Balchem Corp (BCPC) 2010 Q1 法說會逐字稿

Greetings and welcome to the Balchem first quarter conference call. (Operator Instructions). As a reminder, this conference is being recorded. It's now my pleasure to introduce your host Frank Fitzpatrick, CFO for Balchem Corporation. Thank you, Mr. Fitzpatrick. You may now begin.

Thank you. Thank you for joining our conference call this afternoon to discuss the results of Balchem Corporation for the period ending March 31, 2010. My name is Frank Fitzpatrick, Chief Financial Officer. And hosting this call with me is Dino Rossi, 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. This release does contain or likely will contain forward-looking statements which reflect Balchem's expectations or beliefs concerning future events that involve risks and uncertainties.

We 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 our expectations, including risks and factors identified in Balchem's Form 10-K. Forward-looking statements are qualified in their entirety by this cautionary statement. The financial information that is referenced in this meeting was disclosed this morning in our quarterly press release at 9:30 A.M. eastern time. I will now turn the call over to Dino A. Rossi, our President, Chairman and CEO.

Thanks, Frank. Good afternoon, ladies and gentlemen, and welcome to our conference call. Throughout the downturn there have been ongoing challenges in the global economy, Balchem has continued to deliver solid operational and financial performance. So this afternoon we're pleased to report achieving record net earnings of $7 million on consolidated first quarter revenue of $59.9 million for the quarter ended March 31, 2010. These records first quarter sales of $59.9 million were approximately 13.1% greater than the $53 million results of the prior year comparable quarter. Disciplined management of our businesses enabled us to improve operating margins and deliver strong profit 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 markets and strong specialty animal nutrition and health sales which were up 24%. The Food, Pharma and Nutrition business posted 24% organic growth with particular strength in the domestic and international food markets and human grade choline products. (Inaudible) speciality 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 and 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 sales in the quarter. This level is a 1.7 percentage point decline from the prior year quarter as we did on a comparative basis realize higher cost levels and certain key raw materials that are largely petroleum-based derivatives. These raw material increases unfavorably impacted both our animal, nutrition and health and ARC specialty product segment. We did, however, realize a small increase sequentially from the fourth quarter 2009 results even as we realized continued increases in key raw material costs as a gross margin percentage notably in our Food, Pharma and Nutrition segment which improved five percentage points on a sequential basis. Price increase is due to the noted raw material cost increases have been and will be implemented where we have 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 costs later in the second quarter.

At the consolidated operating expense level, you will note a $68,000 decrease to $6.9 million to the quarter which equalled 11.6% of sales versus the prior year comparable spent which was approximately 13.2% of sales. Our spending level reflects a modest expansion of sales and R&D employees 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 had increased reserves relating to is 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 from our human, food and clothing product lines that generated the margin improvement previously discussed, largely due to new product launches, increased volumes, production and logistics efficiencies. As mentioned above, we did experience continued increase in certain petrochemical raw materials during the quarter that did particularly impact our specialty products and animal, nutrition and health segment. Operating margins while slightly low still remain strong for both of these segments and the consolidated earnings from operation at 17.5%.

Other income of $167,000 compared very favorably to the $144,000 expense incurred in the previous year comparable quarter. This improvement is related to the reduction of long term debt that was incurred for the 2007 acquisition and favorable fluctuations in foreign currency exchange rates between the US dollar and the Euro. Net income of $7 million translated to $0.24 per diluted common share or an increase of 14% over the comparative prior year quarter. We also realized approximately $12.6 million of EBITDA in the quarter which translates to $0.43 per diluted share and when including our non-stock based compensation charge we generated $13.5 million of EBITDA in the quarter. On March 31, 2010, our outstanding borrowings were $6 million, but zero net of our cash balance of approximately $51.4 million. We're well positioned to strategically reduce our debt load in the coming months and quarters as we continue to aggressively manage all areas of working capitol driving strong cash flow, reducing interest expense and improving earnings to generate more accretive results from our core businesses. In an effort to detail our consolidated results better for our shareholders, I'm now going to have Frank Fitzpatrick discuss the ARC Specialty products and Food, Pharma and Nutrition segment.

