Balchem Corp (BCPC) 2022 Q4 法說會逐字稿

Greetings, and welcome to Balchem's Fourth Quarter Year-End 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎來到 Balchem 的 2022 年第四季度年終收益電話會議。 （操作員說明）提醒一下，正在錄製此會議。

I would now like to turn the call over to Martin Bengtsson, Chief Financial Officer. Thank you. You may begin.

我現在想把電話轉給首席財務官 Martin Bengtsson。謝謝。你可以開始了。

Thank you, and good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending December 31, 2022. 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 statements.

謝謝大家，早上好。感謝您今天上午參加我們的電話會議，討論 Balchem Corporation 截至 2022 年 12 月 31 日的季度業績。我是首席財務官 Martin Bengtsson；和我一起主持這次電話會議的是我們的董事長、總裁兼首席執行官泰德哈里斯。根據我們的律師、審計師和美國證券交易委員會的建議，此時，我想閱讀我們的前瞻性陳述。

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 include non-GAAP financial measures. Please refer to the reconciliation in our earnings release for further details.

在今天的電話會議上發表的非歷史事實的陳述被視為前瞻性陳述。我們無法保證前瞻性陳述中反映的預期將被證明是正確的，並且各種因素可能導致實際結果與我們的預期存在重大差異，包括 Balchem 最近的 10-K、10-Q 和 10-Q 表格中確定的風險和因素8-K 報告。公司不承擔更新這些前瞻性陳述的義務。今天的電話會議和評論包括非 GAAP 財務指標。有關更多詳細信息，請參閱我們的收益發布中的對賬。

I will now turn the call over to Ted Harris, our Chairman, President and CEO.

我現在將把電話轉給我們的董事長、總裁兼首席執行官泰德哈里斯。

Thanks, Martin. Good morning, and welcome to our conference call. Before we get into the quarter, I would like to reflect for a few minutes on some of the significant accomplishments the Balchem team achieved over the last year. Overall, 2022 was another strong year for Balchem. Financially, we achieved record sales of $942 million, growing almost 18% year-over-year, with record sales in all 3 of our business segments. We also delivered record adjusted net earnings of $131 million, an increase of 12% and record adjusted EBITDA of $216 million, an increase of 14% from the prior year.

謝謝，馬丁。早上好，歡迎來到我們的電話會議。在進入本季度之前，我想花幾分鐘回顧一下 Balchem 團隊在過去一年中取得的一些重大成就。總體而言，2022 年對 Balchem 來說又是強勁的一年。在財務上，我們實現了創紀錄的 9.42 億美元銷售額，同比增長近 18%，我們所有 3 個業務部門的銷售額都創下了歷史新高。我們還實現了創紀錄的調整後淨收益 1.31 億美元，增長 12%，調整後的 EBITDA 達到創紀錄的 2.16 億美元，比上一年增長 14%。

In addition, we generated free cash flow of $89 million, while at the same time investing $49 million in capital projects to support our continued growth. Strategically, we had a very good year as well. In 2022, we strengthened our company with the acquisitions of Kappa Bioscience and Bergstrom Nutrition. The addition of vitamin K2 and methylsulfonylmethane or MSM to our product portfolio will undoubtedly enhance our ability to provide innovative solutions for the health and nutritional needs of the world going forward. We continue to innovate, bring new products to market and expand and strengthen the supporting science behind many of our products. We are pleased that our new product development metric that measures the percent of sales coming from products commercialized over the last 5 years and which really measures the vitality of our product portfolio, once again was close to 28%, showing that we are indeed bringing new innovation to the market.

此外，我們產生了 8900 萬美元的自由現金流，同時在資本項目上投資了 4900 萬美元以支持我們的持續增長。從戰略上講，我們也度過了非常美好的一年。 2022 年，我們通過收購 Kappa Bioscience 和 Bergstrom Nutrition 加強了公司實力。在我們的產品組合中添加維生素 K2 和甲基磺酰甲烷或 MSM 無疑將增強我們為未來世界的健康和營養需求提供創新解決方案的能力。我們不斷創新，將新產品推向市場，並擴大和加強我們許多產品背後的支持科學。我們很高興我們的新產品開髮指標衡量了過去 5 年商業化產品的銷售額百分比，它真正衡量了我們產品組合的活力，再次接近 28%，表明我們確實帶來了新的對市場的創新。

A number of exciting new studies supporting the supplementation of choline, minerals, including MSM and vitamin K2 were published or completed in 2022 that augment existing science and bring new science to light, that ultimately will support and strengthen our efforts to drive increased market penetration of these important nutrients. For example, while we have long known that higher levels of maternal choline intake is critical for infant cognition, a study published early in 2022 by Cornell University that suggested higher maternal choline intake has an enduring effect on cognitive performance through early childhood was truly groundbreaking.

2022 年發表或完成了一些支持補充膽鹼、礦物質（包括 MSM 和維生素 K2）的激動人心的新研究，這些研究擴充了現有科學並揭示了新科學，最終將支持和加強我們推動提高市場滲透率的努力這些重要的營養素。例如，雖然我們早就知道母體攝入較高水平的膽鹼對嬰兒的認知能力至關重要，但康奈爾大學 2022 年初發表的一項研究表明，母體攝入較高的膽鹼會對整個兒童早期的認知表現產生持久影響，這確實是開創性的。

Additionally, Cornell also published a separate study in 2022 that showed the importance of having adequate levels of choline for DHA absorption or status. And while not published yet, the study at the University of North Carolina to identify a choline biomarker was completed. So hopefully, we see the results of this study being published here in 2023. This will be an important step in helping to identify choline deficiency and the need for supplementation in individuals. Several important studies were published or initiated in 2022, enhancing the science around vitamin K2 and MSM as well.

此外，康奈爾大學還在 2022 年發表了一項單獨的研究，表明足夠水平的膽鹼對 DHA 吸收或狀態的重要性。雖然尚未發表，但北卡羅來納大學確定膽鹼生物標誌物的研究已經完成。因此，希望我們能在 2023 年在這裡看到這項研究的結果。這將是幫助確定膽鹼缺乏症和個人補充需求的重要一步。 2022 年發表或啟動了幾項重要研究，加強了圍繞維生素 K2 和 MSM 的科學研究。

In December, the Journal of Dietary Supplements published a study conducted at the University of Arkansas for Medical Sciences that provides compelling evidence that OptiMSM, our branded MSM serves as a methyl donor, which means MSM would then join the club of methyl donors, choline, folate and vitamin B12. So OptiMSM is both a sulfur and a methyl donor, which makes it even more nutritionally efficient than was evident before this study. There were also several studies published or initiated related to vitamin K2 that go beyond the already established therapeutic area of bone health. These studies focused on vitamin K2's role in cardiovascular health, immune health and muscle recovery among others.

12 月，《膳食補充劑雜誌》發表了一項在阿肯色大學醫學科學學院進行的研究，該研究提供了令人信服的證據，證明我們的品牌 MSM OptiMSM 是甲基供體，這意味著 MSM 隨後將加入甲基供體俱樂部，膽鹼，葉酸和維生素 B12。因此 OptiMSM 既是硫又是甲基供體，這使得它比本研究之前明顯的營養效率更高。還有一些已發表或發起的與維生素 K2 相關的研究超出了已經建立的骨骼健康治療領域。這些研究重點關注維生素 K2 在心血管健康、免疫健康和肌肉恢復等方面的作用。

We believe the science around vitamin K2 will continue to grow and help drive significant market expansion over the coming years as more and more studies are completed. Similarly, on the Animal Nutrition & Health side of our business, we continue to invest in outside research to advance the science around our portfolio of nutrients for companion, production and dairy animals. One study of note was published in May, showing the effects of dietary rumen-protected choline supplementation on colostrum yields, quality and choline metabolites from dairy cattle. This was research done with ReaShure, our flagship branded rumen-protected choline at Michigan State University.

我們相信，隨著越來越多的研究完成，圍繞維生素 K2 的科學將繼續發展，並在未來幾年幫助推動市場的顯著擴張。同樣，在我們業務的動物營養與健康方面，我們繼續投資於外部研究，以推進圍繞我們的伴侶動物、生產動物和奶牛營養素組合的科學。一項值得注意的研究於 5 月發表，顯示日糧中補充瘤胃保護膽鹼對奶牛初乳產量、質量和膽鹼代謝物的影響。這是使用我們在密歇根州立大學的旗艦品牌瘤胃保護膽鹼 ReaShure 進行的研究。

The research demonstrated an 80% increase in colostrum yield in ReaShure supplemented cows without any decrease in colostrum quality. It also demonstrated a large increase in choline metabolites in the colostrum that would then be transferred to the newborn calf as it consumes our colostrum. Another ReaShure study conducted at the University of Florida and published in December in the Journal of Dairy Science showed the effects of maternal choline supplementation on performance and immunity of progeny from birth to weaning.

研究表明，補充 ReaShure 的奶牛初乳產量增加了 80%，而初乳質量沒有任何下降。它還表明初乳中膽鹼代謝物的大量增加，然後在它消耗我們的初乳時轉移到新生小牛身上。另一項在佛羅里達大學進行並於 12 月發表在《乳業科學雜誌》上的 ReaShure 研究表明，母體膽鹼補充劑對後代從出生到斷奶的性能和免疫力的影響。

The research demonstrated that calves born to ReaShure supplemented cows had improved health status and survival and increased growth through 2 years of age. Within our Companion Animal business, there were several studies published from Auburn University related to our innovative use of microencapsulation for our structure-forming line of products. The research demonstrated a cost-effective method for manufacturing nutritious pet products for greater sustainability by upcycling protein co-products with the use of our microencapsulated calcium lactate with sodium alginate.

研究表明，補充了 ReaShure 的奶牛所生的小牛在 2 歲之前的健康狀況和存活率都得到改善，生長速度也有所提高。在我們的伴侶動物業務中，奧本大學發表了幾項與我們在結構形成產品系列中創新使用微膠囊技術相關的研究。該研究展示了一種具有成本效益的製造營養寵物產品的方法，通過使用我們的微膠囊化乳酸鈣和海藻酸鈉對蛋白質副產品進行升級再造，從而提高可持續性。

These published studies, combined with the PetShure [Acidulants] Research from Kansas State University that was published in 2021, which demonstrated the value-added benefits of microencapsulated acids to control pathogenic salmonella in fresh meat pet foods form the foundation of our very successful customer-attended PetShure Imaginarium, that took place in November at Auburn University with the Starkey Research Laboratory.

這些已發表的研究與堪薩斯州立大學於 2021 年發表的 PetShure [酸化劑] 研究相結合，證明了微膠囊酸在控制鮮肉寵物食品中致病性沙門氏菌方面的增值優勢，為我們非常成功的客戶奠定了基礎-參加了 11 月在奧本大學與 Starkey 研究實驗室舉辦的 PetShure Imaginarium。

Overall, we are very excited about the opportunities that exist with our portfolio of products, and we believe that as the library of science keeps growing, the market opportunities for our unique portfolio of products and technologies will grow as well. Additionally, we made important and significant new investments in plant and equipment in 2022, resulting in capacity additions for our Human Nutrition, Animal Nutrition and Plant Nutrition businesses. Of particular note for the addition of European manufacturing capabilities for our human encapsulation product line as well as our Plant Nutrition product, which should enable accelerated growth in the region.

總的來說，我們對我們產品組合中存在的機會感到非常興奮，我們相信隨著科學圖書館的不斷發展，我們獨特的產品和技術組合的市場機會也會增長。此外，我們在 2022 年對工廠和設備進行了重要且重大的新投資，從而增加了我們人類營養、動物營養和植物營養業務的產能。特別值得注意的是，我們的人體膠囊產品線以及我們的植物營養產品在歐洲的製造能力增加了，這應該會促進該地區的加速增長。

All of these new investments will help support our continued organic growth as we further penetrate the markets with our product offerings. We also made significant progress in 2022 relating to the company's efforts to advance our environmental, social and governance or ESG initiatives. Balchem released its fourth sustainability report in 2022, in which we provided an update on our progress toward our 2030 goals to reduce both greenhouse gas emissions and water usage by 25%. And I am happy to report that we are well on our way to delivering on our goals.

隨著我們的產品進一步滲透市場，所有這些新投資將有助於支持我們持續的有機增長。 2022 年，我們在公司推進環境、社會和治理或 ESG 舉措方面也取得了重大進展。 Balchem 在 2022 年發布了第四份可持續發展報告，其中我們提供了我們在實現 2030 年目標（將溫室氣體排放和用水量減少 25%）方面的最新進展。我很高興地報告，我們正在順利實現我們的目標。

The report details many of the ways we are advancing our environmental, social and governance initiatives across the organization in alignment with widely accepted ESG reporting frameworks. Balchem's sustainability efforts are fully integrated into our business strategy, which remains unchanged as we continue to focus on our 2 main objectives: providing innovative solutions for the health and nutritional needs of the world and operating with excellence as strong stewards of our stakeholders. As a result of our efforts, Balchem has once again recently named one of America's Most Responsible Companies by Newsweek Magazine for the third consecutive year.

該報告詳細介紹了我們根據廣泛接受的 ESG 報告框架在整個組織內推進環境、社會和治理計劃的許多方式。 Balchem 的可持續發展努力完全融入了我們的業務戰略，該戰略保持不變，因為我們繼續專注於我們的 2 個主要目標：為世界的健康和營養需求提供創新解決方案，並作為我們利益相關者的強有力管家以卓越的方式運營。由於我們的努力，Balchem 最近連續第三年被《新聞周刊》雜誌評為美國最具責任感的公司之一。

And lastly, in December, we announced another increase to our annual dividend, taking the dividend from $0.64 per share to $0.71 per share, an 11% increase year-over-year. This most recent increase marked the 14th consecutive year of double-digit growth of our dividend, which once again reinforced our commitment to our long-standing dividend strategy. All in all, another strong year both financially and strategically for Balchem. 2022 was once again a year of unprecedented external market challenges, where the pandemic impact we experienced in 2020 and 2021 was followed by the war in Ukraine, significant supply chain disruptions and rapidly accelerating inflation.

最後，在 12 月，我們宣布再次增加年度股息，將股息從每股 0.64 美元增加到每股 0.71 美元，同比增長 11%。這一最新增長標誌著我們的股息連續第 14 年實現兩位數增長，這再次加強了我們對長期股息戰略的承諾。總而言之，Balchem 在財務和戰略上又是強勁的一年。 2022 年再次是外部市場挑戰前所未有的一年，我們在 2020 年和 2021 年經歷了大流行病的影響，接著是烏克蘭戰爭、嚴重的供應鏈中斷和迅速加速的通貨膨脹。

The Balchem team was able to step up and deliver strong results, both financially and strategically under these challenging conditions, once again proving the strength of our team and the resilience of our business models. I would like to take this opportunity to thank all of our employees and broad group of stakeholders who supported us and contributed to our success throughout the year. Thank you all.

Balchem 團隊能夠在這些充滿挑戰的條件下加強並在財務和戰略上取得強勁成果，再次證明了我們團隊的實力和我們商業模式的彈性。我想藉此機會感謝我們所有的員工和廣泛的利益相關者群體，他們支持我們並為我們全年的成功做出了貢獻。謝謝你們。

Now regarding the fourth quarter of 2022. This morning, we reported solid fourth quarter results. Our revenue of $233 million was up 9%, and our adjusted earnings from operations were $43 million, up 13% versus the prior year quarter. Our net income of $21 million, a decrease of 14% resulted in earnings per share of $0.66 on a GAAP basis. On an adjusted basis, our fourth quarter non-GAAP net earnings were $30 million, an increase of 9%, resulting in earnings per share of $0.94 on a non-GAAP basis. And we continued to deliver solid cash flows. Cash flows from operations were $42 million for the fourth quarter and quarterly free cash flow of $28 million.

現在關於 2022 年第四季度。今天早上，我們報告了穩健的第四季度業績。我們的收入為 2.33 億美元，增長 9%，調整後的運營收益為 4300 萬美元，比去年同期增長 13%。我們的淨收入為 2100 萬美元，下降 14%，導致按 GAAP 計算每股收益為 0.66 美元。在調整後的基礎上，我們第四季度的非 GAAP 淨收益為 3000 萬美元，增長 9%，因此在非 GAAP 基礎上每股收益為 0.94 美元。我們繼續提供穩定的現金流。第四季度運營現金流為 4200 萬美元，季度自由現金流為 2800 萬美元。

I am now going to turn the call back over to Martin to go through the fourth quarter consolidated financial results for the company and the results for each of our business segments.

我現在要把電話轉回給馬丁，讓他了解公司第四季度的綜合財務業績以及我們每個業務部門的業績。

Thank you, Ted. As Ted mentioned, overall, the fourth quarter was another solid quarter for Balchem. Our fourth quarter net sales of $233 million were 9.1% higher than the prior year, and we delivered sales growth in our Human Nutrition & Health and Specialty Products segments, while sales in the Animal Nutrition & Health segment were essentially flat. Foreign currency exchange, driven primarily by the weaker euro, had a negative impact to our sales growth of 1.7%.

謝謝你，特德。正如 Ted 所提到的，總體而言，第四季度對 Balchem 來說是又一個穩定的季度。我們第四季度的淨銷售額為 2.33 億美元，比去年同期增長 9.1%，我們在人類營養與健康和特種產品領域實現了銷售額增長，而動物營養與健康領域的銷售額基本持平。主要受歐元疲軟影響的外匯兌換對我們 1.7% 的銷售額增長產生了負面影響。

Our fourth quarter gross margin dollars of $69 million were up $5 million or 7.1% compared to the prior year. Our gross margin percent was 29.5% of sales in the quarter, down 54 basis points compared to 30.1% in the fourth quarter of 2021. We continue to experience input cost inflation in the fourth quarter compared to prior year. As we've discussed on previous calls, we're pleased with our efforts to recover these cost increases through pricing actions, but the grossing up of revenues and costs have a dilutive impact on the gross margin percentage despite the fact that we continue to grow our gross margin dollars.

我們第四季度的毛利率為 6900 萬美元，比上年增長 500 萬美元或 7.1%。我們本季度的毛利率佔銷售額的 29.5%，與 2021 年第四季度的 30.1% 相比下降了 54 個基點。與去年同期相比，我們在第四季度繼續經歷投入成本通脹。正如我們在之前的電話會議上所討論的那樣，我們對通過定價行動收回這些成本增加的努力感到滿意，但儘管我們繼續增長，但收入和成本的總和對毛利率百分比有稀釋影響我們的毛利率美元。

Consolidated operating expenses for the fourth quarter were $35 million as compared to $30 million in the prior year. The increase was primarily due to incremental expenses and amortization from the Kappa and Bergstrom acquisitions. GAAP earnings from operations for the fourth quarter were $33 million, a decrease of 1.5% compared to the prior year quarter. On an adjusted basis, as detailed in our earnings release this morning, non-GAAP earnings from operations of $43 million were up $5 million or 13.2% compared to the prior year quarter. Adjusted EBITDA of $52 million was $7 million or 14.6% above the fourth quarter of 2021.

第四季度的綜合運營費用為 3500 萬美元，上年同期為 3000 萬美元。增長主要是由於 Kappa 和 Bergstrom 收購的增量費用和攤銷。第四季度的 GAAP 運營收益為 3300 萬美元，比去年同期下降 1.5%。在調整後的基礎上，正如我們今天上午發布的財報所詳述的那樣，非 GAAP 運營收益為 4300 萬美元，與去年同期相比增加了 500 萬美元或 13.2%。調整後的 EBITDA 為 5200 萬美元，比 2021 年第四季度增加 700 萬美元或 14.6%。

Interest expense was $5 million, and our net debt was $374 million with an overall leverage ratio on a net debt basis of [1.7]. The effective tax rates for the fourth quarters of 2022 and 2021 were 17% and 24.7%, respectively. The decrease in the effective tax rate from the prior year was primarily due to favorable provision to return adjustments, favorable FIN 48 reserve adjustments and higher tax benefits from stock-based compensation. Consolidated net income closed the quarter at $21 million, down 14.2% from the prior year, driven primarily by the higher interest expense and negative impact from amortization related to the recent acquisitions. This quarterly net income translated into diluted net earnings per share of $0.66, a decrease of $0.10 or 13.3% from last year's comparable quarter.

利息支出為 500 萬美元，我們的淨債務為 3.74 億美元，淨債務基礎上的總體槓桿率為 [1.7]。 2022 年和 2021 年第四季度的有效稅率分別為 17% 和 24.7%。實際稅率較上年下降主要是由於有利的回報調整準備、有利的 FIN 48 準備金調整以及股票薪酬帶來的更高稅收優惠。本季度綜合淨收入為 2100 萬美元，較上年同期下降 14.2%，主要原因是利息支出增加以及與近期收購相關的攤銷產生的負面影響。這一季度淨收入轉化為攤薄後每股淨收益 0.66 美元，比去年同期減少 0.10 美元或 13.3%。

On an adjusted basis, our fourth quarter adjusted net earnings were $30 million, translating to $0.94 per diluted share, an increase of 10.1% compared with the prior year quarter. Cash flows from operations for the fourth quarter were $42 million, and we closed out the quarter with $67 million of cash on the balance sheet. As we look at it from a segment perspective, for the fourth quarter, our Human Nutrition & Health segment generated sales of $130 million, an increase of 12.9% from the prior year. The increase was driven both by the contribution from recent acquisitions as well as sales growth within food and beverage markets and higher sales within the minerals and nutrients business.

在調整後的基礎上，我們第四季度調整後的淨收益為 3000 萬美元，相當於每股攤薄收益 0.94 美元，比去年同期增長 10.1%。第四季度的運營現金流為 4200 萬美元，本季度結束時資產負債表上的現金為 6700 萬美元。從細分市場的角度來看，第四季度，我們的人類營養與健康細分市場的銷售額為 1.3 億美元，比去年同期增長 12.9%。這一增長是由近期收購的貢獻以及食品和飲料市場的銷售增長以及礦物質和營養素業務的更高銷售額推動的。

Our Human Nutrition & Health segment delivered quarterly earnings from operations of $18 million, an increase of 0.1% compared to prior year. Higher sales and higher average selling prices were offset by the timing of an insurance reimbursement related to a flash flood event in the prior year, higher manufacturing input costs and higher amortization and operating expenses related to the recent acquisitions.

我們的人類營養與健康部門的季度運營收益為 1800 萬美元，比上年增長 0.1%。較高的銷售額和較高的平均售價被與前一年山洪事件相關的保險報銷時間、較高的製造投入成本以及與近期收購相關的較高攤銷和運營費用所抵消。

Fourth quarter adjusted earnings from operations for this segment were $24 million, an increase of 11%. As mentioned in our last earnings call, we are experiencing increased demand volatility across our Human Nutrition & Health segment. In particular, we're experiencing market demand softness in the dietary supplements market, which we see as a relatively short-term impact on a market that has historically grown at mid single digits. This market softness is being driven both by a normalization of demand following the very strong demand experienced during the pandemic given the immunity boosting nature of many supplements and a clear destocking of inventory across the value chain as supply chain disruptions have dissipated post the pandemic, and customers adjust their inventories down to more normal levels.

該部門第四季度調整後的運營收益為 2400 萬美元，增長 11%。正如我們在上次財報電話會議中提到的，我們人類營養與健康部門的需求波動正在加劇。特別是，我們正在經歷膳食補充劑市場的市場需求疲軟，我們認為這對歷史上以中等個位數增長的市場造成相對短期的影響。鑑於許多補充劑具有增強免疫力的特性，在大流行期間經歷了非常強勁的需求之後，需求正常化以及供應鏈中斷在大流行後已經消散，整個價值鏈的庫存明顯去庫存，都推動了市場疲軟，以及客戶將庫存調低至更正常的水平。

Recent U.S. retail sales data provided by Nielsen for dietary supplements show negative double-digit growth year-over-year, although sales levels remain above the pre-pandemic period. We will likely face this transitionary short-term demand softness through Q1 and into Q2 as the situation normalizes over the course of the year, and the supplements market returns to growth in line with its historical growth trajectory. Our Animal Nutrition & Health segment generated quarterly sales of $65 million, a decrease of 0.3% compared to the prior year. The decrease in sales was the result of lower sales into the monogastric market and an unfavorable impact related to changes in foreign currency exchange rates, partially offset by higher sales into the ruminant market, pricing actions and the contribution from the acquisition of Bergstrom, which included a small Animal Nutrition business.

尼爾森最近提供的膳食補充劑美國零售銷售數據顯示，同比出現兩位數的負增長，儘管銷售水平仍高於大流行前時期。我們可能會在第一季度和第二季度面臨這種過渡性短期需求疲軟，因為情況在一年中恢復正常，補充劑市場恢復增長，符合其歷史增長軌跡。我們的動物營養與健康部門的季度銷售額為 6500 萬美元，比上年下降 0.3%。銷售額下降的原因是單胃動物市場銷售額下降以及與外匯匯率變化相關的不利影響，部分被反芻動物市場銷售額增加、定價行動和收購 Bergstrom 的貢獻所抵消，其中包括一家小型動物營養企業。

On a constant currency basis, the Animal Nutrition & Health segment grew 3.1%. Animal Nutrition & Health delivered earnings from operations of $9 million, a decrease of 10% from the prior year quarter, primarily due to the timing of an insurance reimbursement related to a flash flood event in the prior year, increases in manufacturing input costs and higher operating expenses related to the recent acquisitions, partially offset by the aforementioned higher sales into the ruminant market, pricing actions and the contribution from the acquisition of Bergstrom.

按固定匯率計算，動物營養與健康部門增長 3.1%。 Animal Nutrition & Health 實現了 900 萬美元的運營收益，比去年同期下降 10%，這主要是由於與去年的山洪事件相關的保險報銷時間、製造投入成本的增加以及更高的成本與近期收購相關的運營費用，部分被上述反芻動物市場更高的銷售額、定價行動和收購 Bergstrom 的貢獻所抵消。

Fourth quarter adjusted earnings from operations for this segment were $10 million, an increase of 16.5%. Similar to what we are experiencing in Human Nutrition & Health, our Animal Nutrition & Health segment is also experiencing increased demand volatility, particularly in Europe. The European Food Animal Feed market has been hit hard by a combination of factors, including the spread of animal diseases, higher utility costs, increasing costs linked to environmental and animal welfare policy measures and the economic impact of the war in Ukraine. This has resulted in lower feed demand in our key markets, poultry, swine and dairy across much of Europe. Lower utility costs and ultimately, the containment of animal diseases within Europe should allow for improved market conditions and a normalizing of demand as 2023 progresses.

該部門第四季度調整後的運營收益為 1000 萬美元，增長 16.5%。與我們在人類營養與健康領域所經歷的類似，我們的動物營養與健康部門也在經歷著需求波動加劇的情況，尤其是在歐洲。歐洲食用動物飼料市場受到多種因素的嚴重打擊，包括動物疾病的傳播、更高的公用事業成本、與環境和動物福利政策措施相關的成本增加以及烏克蘭戰爭的經濟影響。這導致我們在歐洲大部分地區的主要市場、家禽、豬和奶製品的飼料需求下降。隨著 2023 年的進展，降低公用事業成本並最終遏制歐洲境內的動物疾病應該可以改善市場條件並使需求正常化。

Our Specialty Products segment delivered quarterly sales of $32 million, an increase of 16.2% compared to the prior year quarter due to higher sales of products in the Performance Gases business and higher Plant Nutrition sales, partially offset by an unfavorable impact related to changes in foreign currency exchange rates. Specialty Products delivered earnings from operations of $8 million, an increase of 20.4% versus the prior year quarter. The increase was primarily due to the aforementioned higher sales. Fourth quarter adjusted earnings from operations for this segment were $9 million, an increase of 19.6%.

我們的特種產品部門的季度銷售額為 3200 萬美元，比去年同期增長 16.2%，這是由於高性能氣體業務的產品銷售額和植物營養銷售額的增加，部分被與國外變化相關的不利影響所抵消貨幣匯率。 Specialty Products 實現了 800 萬美元的運營收益，比去年同期增長 20.4%。增加的主要原因是上述較高的銷售額。該部門第四季度調整後的運營收益為 900 萬美元，增長 19.6%。

Within Specialty Products, we continue to see recovery in our Performance Gases business in both the U.S. and in Europe, following the negative impact we experienced during the COVID-19 pandemic. We're still slightly below pre-pandemic volumes, but the business has further stabilized, and we are well positioned to drive growth in 2023.

在特種產品方面，在 COVID-19 大流行期間遭受負面影響後，我們繼續看到美國和歐洲的高性能氣體業務出現復甦。我們仍略低於大流行前的銷量，但業務已進一步穩定，我們有能力在 2023 年推動增長。

I'm now going to turn the call back over to Ted for some closing remarks.

我現在要把電話轉回給泰德，讓他發表一些結束語。

Thanks, Martin. We are pleased with Balchem's financial results reported earlier this morning for the fourth quarter of 2022, capping off another great year for Balchem, a year in which we delivered strong growth in both sales and earnings, while managing through a challenging environment. We also continue to progress our strategic growth initiatives and remain encouraged about the long-term growth opportunities ahead of us despite shorter-term challenges.

謝謝，馬丁。我們對 Balchem 今天上午早些時候公佈的 2022 年第四季度財務業績感到滿意，這為 Balchem 又一個偉大的一年畫上了句號，這一年我們在銷售和收益方面實現了強勁增長，同時在充滿挑戰的環境中進行管理。我們還繼續推進我們的戰略增長計劃，儘管存在短期挑戰，但仍對我們面前的長期增長機會感到鼓舞。

Our results show that we continue to evolve and strengthen our company and position ourselves in attractive markets where we have capabilities to be successful not only today but also into the future. I would like to once again take this opportunity to thank all of the Balchem employees across the world who help make it happen every day.

我們的結果表明，我們將繼續發展和加強我們的公司，並將自己定位於有吸引力的市場，我們有能力在今天和未來取得成功。我想再次藉此機會感謝世界各地的所有 Balchem 員工，他們每天都在幫助實現這一目標。

Thank you so much. I will now hand the call back over to Martin, who will open up the call for questions. Martin?

太感謝了。我現在將把電話轉回給 Martin，他將打開電話提問。馬丁？

Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.

謝謝你，泰德。會議的正式部分到此結束。在這一點上，我們將打開電話會議提問。

(Operator Instructions) Our first question has come from the line of Bob Labick with CJS Securities.

（操作員說明）我們的第一個問題來自 CJS 證券公司的 Bob Labick。

It's actually Lee Jagoda for Bob. Just a couple of questions. First, to start, I know you made some comments about a little bit of demand softness related to the sell-through in the first half of 2023. Can you talk to what the channel inventory situation looks like versus that core demand and when we expect things to become normalize?

對於 Bob，實際上是 Lee Jagoda。只是幾個問題。首先，首先，我知道你對 2023 年上半年與銷售相關的需求疲軟發表了一些評論。你能談談渠道庫存情況與核心需求的對比情況以及我們預計的時間嗎事情變得常態化？

Sure, Lee. Thanks for stepping in for Bob. Good to talk to you. So Martin, in the prepared comments talked really about the slowing of demand that we've seen in 2 particular areas: one being the dietary supplements market, particularly, obviously, in the Human Nutrition & Health business, and then secondly, the European feed market demand slowing is impacting Animal Nutrition & Health. So let's talk about both of those separately. We saw as Q4 evolves that after a relatively strong start to the quarter that weakening demand progressed throughout the quarter, which ultimately we were pleased to see, we delivered organic growth in the quarter, but it was fairly modest at low single digits, but that really came from stronger growth in the early part of the quarter, offset by a negative growth in the latter part of the quarter.

當然，李。感謝您介入 Bob。很高興和你交談。因此，馬丁在準備好的評論中真正談到了我們在兩個特定領域看到的需求放緩：一個是膳食補充劑市場，尤其是人類營養與健康業務，其次是歐洲飼料市場需求放緩正在影響動物營養與健康。因此，讓我們分別討論這兩個問題。我們看到，隨著第四季度的發展，在本季度開局相對強勁之後，需求疲軟在整個季度都在發展，最終我們很高興看到，我們在本季度實現了有機增長，但在低個位數時相當溫和，但真正來自本季度初期的強勁增長，被本季度後期的負增長所抵消。

And we see that continuing for the dietary supplements portion of our Human Nutrition & Health business in Q1 of 2023 and correcting itself in the early part of Q2. So we see the second half of 2023 as being certainly stronger than the first half. And in many ways, it's a little bit of the reverse of what we saw in 2022, where we saw an incredibly strong first half, offset by slower demand in the second half. So that's our perspective there. We do have more visibility into retail sales demand in that channel as well as customer inventory.

我們看到 2023 年第一季度我們人類營養與健康業務的膳食補充劑部分繼續存在，並在第二季度初期自我糾正。因此，我們認為 2023 年下半年肯定會比上半年更強勁。在很多方面，這與我們在 2022 年看到的情況有點相反，我們看到上半年非常強勁，但被下半年需求放緩所抵消。這就是我們的觀點。我們確實對該渠道的零售銷售需求以及客戶庫存有了更多的了解。

So feel as though our view into that market evolution is relatively good at this point. The Animal Nutrition market in Europe is a little bit more difficult for us to really forecast. We have seen slow demand, I would say, really through the second half of 2022, which we see continuing in the first quarter of 2023. We do see some positive signs. The -- obviously, energy costs have come down from their peak. They're still very high relative to historical levels, but they've come down from their peaks, and that's starting to ease some of it, at least the cost pressure on the market.

因此，在這一點上，我們對市場演變的看法似乎相對較好。歐洲的動物營養市場對我們來說更難真正預測。我想說，我們已經看到需求放緩，直到 2022 年下半年，我們認為這種情況將持續到 2023 年第一季度。我們確實看到了一些積極的跡象。很明顯，能源成本已經從高峰期回落。相對於歷史水平，它們仍然非常高，但它們已經從峰值回落，這開始緩解一些壓力，至少是市場上的成本壓力。

And so we see some positivity coming out of that. So we're -- we believe that Q1 will continue to be soft. But as that positivity of the lower utility costs and energy costs starts to result in replacement of animals, we will see that business start to pick up in Q2 and as 2023 evolves. So hopefully, that gives you a little bit of feel for those 2 specific markets, which is really the area that Martin highlighted in his prepared remarks.

因此，我們看到了一些積極的一面。所以我們 - 我們相信第一季度將繼續疲軟。但隨著公用事業成本和能源成本降低的積極性開始導致動物被替代，我們將看到業務在第二季度開始回升，並隨著 2023 年的發展。所以希望這能讓你對這兩個特定市場有一點感覺，這確實是馬丁在他準備好的發言中強調的領域。

That's very helpful. Just one more, and I'll hop back in the queue. It sounds like you've done a pretty good job working with your customers to sort of raise prices on a dollar-for-dollar basis to cover your costs, but ultimately at the expense of your gross margin percentage. Where are we related to the price cost balance? And how should we think about when certain raws start going back down, are your customers going to be willing to work with you to get back to some of the gross margin percentage as we come out of the inflationary environment that we've been in?

這很有幫助。還有一個，我會跳回到隊列中。聽起來您在與客戶合作方面做得很好，以美元對美元的方式提高價格以支付您的成本，但最終以犧牲您的毛利率為代價。我們在哪裡與價格成本平衡相關？我們應該如何考慮當某些原材料開始回落時，您的客戶是否願意與您合作，在我們走出我們所處的通貨膨脹環境時恢復到一定的毛利率？

So yes, maybe I'll take a first stab at that, and Martin can chime in to add any color that's needed. First of all, we are really pleased with our ability to raise prices, that's been a major focus for us for well over a year. And I think that's really -- it just shows the strength of our market positions that we've been able to, by and large, offset the cost increases dollar-for-dollar at the expense as you have pointed out of the margin. Historically, we have seen an unfavorable margin lag as costs increase and we raise prices. And historically, we've seen a favorable margin lag, if you will, as costs decrease.

所以是的，也許我會先試一試，Martin 可以插話添加任何需要的顏色。首先，我們對我們提高價格的能力感到非常滿意，這是我們一年多以來的主要關注點。而且我認為這真的 - 它只是表明我們的市場地位的實力，我們已經能夠在很大程度上抵消美元對美元的成本增加，正如你所指出的那樣。從歷史上看，隨著成本增加和我們提高價格，我們已經看到不利的利潤率滯後。從歷史上看，隨著成本的降低，如果你願意的話，我們已經看到了有利的利潤率滯後。

And there's no reason to expect that, that won't happen. We have certainly part of our customer base that is particularly in the Animal Nutrition world is based on contractual situations that have passed through raw material costs. And so we have a built-in negative lag when costs are going up, but we also have a built-in positive lag when costs are coming down. So we do believe that we will see that as we've seen it in the past and are very focused as a company on recapturing that margin. We're again pleased that we've been able to raise prices as we have and gross margin dollars have increased, but an important part of our kind of economic profile, if you will, is our margin profile. And so we're determined to take whatever steps we need to in order to gradually recover that margin to its historical levels.

沒有理由期望那不會發生。我們當然有一部分客戶群，特別是在動物營養領域，是基於已經通過原材料成本的合同情況。因此，當成本上升時，我們有一個內在的負滯後，但當成本下降時，我們也有一個內在的正滯後。因此，我們確實相信，我們會看到這一點，就像我們過去看到的那樣，並且作為一家公司非常專注於重新奪回利潤率。我們再次感到高興的是，我們能夠像以前那樣提高價格，毛利率美元也有所增加，但如果你願意的話，我們經濟狀況的一個重要部分是我們的利潤率狀況。因此，我們決心採取一切必要措施，逐步將利潤率恢復到歷史水平。

And Lee, if I'd just add a comment or 2, I would say the dollar-for-dollar pass-through has a -- I mean, has a significant impact on that margin percentage for Q4. For example, it was approximately 1.5% margin impact just from that dollar-for-dollar pass-through. And if you look on a full year basis, it's over 3 percentage points, 4 percentage points in that pass-through math. And for us to see the margins go back to where we want them to be and where we expect them to be, you do need to see some easing in the inflationary pressure, which hopefully we'll see soon.

Lee，如果我只添加評論或 2，我會說美元對美元的傳遞有一個 - 我的意思是，對第四季度的保證金百分比有重大影響。例如，僅美元對美元的傳遞就產生了大約 1.5% 的利潤率影響。如果你從全年來看，它超過 3 個百分點，在傳遞數學中是 4 個百分點。為了讓我們看到利潤率回到我們希望的水平和我們期望的水平，你確實需要看到通脹壓力有所緩解，希望我們很快就會看到。

You're starting to see it and you're experiencing already on the chemical side, where we're seeing costs coming down sequentially, but you're actually still seeing sequential inflation on the food commodities side. So net-net, overall, for our portfolio, if we look at it sequentially kind of Q4 versus the Q3, there's no easing yet in terms of the cost picture. And obviously, on a year-over-year basis, still significantly up. But the food commodities tend to lag sort of to the chemicals with some delays. So the fact that the chemicals are coming down should hopefully mean that the food commodities will also over a period of time here start easing off and that will help our margins for sure.

你開始看到它並且你已經在化學方面經歷過，我們看到成本連續下降，但實際上你仍然看到食品商品方面的連續通貨膨脹。因此，總的來說，對於我們的投資組合，如果我們按順序看第四季度和第三季度，就成本情況而言還沒有放鬆。顯然，與去年同期相比，仍然顯著上升。但食品類商品往往滯後於化學品，並有一些延遲。因此，化學物質下降的事實應該有望意味著食品商品也將在一段時間內開始放鬆，這肯定會幫助我們的利潤率。

Our next question has come from the line of Ram Selvaraju with H.C. Wainwright.

我們的下一個問題來自 Ram Selvaraju 和 H.C.溫賴特。

Just a couple for you, Ted. Could you comment on VitaCholine's positioning versus other choline-based products in the market? And what do you think is most likely to drive growth of this brand, particularly in light of the recent Cornell study findings? And secondly, could you give us a sense of what you think long-term directionality is and growth prospects are for the Specialty Products business given the growth you saw in the most recently reported period? And I just had one quick one for Martin. Given the lower than historical effective tax rate in the fourth quarter, is this the most likely appropriate baseline to use going forward or should we expect a reversion to what the historical effective tax rate has been?

給你一對，特德。您能否評論一下 VitaCholine 相對於市場上其他膽鹼產品的定位？您認為什麼最有可能推動該品牌的發展，特別是根據康奈爾大學最近的研究結果？其次，鑑於您在最近報告期間看到的增長，您能否告訴我們您認為特種產品業務的長期方向和增長前景如何？我剛給馬丁準備了一份。鑑於第四季度低於歷史的有效稅率，這是最有可能在未來使用的合適基準，還是我們應該期待回歸到歷史有效稅率？

Okay. Well, thanks for the questions, Ram. We'll try to remember all 3 of those. VitaCholine positioning, there's no question that VitaCholine, which for those of you who don't know is our branded choline product that goes into the Human Nutrition market. And there's no question it is the leading brand globally, both from a market share perspective as well as a technology perspective. And it's less based on the physical attributes of the product itself and more based on the fact that we have multiple production facilities, one in Europe, one in the U.S. and a global position in this product.

好的。嗯，謝謝你的問題，拉姆。我們將嘗試記住所有這 3 個。 VitaCholine定位，毫無疑問，VitaCholine，對於那些不知道的人來說，是我們進入人類營養市場的品牌膽鹼產品。毫無疑問，無論是從市場份額角度還是從技術角度來看，它都是全球領先的品牌。它較少基於產品本身的物理屬性，更多的是基於我們擁有多個生產設施的事實，一個在歐洲，一個在美國，並且在該產品中處於全球地位。

But really, most importantly, just from a science-based perspective, the studies that we have done with our branded products, those Cornell studies were done with VitaCholine. And really, all of the studies that we've talked about over the years have been done with our VitaCholine. And so when we approach our customers, when we approach the market, we're clearly viewed as the technology leader, the science leader and the kind of the innovator, if you will, of the product. So we feel really good about the positioning of that brand and believe that as our customers innovate with choline, include choline and various new product launches that they will choose to do that with our clear market-leading brand.

但實際上，最重要的是，從基於科學的角度來看，我們對品牌產品所做的研究，康奈爾大學的那些研究都是用維生素膽鹼完成的。事實上，我們多年來討論的所有研究都是用我們的維生素膽鹼完成的。因此，當我們接近我們的客戶時，當我們接近市場時，我們顯然被視為技術領導者、科學領導者和產品創新者，如果你願意的話。因此，我們對該品牌的定位感到非常滿意，並相信隨著我們的客戶使用膽鹼進行創新，包括膽鹼和各種新產品發布，他們將選擇使用我們明確的市場領先品牌來實現這一目標。

And you do find that many of those commercialized products will include our brand on their label. And we're very proud of that, and I think that speaks to the value that our brand brings. Relative to the long-term direction, the growth of Specialty Products, we really were very pleased with the fourth quarter, and it was a combination of both healthy growth in our Performance Gases business as well as our Plant Nutrition business. So overall, it was a good quarter for Specialty Products. And we really see that continuing certainly through the year.

您確實會發現，許多商業化產品的標籤上都會包含我們的品牌。我們為此感到非常自豪，我認為這說明了我們品牌帶來的價值。相對於長期方向，特種產品的增長，我們對第四季度非常滿意，這是我們高性能氣體業務和植物營養業務健康增長的結合。總的來說，這是特種產品的一個好季度。我們確實看到這一年肯定會持續下去。

We feel that long-term, the Performance Gases business, as we've said for years, is a low single-digit type of growth business. But we've been in this time of recovery. This is one of the businesses that was hurt during the pandemic, a little bit of the opposite of the dietary supplement market that was benefited during the pandemic, and we're seeing a little bit of a slowing as demand normalizes post-pandemic. Similar here, this was hurt during that, but opposite, this was hurt during the pandemic, and we're seeing a bounce in growth back to kind of pre-pandemic type levels, where we -- and we think we'll get there in 2023.

正如我們多年來所說的那樣，我們認為從長遠來看，Performance Gases 業務是一種低個位數的增長業務。但我們一直處於恢復期。這是在大流行期間受到傷害的企業之一，與在大流行期間受益的膳食補充劑市場有點相反，而且隨著大流行後需求正常化，我們看到了一點點放緩。與此類似，這在那段時間受到了傷害，但相反，這在大流行期間受到了傷害，我們看到增長反彈到大流行前的水平，我們 - 我們認為我們會到達那裡2023年。

So we see in that business, a combination of continued volume growth, a little bit higher than historical levels, plus growth from pricing that has been a result of all of the inflation of those products that we repackage and sell to the market. So we see healthy growth in Performance Gases. And we're encouraged by the recent growth in Plant Nutrition that we delivered in Q4, and we believe that Plant Nutrition will have a very good year in 2023 fueled a bit by the new assets that we've put in place in Europe. We're excited about that in Q4 with those assets. Our growth in Europe was particularly strong. So we do feel like we've made an investment in assets that will help facilitate growth there.

因此，我們在該業務中看到，銷量持續增長，略高於歷史水平，再加上定價的增長，這是我們重新包裝並出售給市場的那些產品的所有通貨膨脹的結果。因此，我們看到 Performance Gases 的健康增長。我們對我們在第四季度交付的植物營養最近的增長感到鼓舞，我們相信植物營養將在 2023 年有一個非常好的一年，這將受到我們在歐洲投入的新資產的推動。我們對第四季度的這些資產感到興奮。我們在歐洲的增長尤為強勁。所以我們確實覺得我們已經對資產進行了投資，這將有助於促進那裡的增長。

But our Plant Nutrition business should be a double-digit type of growth business, given the relatively small global market position, the efficacy of our products and the brand that we have. And so we really do feel like we should be able to grow that business at double digits and deliver an all-round strong year for Specialty Products. I guess the other point to note is that we're -- we have yet to really see it play out. We're encouraged with all the rain that California has gotten over the year. We hope it ends up not being too much rain for the planting season. But I think generally, the ag barometer is favorable at this point in time in the Western part of the U.S. And so that should also create a bit of a tailwind for that business. So I'll hand it over to Martin for the tax question.

但考慮到相對較小的全球市場地位、我們產品的功效和我們擁有的品牌，我們的植物營養業務應該是一個兩位數的增長業務。因此，我們確實覺得我們應該能夠以兩位數的速度增長該業務，並為特種產品帶來全面強勁的一年。我想另一點要注意的是我們 - 我們還沒有真正看到它發揮作用。我們對加利福尼亞一年來的降雨感到鼓舞。我們希望播種季節不會下太多雨。但我認為總的來說，農業晴雨表目前在美國西部是有利的，因此這也應該為該業務創造一些順風。所以我會把它交給馬丁來解決稅務問題。

Yes. Ram, on the tax rate, I think the right planning rate is closer to 23% as opposed to the 21% that we achieved in 2022. I mean our rates fluctuate a little bit. We were at that 23% range if you go back here in 2021, and we were able to drive some unique items here in the year, and they are hard to predict and hard to forecast. And if we look at it today, I think we'll be closer to the 23% than the 21%. So not a new baseline from my perspective.

是的。 Ram，關於稅率，我認為正確的計劃稅率接近 23%，而不是我們在 2022 年實現的 21%。我的意思是我們的稅率略有波動。如果你在 2021 年回到這裡，我們處於 23% 的範圍內，我們能夠在這一年推出一些獨特的項目，它們很難預測，也很難預測。如果我們今天來看，我認為我們將更接近 23% 而不是 21%。所以從我的角度來看，這不是一個新的基線。

Our next question has come from the line of Mitra Ramgopal with Sidoti.

我們的下一個問題來自 Mitra Ramgopal 與 Sidoti 的對話。

Yes. First, I might have missed if you mentioned it in terms of the revenue growth you saw, how much of it was volume driven versus price?

是的。首先，如果你提到你所看到的收入增長，我可能會錯過，其中有多少是數量驅動的而不是價格驅動的？

Yes. The growth has been primarily price driven more than volume driven. So primarily price.

是的。增長主要是價格驅動而非銷量驅動。所以主要是價格。

Okay.

好的。

Mitra, Mitra, just to add a little bit of color to that. I think that's clear in Q4. And just to go back to my earlier comment around it's kind of a year of 2 halves in the first half of the year. It was primarily volume driven. That subsided somewhat in the second half and became mostly price driven as we raise prices and start recovering those costs from inflation. So overall, we saw volume growth in the year, but certainly, the second half of the year was more price.

Mitra，Mitra，只是為了給它添加一點色彩。我認為這在第四季度很明顯。回到我之前的評論，今年上半年是一年的兩個半年。它主要是體積驅動的。隨著我們提高價格並開始從通貨膨脹中收回這些成本，這種情況在下半年有所消退，並且主要受價格驅動。所以總的來說，我們看到了今年的銷量增長，但可以肯定的是，下半年價格更高。

Okay. And looking at the Bergstrom and Kappa acquisitions, I know it's still early days, but in terms of your expectations for 2023 and being able to realize costs and even revenue synergies to drive growth going forward, if you can maybe help us in terms of how you're thinking about those acquisitions in '23?

好的。看看 Bergstrom 和 Kappa 的收購，我知道現在還為時過早，但就您對 2023 年的期望以及能夠實現成本甚至收入協同效應以推動未來增長而言，如果您能幫助我們如何你在考慮 23 年的那些收購？

Yes. Maybe I'll take a stab at that, and again, Martin, you can chime in for any additional color. So we're 2 quarters into the Kappa acquisition and, let's say, a quarter into the Bergstrom acquisition. And overall, we are pleased with how the integration processes are going. Essentially, both companies have been integrated from a commercial perspective. So we have our sales organization, their sales organization combined in a single organizational structure and the cross-training efforts are well underway, to some extent, done in some areas. So feel good about the coming together of the organizations. We've also fully integrated the functional organizations as well and feel like that's going very well.

是的。也許我會試一試，再一次，馬丁，你可以加入任何額外的顏色。因此，我們對 Kappa 的收購進行了兩個季度，比方說，對 Bergstrom 的收購進行了四分之一。總的來說，我們對整合過程的進展感到滿意。從本質上講，兩家公司已經從商業角度進行了整合。所以我們有我們的銷售組織，他們的銷售組織結合在一個單一的組織結構中，交叉培訓工作正在順利進行，在某種程度上，在某些領域已經完成。因此，對這些組織的聯合感到高興。我們還完全整合了職能組織，感覺進展順利。

And also pleased that both companies are already on our ERP platform, Microsoft Dynamics 365. So we feel like we've moved very, very quickly. So overall, we feel really good about the integration of the organizations. And I think to your specific point, we are starting to see some of those very early signs of kind of synergies associated with the combination of the organization from both a cost perspective but maybe more importantly, from a sales and growth perspective.

也很高興兩家公司都已經在我們的 ERP 平台 Microsoft Dynamics 365 上。所以我們覺得我們的行動非常非常快。總的來說，我們對組織的整合感覺非常好。我認為，就你的具體觀點而言，我們開始看到一些與組織合併相關的協同效應的早期跡象，無論是從成本角度，還是更重要的是，從銷售和增長角度來看。

We have sales reps now calling on customers, talking about the broad product line, and we're seeing a lot more call reports coming in that, that have identified opportunities outside of the portfolio that, that person historically may have had. So I'm encouraged by the progress that we've made relative to the integration of the companies, and we are starting to see some signs of those sales synergies, and we have realized some of the costs that we're expecting. So very pleased with that. Continue to feel very good about the long-term potential of the 2 products, MSM and K2. We feel like there's significant market penetration opportunity available to us as we thought going in.

我們現在有銷售代表拜訪客戶，談論廣泛的產品線，我們看到更多的電話報告進來，這些報告已經確定了該人過去可能擁有的投資組合之外的機會。因此，我對我們在公司整合方面取得的進展感到鼓舞，我們開始看到這些銷售協同效應的一些跡象，我們已經實現了一些預期的成本。對此非常滿意。繼續對 2 種產品 MSM 和 K2 的長期潛力感到非常滿意。正如我們所想的那樣，我們覺得我們有很大的市場滲透機會。

So remain very excited about that. Obviously, the short-term slowing of and destocking that's going on within the dietary supplement market is impacting those businesses. They're not immune to that situation. So we are seeing some slower demand than we ideally would like as we are seeing across the nutritional portfolio. But all in all, feel really good about the integration and the opportunity ahead.

所以對此保持非常興奮。顯然，膳食補充劑市場的短期放緩和去庫存正在影響這些業務。他們不能倖免於這種情況。因此，正如我們在整個營養產品組合中看到的那樣，我們看到的需求比我們理想中的需求要慢。但總而言之，對整合和未來的機會感到非常滿意。

Okay. And then just to be clear, the customer destocking, you see it as a temporary issue. It seems like the inflationary pressures are starting to ease. So at least for the first half, it will continue to be challenging, but heading into second half and looking out to '24, you feel much more comfortable in terms of where things are headed?

好的。然後需要明確的是，客戶去庫存，你認為這是一個暫時的問題。通脹壓力似乎開始緩和。所以至少在上半場，它會繼續充滿挑戰，但進入下半場並展望 24 年，你對事情的發展方向感到舒服多了？

Yes, absolutely. We're watching the Nielsen retail data very closely. And so feel like we've got a good feel for the brick-and-mortar sales out there. And sales continue despite the negative growth that we've seen for the last few months, sales continue to be higher than pre-pandemic levels. So I think that's very encouraging that certainly, some of the bounce that we saw with the pandemic because of the immunity boosting nature of many of these nutrients. The growth is still there relative to pre-pandemic levels, which is great. It's just not at the peak level that we once saw.

是的，一點沒錯。我們正在密切關注尼爾森的零售數據。所以感覺我們對那裡的實體銷售有很好的感覺。儘管我們在過去幾個月看到了負增長，但銷售額仍在繼續，銷售額繼續高於大流行前的水平。所以我認為這當然是非常令人鼓舞的，我們在大流行病中看到的一些反彈是由於許多這些營養素具有增強免疫力的特性。相對於大流行前的水平，增長仍然存在，這很好。它只是不在我們曾經看到的最高水平。

So we think that's encouraging. The anecdotal evidence that we have from all of the discussions that we have with customers suggest that the destocking will start to slow, I think really in the earlier part of Q2. And so your comment was specific around we should see things back to a normal type of growth level in the second half, we absolutely believe that based on everything that we're seeing today, and we feel like Q2 will be that transitional quarter, if you will, to the more normalized demand levels that we expect.

所以我們認為這是令人鼓舞的。我們從與客戶的所有討論中獲得的軼事證據表明，去庫存將開始放緩，我認為真的在第二季度的早些時候。因此，您的評論具體圍繞我們應該在下半年看到事情恢復到正常類型的增長水平，我們絕對相信，基於我們今天看到的一切，我們認為第二季度將是過渡季度，如果您會達到我們預期的更規範化的需求水平。

Okay. And then Martin, just a couple of housekeeping questions. How should we think about interest expense going forward and also CapEx for '23?

好的。然後是馬丁，請問幾個內務問題。我們應該如何考慮未來的利息支出以及 23 年的資本支出？

Yes. On the interest expense side, we're currently sort of paying an effective rate of around 6% based on where the Fed is at, at the moment. So that means $6 million of interest expense for every $100 million of debt, and we currently have $440 million. So if you do that math, you'll end up somewhere $26 million or so on an annualized basis. Obviously, as you know, as we generate cash, we tend to pay down debt, and we intend to continue to do so. But that's sort of the simple back of the napkin math you can do as you forecast out.

是的。在利息支出方面，根據美聯儲目前的狀況，我們目前支付的有效利率約為 6%。所以這意味著每 1 億美元的債務就有 600 萬美元的利息支出，而我們目前有 4.4 億美元。所以如果你算一下，你最終會得到大約 2600 萬美元的年化收益。顯然，如您所知，當我們產生現金時，我們傾向於償還債務，並且我們打算繼續這樣做。但這是餐巾紙數學的簡單背面，您可以按照您的預測進行計算。

And the second part of the question around capital. We did see higher capital in 2022 versus what you were used to seeing. We spent $49 million in terms of expanding our capacities and also adding the acquisitions in there. And as we look for 2023, we think the range for CapEx will be between USD40 million and USD50 million, depending a little bit on the spend. So that's kind of where we see the range for CapEx. We still are expanding our capacities around vitamin K2 and completing a new facility there here in 2023 that will drive some incremental expense, but in the range of $40 million to $50 million is where I expect 2023 to come out.

以及圍繞資本的問題的第二部分。我們確實看到 2022 年的資本比你過去看到的要多。我們花費了 4900 萬美元來擴大我們的能力並在那裡增加收購。展望 2023 年，我們認為資本支出的範圍將在 4000 萬美元至 5000 萬美元之間，這在一定程度上取決於支出。所以這就是我們看到資本支出範圍的地方。我們仍在擴大我們圍繞維生素 K2 的產能，並於 2023 年在這裡完成一個新設施，這將增加一些支出，但我預計 2023 年將達到 4000 萬至 5000 萬美元。

Okay. That's very helpful.

好的。這很有幫助。

Thank you. There are no further questions at this time. I would now like to turn the call back over to Chief Executive Officer, Ted Harris, for closing remarks.

謝謝。目前沒有其他問題。我現在想將電話轉回給首席執行官泰德·哈里斯，以作結束語。

Great. Thanks, Darryl. Once again, thank you all very much for joining the call today, and we really are pleased with the results for the fourth quarter, particularly given the macroeconomic challenges we've been facing. And 2022 was another very strong year for Balchem and one in which we set new records financially while continuing to make good progress strategically with the company. So we really appreciate your support through the year as well as your time today. We look forward to reporting our Q1 2023 results in April. Thanks so much for joining. Take care.

偉大的。謝謝，達里爾。再次非常感謝大家參加今天的電話會議，我們對第四季度的結果感到非常滿意，特別是考慮到我們一直面臨的宏觀經濟挑戰。 2022 年對 Balchem 來說又是一個非常強勁的一年，我們在這一年創造了新的財務記錄，同時繼續與公司在戰略上取得良好進展。因此，我們非常感謝您一年來的支持以及您今天的時間。我們期待在 4 月份報告 2023 年第一季度的業績。非常感謝您的加入。小心。

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

謝謝。今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路。享受你剩下的一天。