What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 46 added, 43 removed, 144 unchanged (38% of the section changed)

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See “Cautionary Statement Regarding Forward-Looking Statements.”

We develop, manufacture, distribute and market specialty performance ingredients and products for the nutritional, food, pharmaceutical, animal health, medical device sterilization, plant nutrition and industrial markets.

We develop, manufacture, distribute and market specialty performance ingredients and products for the nutritional, food, pharmaceutical, animal health, plant nutrition, sterilization, fumigation, and industrial markets.

Our three reportable segments are strategic businesses that offer products and services to different markets:

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Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated".

Recent Developments

Anti-Dumping Investigation in the European Union

In late June 2025, the European Commission announced that it would impose provisional duties between 95.4% and 120.8% on imports into the European Union of choline chloride originating in the People’s Republic of China, effective July 1, 2025.

The investigation was initiated by the European Commission in late October 2024, following a complaint lodged by Balchem Italia Srl and another complainant.

On December 19, 2025, the European Commission published their final decision to set definitive duties between 90.0% and 115.9%.

Further, the European Commission set rules to make it clear that the country of origin of choline chloride, regardless of form, will be the country where the chemical reaction between trimethylamine hydrochloride and ethylene oxide takes place.

Segment Results

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Unallocated corporate expenses consist of:

(i) Transaction and integration costs, ERP implementation costs, and unallocated legal fees totaling $1,484, $1,617 and $3,581 for years ended December 31, 2024, 2023 and 2022, respectively, and (ii) Unallocated amortization expense of $0, $312, and $2,951 for years ended December 31, 2024, 2023, and 2022, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

On August 30, 2022, we completed the acquisition of Bergstrom, a leading science-based manufacturer of MSM, based in Vancouver, Washington, and on June 21, 2022, we completed the acquisition of Kappa, a leading science-based manufacturer of specialty vitamin K2 for the human nutrition industry, headquartered in Oslo, Norway.

Details related to both acquisitions are disclosed in Note 2, Significant Acquisitions , and the "Acquisitions" section in Item 1.

(i) Transaction and integration costs of $1,242, $1,484 and $1,617 for years ended December 31, 2025, 2024 and 2023, respectively, and (ii) Unallocated amortization expense of $0, $0, and $312 for years ended December 31, 2025, 2024, and 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

Results of Operations - Fiscal Year 2025 compared to Fiscal Year 2024

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• The increase in net sales within the Human Nutrition and Health segment for 2025 compared to 2024 was driven by higher sales within both the nutrients business and the food ingredients and solutions businesses.

Total sales for this segment grew 9.0%, with volume and mix contributing 6.6% and average selling prices contributing 2.4%.

• The decrease in net sales within the Animal Nutrition and Health segment for 2024 compared to 2023 was driven by lower sales in both the monogastric and ruminant species markets.

Total sales for this segment decreased by 9.9%, with average selling prices contributing -6.1% and volume and mix contributing -3.8%.

• The increase in net sales within the Specialty Products segment for 2024 compared to 2023 was due to higher sales in the performance gases market, partially offset by lower sales in the plant nutrition business.

Total sales for this segment increased by 5.4%, with average selling prices contributing 3.9% and volume and mix contributing 1.4%.

• Sales relating to Other decreased from the prior year primarily due to lower average selling prices.

Total sales for this segment grew 9.9%, with volume and mix contributing 6.6%, average selling prices contributing 2.8%, and the change in foreign currency exchange rates contributing 0.4%.

• The increase in net sales within the Animal Nutrition and Health segment for 2025 compared to 2024 was driven by higher sales in both the ruminant and monogastric species markets.

Total sales for this segment increased by 7.5%, with average selling prices contributing 5.6%, volume and mix contributing 1.0%, and the change in foreign currency exchange rates contributing 0.9%.

• The increase in net sales within the Specialty Products segment for 2025 compared to 2024 was due to higher sales within both the performance gases market and the plant nutrition business.

Total sales for this segment increased by 6.2%, with average selling prices contributing 4.0%, the change in foreign currency exchange rates contributing 1.3%, and volume and mix contributing 0.9%.

• Sales may fluctuate in future periods based on macroeconomic conditions, competitive dynamics, changes in customer preferences, and our ability to successfully introduce new products to the market.

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% of net sales 35.7 % 35.3 %

Gross margin dollars increased for 2024 compared to 2023 due to higher sales, a favorable mix and a decrease in cost of goods sold of $2,905.

Cost of goods sold decreased by 0.5%, mainly driven by certain lower manufacturing input costs.

Gross margin dollars increased for 2025 compared to 2024 due to higher sales and a favorable mix, partially offset by certain higher manufacturing input costs.

Operating Expenses

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% of net sales 15.6 % 16.1 %

The increase in operating expenses was primarily due to the impact of favorable adjustments to transaction costs in the prior year of $11,300, an increase in compensation-related expenses of $9,074, higher professional services of $1,950, and the impact of a gain on the sale of fixed assets of $1,338 in the prior year, partially offset by lower amortization expense of $8,867 and a decrease in restructuring-related impairment charges of $7,243.

The increase in operating expenses was primarily due to an increase in compensation-related expenses of $8,327 and higher professional services of $3,856, partially offset by lower amortization expense of $2,376 and a decrease in agent and broker commissions of $1,132.

Earnings From Operations

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• Human Nutrition & Health segment earnings from operations increased $17,949 primarily due to a gross margin contribution of $22,438.

The increase in gross margin was driven by the aforementioned higher sales, a favorable mix and certain lower manufacturing input costs.

• Animal Nutrition & Health segment earnings from operations decreased $13,563.

Gross margin decreased $11,198 primarily due to the aforementioned lower sales, partially offset by certain lower manufacturing input costs.

• Specialty Products segment earnings from operations increased $5,327 due to an increase in gross margin of $9,518.

The increase in gross margin was primarily due to the aforementioned higher sales and certain lower manufacturing input costs.

This was partially offset by an increase in operating expenses of $4,191, mainly due to higher compensation-related costs.

• The decrease in Other and unallocated was primarily driven by the aforementioned lower sales, partially offset by lower unallocated corporate expenses.

The increase in gross margin was driven by the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs.

The increase in gross margin was partially offset by an increase in operating expenses of $4,489, primarily due to higher compensation-related costs of $5,909, partially offset by lower amortization of $2,329.

• Animal Nutrition & Health segment earnings from operations increased $4,674 primarily due to a gross margin contribution of $7,259.

The increase in gross margin was driven by the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs.

The increase in gross margin was partially offset by an increase in operating expenses of $2,585, primarily driven by higher compensation-related expenses of $2,147.

• Specialty Products segment earnings from operations increased $2,995 primarily due to a gross margin contribution of $4,065.

The increase in gross margin was driven by the aforementioned higher sales.

This was partially offset by an increase in operating expenses of $1,070, primarily related to higher professional services of $831.

Other Expenses (Income)

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Interest expense, net $ 10,219 $ 16,528 $ (6,309) (38.2) %

Other (income) expense, net (72) (681) 609 89.4 %

Other expense (income), net 77 (72) 149 206.9 %

$ 10,296 $ 16,456 $ (6,160) (37.4) %

6 unchanged sentences

Effective tax rate 22.2 % 22.8 %

The increase in the effective tax rate was primarily due to an increase in certain foreign taxes.

The decrease in the effective tax rate was primarily due to a decrease in certain state and foreign taxes partially offset by lower tax benefits from stock-based compensation.

Liquidity and Capital Resources

(All amounts in thousands, except share and per share data)

Contractual Obligations

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We could seek additional bank loans or access to financial markets to fund such acquisitions, our operations, working capital, necessary capital investments or other cash requirements should we deem it necessary to do so.

Cash and cash equivalents decreased to $49,515 at December 31, 2024 from $64,447 at December 31, 2023.

Cash and cash equivalents increased to $74,570 at December 31, 2025 from $49,515 at December 31, 2024.

At December 31, 2025, we had $61,986 of cash and cash equivalents held by our foreign subsidiaries.

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operations, we could be required to pay additional withholding taxes to repatriate these funds.

In 2023, due to prevailing economic conditions of increased interest rates and subsequent borrowing costs, we remitted approximately $18,000 from our Belgium subsidiary to pay down U.S.

debt, resulting in income tax expense of $20.

Working capital was $156,085 at December 31, 2024 as compared to $165,751 at December 31, 2023, a decrease of $9,666.

Significant cash payments during the year included net payments on the revolving loan of $119,569, income taxes paid of $42,643, capital expenditures and intangible assets acquired of $35,661, the payment of the 2023 declared dividend in 2024 of $25,576, and cash paid for an acquisition of $24,164.

Working capital was $189,230 at December 31, 2025 as compared to $156,085 at December 31, 2024, an increase of $33,145.

Significant cash payments during the year included repurchases of common stock of $107,636, capital expenditures and intangible assets acquired of $43,489, income taxes paid of $37,749, the payment of the 2024 declared dividend in 2025 of $28,287, and net payments on the revolving loan of $26,000.

(in thousands) 2025 2024 Increase

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Operating Activities

The decrease in cash flows from operating activities was primarily driven by the impact from changes in working capital.

The increase in cash flows from operating activities was primarily driven by the increase in net earnings and the impact from the changes in working capital.

Investing Activities

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These capital expenditures are part of our continuous efforts to support our growing businesses.

Cash paid to acquire an existing toll manufacturer to add capacity amounted to $24,164 for the year ended December 31, 2024, net of cash acquired.

Cash paid for acquisitions, net of cash acquired, amounted to $1,252 for year ended December 31, 2023.

Cash paid to acquire an existing toll

manufacturer to add capacity amounted to $323 and $24,164 for the years ended December 31, 2025 and 2024, respectively, net of cash acquired.

Financing Activities

In 2024, we borrowed $26,000 to fund the payment of the 2023 dividend and made total loan repayments of $145,569, resulting in $360,000 available under the 2022 Credit Agreement (see Note 8, Revolving Loan ) as of December 31, 2024.

We have an approved stock repurchase program.

The total authorization under this program is 3,763,038 shares.

Since the inception of the program in June 1999, a total of 3,142,028 shares have been repurchased.

In 2025, we borrowed $88,000 to fund share repurchases and the payment of the 2024 dividend, and made total loan repayments of $114,000, resulting in $386,000 available under the 2022 Credit Agreement (see Note 7, Revolving Loan ) as of December 31, 2025.

On December 9, 2025, the Company's Board of Directors approved a new stock repurchase program (the "December 2025 program"), which replaced the previously approved June 1999 program.

The December 2025 program authorizes the repurchases of up to and including 4,000,000 shares of the Company's ordinary shares.

This new stock repurchase program has no expiration date, does not oblige the Company to acquire any particular amount of the Company's ordinary shares, and may be terminated at any time.

As of December 9, 2025, the 1999 program was terminated and all remaining authorized shares (5,742 shares) were expired.

Since the inception of the December 2025 program, a total of 69,659 shares have been repurchased.

We intend to acquire shares from time to time at prevailing market prices if and to the extent we deem it is advisable to do so based on our assessment of corporate cash flow, market conditions and other factors.

Open market repurchases of common stock could be made pursuant to a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

We also purchase (withhold) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan.

Share repurchases are funded with existing cash on hand.

Open market repurchases of common stock could be made pursuant to a share repurchase agreement in compliance with Rule 10b-18 or a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that we might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

We also repurchase (withhold) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options, as applicable, under the Company's omnibus incentive plan.

Such repurchases of shares from employees are funded with existing cash on hand.

Repurchases of common stock were $107,636 and $5,682 for the years ended December 31, 2025 and 2024, respectively.

Proceeds from stock options exercised were $9,307 and $17,228 for the years ended December 31, 2025 and 2024, respectively.

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We provide an unfunded, nonqualified deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees.

Assets of the plan are held in a rabbi trust, which are included in "Other non-current assets" on the consolidated balance sheet.

Assets of the plan are held in a rabbi trust, which are included in "Other non-current assets" on the consolidated balance sheets.

They are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company.

The deferred compensation liability was $11,470 as of December 31, 2024, of which $11,449 was included in "Other long-term obligations" and $21 was included in "Accrued compensation and other benefits" on our condensed consolidated

balance sheets.

The deferred compensation liability was $10,188 as of December 31, 2023 and was included in "Other long-term obligations" on our condensed consolidated balance sheets.

The related rabbi trust assets were $11,465 and $10,188 as of December 31, 2024 and 2023, respectively, and were included in "Other non-current assets" on the Company's consolidated balance sheets.

The deferred compensation liability was $12,806 as of December 31, 2025, of which $12,781 was included in "Other long-term obligations" and $25 was included in "Accrued compensation and other benefits" on our consolidated balance sheets.

The related rabbi trust assets was $12,798 as of December 31, 2025, of which $12,773 was included in "Other non-current assets" and $25 was included in "Other current assets" on the Company's consolidated balance sheets.

The related rabbi trust assets was $11,465 as of December 31, 2024, and was included in "Other non-current assets" on the Company's consolidated balance sheets.

Related Party Transactions

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis