improving over there. So any color you could provide would be great. Thank you.
Carl Martin Bengtsson: Sure. Yeah. I mean, we are really happy with how A&H has been performing here for the last couple of quarters, right, and getting back to delivering year-over-year quarterly growth, which we have done for a number of quarters. When it comes to sort of the strong growth, we reported 15% here in the second quarter. And about half of that is volume driven and about half is price driven, directionally. In Europe, where we filed for antidumping and successfully got that through, and that started as of January 1 or end of December of 2025. So we have been in that environment for six months now. We have really seen the return of that business. We have seen more volumes coming our way, so we are regaining some of that share that was lost due to the dumping. And we have also seen a price recovery. And that has improved sort of every quarter. It started a little bit already, and at the end of last year in anticipation of the dumping duties. And has continued every quarter since. So I would say it is playing out the way we were hoping for it to play out. Because we knew that if we could restore a more level playing field and if people were playing fair that we would have a really strong offering in the region. So it is nice to see that business return. So yeah, it is working very well for us at the moment, and we are pretty excited about what is ahead.
Theodore L. Harris: Yeah. Daniel, I would just add to Martin's comment. How pleased we are with the continued growth of the ruminant part of the portfolio, which of course is the higher margin, there is more science, more technology in those products, and it is a little bit more similar to what we are doing in the nutrient business in Human Nutrition and Health, trying to create awareness. We build the science, create awareness, drive market penetration. And that business has been growing over the last few years. And in the quarter alone, grew about 20%. And that growth is almost all volume growth. And I think that is really exciting to see in that business driving the ruminant growth to that extent with those products penetrating the market additionally. So we really are pleased overall with performance of A&H and the momentum we have in that business.
Daniel Harriman: That is really helpful, guys. Thanks, Martin, and Ted, and congrats on the great quarter.
Carl Martin Bengtsson: Great. Thank you. Thanks, Daniel.
Operator: There are no further questions at this time. I will now turn the call back to Ted for closing remarks.
Theodore L. Harris: Thanks, Tracy. Once again, thank you all very much for joining our call today. We are really pleased with the second quarter results we reported earlier today and the outlook for our company. We very much appreciate your support as well as your time today, and we look forward to reporting our Q3 2026 results in October. In the meantime, we will be participating in the Wells Fargo Consumer Conference on September 23 in Laguna Beach, California. Nice place to be. So, hopefully, we will see some of you there. Thanks again for joining today.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