The ARC Specialty products segment posted first quarter sales of approximately $9.7 million or 10% increase over the prior year comparable quarter. This increase in sales was derived principally from a 12% increase in total volume sold, which was slightly offset by product mix pricing. ARC quarterly business earnings decreased 2.2% to $3.3 million versus prior year comparable quarter. This decline is largely a result of the product mix, increased petrochemical raw material cost, and increased expenses related to the development of the Company's ERC technology. We continue working on a number of initiatives to broaden the ARC business model with particular application development work on the ERC license technology to repackage, distribute and deliver another chemical for the fruit ripening industry. As disclosed in the previous quarter, a number of tests with large fruit producers and wholesalers have continued to take place and our confidence level is building with continuous positive trial results. We have recently been granted a special permit issued by the DOT allowing for the technology to be utilized for in transit fruit ripening. We did realize modest revenue in this quarter and expect to see notable product sales from this new technology in this fiscal year.

For the quarter, the Food, Pharma and Nutrition segment realized a 20% sales increase to $10 million from the prior year comparable quarter. Business segments earnings of $2 million were more than double the same period of last year and also improved 37% on a sequential basis. As stated in this morning's press release, the domestic and international food sectors were up this quarter as we continue to seek solid double-digit growth of the capsulated ingredients for baking, preservation and confection markets. In the quarter, we also realized double-digit growth of our human choline products targeting new food and beverage applications, and we also saw some rebound in sales into the supplement marketplace. In 2009, we saw many customers aggressively managing inventory levels down by delaying orders in response to certain retail product line slowness in certain large retail chains, the elimination of multiple SKUs, some that previously included choline. We continue of the benefits of choline, hence choline inclusion in more foods such as Gerber baby food and fortified beverages. More independent research on the benefits of choline have been completed, recently published and available on the web page, we continue to position choline with nutritional and pharmaceutical companies as an essential ingredient with excellent therapeutic benefits for all ages.

This first quarter result did see another difficult quarter in our calcium product sales into the over-the-counter pharmaceutical markets. During the quarter, we experienced certain production issues relating to this product line that resulted in an inability to meet all orders in the quarter. We have since made modifications to our equipment and process which are currently being tested to assure that the issues have been resolved. We do expect to see an upturn in this product line in the balance of 2010. Also in addition to our existing products, a number of new calcium products are currently under development or have been sent to prospects in the nutritional supplement marketplace.

Our pharmaceutical drug delivery commercial development efforts continue. In the quarter, we did not generate any significant R&D milestone payments. However, as previously recorded, a licensee of our technology has been authorized by the FDA to commence a Phase III clinical trial containing our technology. A modest number of patients have been enrolled and the trial is currently under way. With this progressive step, we are cautiously confident with these efforts -- that these efforts will yield good end results, but in the near term this sector remains a net expense to the business segment. I will now turn over the call to Mr. Rossi for him to discuss the animal, nutrition and health segment.

Thanks, Frank. In the animal, nutrition and health segment, we realized sales of $40.3 million, an increase of $4.4 million or 12.2% as compared to the prior year comparable quarter. Within the segment, specialty ANH product sales realized 24% growth from the prior year comparable quarter as some improvement in dairy economics created greater demand for our products. These increases are principally a result of increased sales of Reashure, NatureSure, (inaudible) and AminoSure L, our protected licensing. We continue to be pleased with the progress we have made with the AminoSure L launch as more prospective customers trying the product are realizing positive experiences and on a sequential basis, our specialty product sales improved 7.6%. These overall increases coincide with the dairy economy that has improved over the last several months. However, we are monitoring this very closely as futures currently point towards dairy prices that are at a level which will continue to challenge the economics for producers.

Sales of our largest AN&H product increased approximately 1.2% over the prior year quarter. This increase in the quarter was from a number of factors, including slightly improved sales of liquid choline into the North American feed segment reflecting poultry production levels that appear to have stabilized and are even showing some modest growth. Exports of liquid and dry choline from the North American plants declined as rising raw material cost in combination with global competition resulted in our declining certain business in the quarter. We will continue to evaluate these export sales opportunities in the coming quarters and may have to be more aggressive in seeking to win this business depending upon the then current cost and market conditions.

Sales for our liquid and dry Italian produced choline improved 4% in the quarter with improved export volumes sold outside of western Europe. Still the industrial derivatives while small sector of ANH improved approximately 44% over the prior year quarter. Sales of methylamine and other industrial products including a methylamine derivative from our Italian operation specifically into Europe has started the world quite strong in Europe, despite the continued poor economic climate in Europe. We also, again, saw improved sales of choline-derivative products being sold through various industrial applications in North America. Earnings from operations for this entire segment improved to $5.2 million as compared to $4.9 million in the prior year comparable quarter, largely due to improved volume sold, product mix and certain favorable production and logistic efficiencies. This improved all of the profitability of the ANH segment achieved with a constant reevaluation of global raw material cost, product reformulation, currency review and our ultimate ability to meet market needs from our various global facilities. The opportunity to capitalize in this fashion is a direct result of our acquisitions and growth strategy and the ability to drive costs out of our business model.

With the bulk of the feed grade calling predominately going to the poultry and swine markets, we are very sensitive to continued economic pressures on the large production animal integrators. Feed ration costs have corrected to some degree, but retail poultry and swine prices remain very low keeping significant downward pressure on profitability with this global end market. As indicated in our press release this morning, we will continue to monitor closely our raw material cost for all segments of our business and implement cost pass through as appropriate. As noted in previous calls, we continue to see a revenue roller coaster effect quarter-to-quarter in the various market sectors, but we are very pleased with the overall quarterly and consolidated earnings results. We continue to strengthen our global growth platform and are confident more business will be generated based on the unique platform of products that we offer or soon will offer the market. Our business portfolio continues to create good balance, yielding profitable growth opportunity through the challenges of any single segment or product line. We continue to develop solid revenue and operating income growth by staying focused on helping our customers save and make money in this tough economy while maintaining our own operating discipline.

Overall, we continue to build a financial strength of the Company managing the asset base aggressively, reducing debt and interest expense which also assist in yielding improved financial results. Near term, we remain focused on implementing operational and logistics improvement, new product development and new product marketing. We also continue to explore alliances, acquisitions and/or joint ventures to continue building and leveraging our technology and strong human asset base. This now concludes the formal portion of the conference. I would now ask the operator to open the floor for questions.

Thank you. We'll now be conducting a question-and-answer session. (Operator Instructions). One moment while we pause for questions. Our first question comes from Daniel Rizzo from Sidoti & Co.

You indicated that you'll be raising prices where contracts allow it. I was just wondering what rate percentage of your overall price increase will you recapture? Is it a small percentage or are you going to get most of it back?

Well, obviously I think our intent is going to be to try to recapture as much of it as we can within reason. Our approach to it is a little bit differently. In the gas business, we would look to pass along a cost increase. But as I mentioned a couple quarters ago, we actually backed off a price increase we implemented a year ago kind of in response to the fact the raw materials did come down. So, there we kind of move I'm going to say a little bit on a delayed basis. But generally across the board in that business when you jump over to the animal, nutrition and health business which is the other segment that I'm going to say most likely affected by, again, petroleum derivatives, we have a pricing model in place in North America where on a quarter delay basis we can pass on those raw material cost increases to the North American market.

That doesn't speak to the export market for sure because that's more bid sensitive and much more aggressive. It's a little bit of a mixed bag. I don't know there's a hard and fast percentage we could gravitate to to answer that question on a quarter by quarter basis. But certainly I think within reason we would look to recoup those raw material cost increases as it affects each and any one of those segments.

Okay. I got you. And just with the recent problems in Europe with the weakness in the Euro, are you seeing any downturn in demand from the export market or just the European market as a whole?

In general, I mean, if the focus here being the Italian operation, we continue to see very good uptake of the product. And we're over there with a quality product. I'm going to say largely competing against the Chinese. I would tell you there is a marketplace there that's willing to pay for quality products and certainly we have been very successful in moving a fair volume at that higher price point in response to what it is the customers are looking for.

Okay. And last question, you said you expect notable sales beginning now from the banana ripening system. Is that hundreds of thousands of millions? What are we talking about in general?

I think this came up maybe a couple quarters ago, Dan, how quickly might this ramp up. I think that's the ultimate unknown here. But I think with some reasonable level, our expectation this year is maybe to do as much as a million dollars in revenue out of that business. And I would like to believe that is kind of touching the tip of the iceberg. But we'll have to see how that ramp goes. It's difficult for me because it is a new innovative technology into that space. While there has been pretty good receptivity, all of the trials have gone very well, the general consensus is everyone understands the value of this. So we're hoping that once we get it up and running in a significant way that it will, quite honestly, catch fire.

Okay. Thanks guys.

Thank you.

Our next question comes from Greg Garner from Singular Research.

Hi, Greg.

Just a follow up from the last question about the new gas product. Can you walk me through the economic how beneficial it is for the food ripener? Is it beneficial for the grower or for the distributor or how does that work?

Well, I think in many cases the grower is the distributor in the North American market. And there is three major producers of bananas and distributors in the North American market today and I think you know who they are.

Yes.

And the reality is is that bananas are the harvested green somewhere along the equator and then shipped to one of seven ports in the North American market at which point they're unloaded and they go into conditioning operations so they're handled loading, unloading in the ocean going containers and then they're conditioned locally in these rooms using additional labor. And then put into containers -- back into containers, if you will, and shipped into distribution. So the idea here is to avoid a lot of the labor, if you will, on land. And quite honestly shortening the inventory supply chain time to market.

So, you get into a lot of issues in terms of the value of it being labor savings, being taking money out of the inventory supply chain, not having to invest in hard assets for conditioning rooms either at the port or inland and other distribution points. So, there is a lot of value there to be extracted. But quite honestly, for each one of those, it's likely going to be a slightly different scenario. But net-net, I think there is good economic value here for those producers to go down this path. And I think that as we get it up and running, more and more will see that and hopefully you'll see more adoption of it.

And do you expect it to be used in other fruits other than bananas?

The answer is yes. But let me be sure to tell you it cannot be used or does not need to be used for all fruits. And so selectively we're going through far and away the largest fruit imported is bananas, so that's why our focus is there.

Does the fruit need to have a hard casing like a banana that is not edible or is not generally eaten?

Not necessarily, no. You take apples, for instance, generate a lot of their own ethylene which is used to help ripen them as well. And there you have a skin that is eaten. So exposure from that standpoint to this product is not at all, I think, distant to kind of understand. We're doing a lot of experiment with pears, for instance. Again, the skin of the pears is consumed and not really that hard. Like pineapples, the outside coating is so hard and waxy this product is of no value. So you have to go through selectively and understand where it will work and where it won't.

And so would the bananas have to be put in one container with this gas and stay in that until it's distributed to the end point? Is that the idea?

That's the idea.

Okay. And is there a need for approval outside the United States to use this?

You know what, that is an excellent question. I know that our focus right now has been strictly North America and certainly some discussion if it's successful in North America it's a global product. That's by some of the same large players, if you will, that are producing and shipping in the country. So that regulatory issue would be a hurdle that they would have to clear.

Initially you would sell it to the -- at the location where it's imported into the US and then it's put into a container with this gas that controls the ripening? Is that right?

That's correct. Ultimately what we'd like to do is put it in the container when they're first harvested.

Yes, okay.

But right now the focus is once they get to the land.

And on the new pharmaceutical product, there is mention that the trial was "modestly " subscribed to or for the Phase III. Does that mean it's moving slower than originally anticipated?

I don't know that it means that it's moving slower. I think that there's a certain protocol of candidates for the program. So I think the process of identifying them with the right kind of biological markers is important. And so I think there is a very deliberate effort to make sure that the candidates chosen are the ones that are really targeted for this. And I think the process just takes a little bit longer than perhaps we had expected. And I'll say we having not really been in the pharmaceutical space.

So we're still looking towards the end of this year or early next year for any initial revenues from that product?

Oh, I'm not even looking this year.

Okay.

I think next year. It will be next year before the clinicals are done and the results are determined. I would say maybe even as late as mid next year.

Okay.

Yes.

And the intention objective to raise prices as a result of the cost increases, might this be difficult at all with the poultry and the dairy markets not really being very robust?

Well, that's a great question. I think there is always -- there is always a challenge when you look to pursue a price increase. So we've entered this model in North America and everybody pretty much clearly understands how it's supposed to work and does work. And basically we have a scenario where we have an index that is composed of the three key raw materials that go into manufacturing this product. And so that index kind of sits on top of the base price of the product. And that index is what we basically monitor and adjust and plus or minus, there has been some minuses where we've taken price down as well since we implemented this.

So, the industry sees how it works. It goes both ways. And let me point out too. I do think we're going to see some relief here maybe late in Q2 and hopefully through the balance of the year. So while they may be looking at a near-term increase, I hope for their sake and for our sake that the price will come back down.

Okay. And just two items on the Food, Pharma, Nutrition. The increase there, is that partly due to a snap back from the channels being overfilled last year and may have been overly deleted or depleted, I mean? And so here we're having a little snapback. Is that a good way of characterizing the strong revenue growth in this quarter?

I would say to some degree that's the case on the choline products. We know for sure there was -- I'm going to say a depletion of inventory that took place early last year. And in particular for supplements that contain choline, and so I think what we've noticed certainly is that the supplement market has picked up in general. And so I think more of the SKUs are back on the shelf and inventory levels are returning. So I think there is some increase there. I don't think it's kind of a restocking, if you will, scenario. I think it's just getting some product back on the shelves and our expectation is it's going to continue through the balance of the year.

Over on the food side, we did introduce choline to a couple of products, in particular Gerber baby products came out introducing choline. Also on the food side there have been a couple other products we have launched into a confectionary product and also an Asian sauce of a large chain that now has the product out in the grocery channels. So I think it's a combination of both. But what I will tell you is we do not believe that "rebound" as you identified it as is kind of a major restocking and it's going to drift back. But I think there's definitely some uptake there that we expect to see just kind of continue steady state.

Okay. And, finally, on the Food, Pharma and Nutrition again, how are things in Europe? How would you characterize demand there?

On the Food, Pharma and Nutrition side?

Yes.

Well, we are certainly seeing good uptake on the food side. The platforms that we're working here preservation, baking, are platforms that are consistent in any one of these markets. We've changed out and put some new distributors in place in the European market for sure, so we're seeing good uptake there. Choline going into food as well as supplements is doing very, very well over there. As a matter of fact, this first quarter we've been in a debottlenecking process in our choline operation in Italy. That should be debottlenecking online here within the next month. So that should give you an idea too certainly we see growth going on there and expect -- and need to be able to support it.

Okay. Thank you.

Sure.

Thank you. (Operator Instructions). Our next question comes from Jack Balsam who is a Private Investor.

Good afternoon.

Hi, Jack.

My question has to do with the long-term debt that we have on the books of about $6.3 million. Are we locked into that or can we prepay it?

No. We certainly have an ability to prepay it. That debt is based over with our Italian operation and it's actually Euro debt. We're actually having that conversation as the dollar has strengthened here. We're going to maybe take the opportunity to buy some Euros and take it down.

It seems like we can eliminate that whole debt.

I'm just looking for right opportunity with the currency rate.

Okay. One other question. CNN Money on its Balchem quote list continues to show incorrect D ratio of 41 instead of 20 something.

Yes.

And the dividend yield of only .29% instead of 0.4 something percent. I wonder if you could look into that and make sure that they change it.

Right. Absolutely. We are actually aware of it and have made some inquiries as to what the problem is. And we will follow up on that again.

Okay. Thank you very much.

Yes.

Thank you. Our next question comes from Lawrence Goldstein from CNP Asset Management.

Hi. The only phrase used in describing any part of the business that you didn't attach an adjective to, positive adjective, was early on you said something to the effect of about in this business climate, indicating things are tough, what might you have looked like if this business climate were booming? [ Laughing ]

All I can say is probably a lot better, Larry. I don't know. It's very difficult to say. But certainly I think if stars were aligned a little bit better, and I'm not complaining, that's for sure, it could have been tremendous. But we're pretty pleased with the overall growth, for sure.

Thank you.

Thank you.

Thank you. Our next question comes from [Brian Lawson] from Morgan Capital Management.

Good afternoon, guys.

Hi.

Can you talk a little bit about the human choline additive. You mentioned bakery, I think, in candy or confectionary, Gerber baby products. Talk about some of the broader product lines you guys are pushing into.

With choline.

With choline for the human consumption.

Certainly we mentioned the Gerber product line. There is a number of drinks out there that have the product. I think Frank alluded to those here before. We've gotten into some of the cereals as well. Post Alphabet, Kashi Cereals, Minute Maid juices . And I think in general we're just seeing people willing to look at it a little bit more as more and more companies out there are now including the product in theirs. Picking up consumer awareness I think we're looking to be the key driver here and we're trying to bring the scientific value of the product to -- I'm going to say the food producers in general. And I will tell you there's even some people that are looking at choline as a sodium replacement product which the pressure on reduced sodium levels out there.

Yes.

And so we have people looking at it from that standpoint, let alone the nutritional value of the choline. So really starting to -- I should say starting to more continuing for people to get it in the products and get it incorporated and see it as a discernible difference that they can kind of wave the flag with.

Okay. On some of the animal nutrition side you talked Reashure, if you go down to the dairy farm, milk prices per hundred weight were almost cut in half more so last year to this year, what is driving the unit economics of the farmer who is not receiving those wholesale prices to buy supplements that are induce a higher production per cow or whatever? What are some of the economics?

Well, I think obviously the key economics there for these guys is the price of the fluid milk. And, you're right, prices did drop in half earlier this year. They came back pretty strongly and had moved from like an $8, $9 per hundred weight load to prices and futures in the $16 per hundred weight. And now futures have dropped down to $14, $13 a hundred. And so as these guys were looking to make money as milk prices moved up, and I would say the balance of the ration cost itself had declined with corn prices coming down and the other feed stuff involved there. But at the end of the day, each and every one of these guys measures their milk yield as the key driver. And there may be some other variables in there, percent of fat in milk and things like that that could also make a difference. But at the end of the day, it's still about volume of milk. And dairy farmers are -- when prices are down, they want to create more milk. When prices are up, they want to create more milk. And that's how they make money.

So when you get into each one of our products, there are different drivers, if you will, to talk to in the value proposition. And maybe it's a change in a ration, maybe its our product substituting something else in the cost of the ration has gone up dramatically and makes our product even more valuable. So I would say any given month, any given quarter you're going to see movements in some of the variables in the ration that are going to drive, if you will, additional value. Or, there is moments where we start to get pinched in terms of the value too. But they kind of validate keeping our product in the ration.

Okay. Fair enough. Give us a sense as you guys look at your budgets for 2010 here kind of what your CapEx budget is and then maybe what tax rate would be.

The CapEx budget is expected right now to be probably $8.8 million to $9 million. And that is a little bit higher than normal for us for sure. Some of that is same business type capitol. We now have seven plants and that includes the Italian operation as well. But we're also looking to implement a couple new technologies in our production/process of some of these products in an effort to come up with a lower cost, more competitive product. So there is probably a solid $4 million to $5 million there that is being directed to new technology introduction at the plant level. Our tax rate we're looking at right now probably running about 34%.

About 34. And then anything relative to the healthcare bill, its impact on salary, wages, benefits as it applies to Balchem?

I would say right at the moment we're not really projecting any kind of differences. Maybe we'll see as some of this settles out a little more, but right now we don't expect to see any significant differences.

All right. Great job, guys. Thanks.

Thank you. Our next question comes from [Frank Armitrose] from (inaudible) Stock Advisors.

Thanks, guys. Another great quarter. Great. Quick AminoShure versus Reashure when you might pass Reashure and also the implications of the Gulf spill for fish meal versus soy meal and how that may impact the use of your product?

Well, first in response to your question about Lysine versus Reashure, the Lysine product has done pretty nicely in the face of a tough dairy economy. So it's the economics I'm going to say held up at this moment plus our expectation is that AminoShure L could pass Reashure within a year or two years for sure. Maybe sooner. But so that, again, really contingent on the economics dairy milk price wise.

As it relates to the oil spill in the Gulf, we haven't really projected any kind of real difference yet. Maybe that's because we really haven't been confronted with it. But I would say the spill in general are things that we watch very closely. Everything from shipping lines down there that might be affected because of our plant in Louisiana, exported products out of there. I probably would be a little more concerned about how that would impact us versus fish meal and soy meal. I won't make light. Those are all things that we'll be paying much more closer attention to, especially if it interferes, unfortunately this is going to be a long time to get resolved.

In terms of revenue in the quarter from Reashure and AminoShure, give us a sense of approximates.

Hold on one second. Reashure did about $2.5 million in the quarter and Amino did about $600,000.

Great. Thanks, guys.

Thank you.

Thank you. At this time we have no further questions. I would like to turn the call back over to Mr. Rossi for any closing comments.

I think that's all we have. I appreciate everybody listening into the call today. Again, I think it was a pretty good quarter. And I want to thank you all for being investors with the Company and look forward to talking to you again at the end of the next quarter. Thanks.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation .