BALCHEM CORP 10-Q

Item 1. Financial Statements BALCHEM CORPORATION Condensed Consolidated Balance Sheets (Dollars in thousands, except share and per share data) Assets June 30, 2026 December 31, 2025 Current assets: (unaudited) Cash and cash equivalents $ 63,174 $ 74,570 Accounts receivable, net of allowance for credit losses of $ 1,128 and $ 862 at June 30, 2026 and December 31, 2025, respectively 148,973 143,596 Inventories, net 161,551 131,449 Prepaid expenses 8,527 9,778 Prepaid income taxes 868 — Other current assets 5,331 6,221 Total current assets 388,424 365,614 Property, plant and equipment, net 304,702 306,648 Goodwill 808,809 816,375 Customer relationships and lists, net 123,728 132,994 Other intangible assets with finite lives, net 27,915 30,295 Right of use assets - operating leases 12,703 14,672 Right of use assets - finance lease 1,417 1,520 Other non-current assets 19,306 18,134 Total assets $ 1,687,004 $ 1,686,252 Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $ 70,451 $ 60,425 Accrued expenses 51,791 49,288 Accrued compensation and other benefits 19,965 27,896 Dividends payable 166 31,044 Income taxes payable — 3,912 Operating lease liabilities - current 3,172 3,614 Finance lease liabilities - current 210 205 Total current liabilities 145,755 176,384 Revolving loan 152,000 164,000 Deferred income taxes 52,943 54,143 Operating lease liabilities - non-current 9,895 11,324 Finance lease liabilities - non-current 1,438 1,544 Other long-term obligations 22,595 21,444 Total liabilities 384,626 428,839 Commitments and contingencies (Note 15) Stockholders' equity: Preferred stock, $ 25 par value. Authorized 2,000,000 shares; no ne issued and outstanding — — Common stock, $ 0.0667 par value. Authorized 120,000,000 shares; 31,955,534 and 32,058,121 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 2,132 2,139 Additional paid-in capital 66,741 92,331 Retained earnings 1,206,296 1,121,396 Accumulated other comprehensive income 27,209 41,547 Total stockholders' equity 1,302,378 1,257,413 Total liabilities and stockholders' equity $ 1,687,004 $ 1,686,252 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents BALCHEM CORPORATION Condensed Consolidated Statements of Earnings (Dollars in thousands, except per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net sales $ 283,997 $ 255,467 $ 554,706 $ 505,986 Cost of sales 180,314 162,354 349,939 324,705 Gross margin 103,683 93,113 204,767 181,281 Operating expenses: Selling expenses 21,137 19,300 42,233 36,226 Research and development expenses 4,534 4,300 10,415 8,962 General and administrative expenses 18,791 18,071 37,272 33,636 44,462 41,671 89,920 78,824 Earnings from operations 59,221 51,442 114,847 102,457 Other expenses, net: Interest expense, net 1,938 2,766 4,151 5,690 Other (income) expense, net ( 498 ) ( 335 ) 393 ( 184 ) 1,440 2,431 4,544 5,506 Earnings before income tax expense 57,781 49,011 110,303 96,951 Income tax expense 13,166 10,733 25,403 21,620 Net earnings $ 44,615 $ 38,278 $ 84,900 $ 75,331 Net earnings per common share - basic $ 1.40 $ 1.18 $ 2.66 $ 2.33 Net earnings per common share - diluted $ 1.39 $ 1.17 $ 2.63 $ 2.30 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents BALCHEM CORPORATION Condensed Consolidated Statements of Comprehensive Income (Dollars in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net earnings $ 44,615 $ 38,278 $ 84,900 $ 75,331 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustment ( 4,534 ) 43,776 ( 14,636 ) 65,498 Change in postretirement benefit plans ( 6 ) ( 1 ) 298 ( 239 ) Other comprehensive (loss) income ( 4,540 ) 43,775 ( 14,338 ) 65,259 Comprehensive income $ 40,075 $ 82,053 $ 70,562 $ 140,590 See accompanying notes to condensed consolidated financial statements. 5 Table of Contents BALCHEM CORPORATION Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Three and Six Months Ended June 30, 2026 and 2025 (Dollars in thousands, except share and per share data) (Unaudited) Total Stockholders' Equity Retained Earnings Accumulated Other Comprehensive Income (Loss) Common Stock Additional Paid-in Capital Shares Amount Balance - December 31, 2025 $ 1,257,413 $ 1,121,396 $ 41,547 32,058,121 $ 2,139 $ 92,331 Net earnings 40,285 40,285 — — — — Other comprehensive loss ( 9,798 ) — ( 9,798 ) — — — Repurchases of common stock ( 14,923 ) — — ( 89,880 ) ( 6 ) ( 14,917 ) Shares and options issued under stock plans 12,139 — — 160,285 10 12,129 Balance - March 31, 2026 1,285,116 1,161,681 31,749 32,128,526 2,143 89,543 Net earnings 44,615 44,615 — — — — Other comprehensive loss ( 4,540 ) — ( 4,540 ) — — — Repurchases of common stock, including excise tax ( 29,800 ) — — ( 183,249 ) ( 12 ) ( 29,788 ) Shares and options issued under stock plans 6,987 — — 10,257 1 6,986 Balance - June 30, 2026 $ 1,302,378 $ 1,206,296 $ 27,209 31,955,534 $ 2,132 $ 66,741 Balance - December 31, 2024 $ 1,149,913 $ 997,493 $ ( 23,747 ) 32,527,244 $ 2,170 $ 173,997 Net earnings 37,053 37,053 — — — — Other comprehensive income 21,484 — 21,484 — — — Repurchases of common stock ( 5,325 ) — — ( 32,869 ) ( 2 ) ( 5,323 ) Shares and options issued under stock plans 5,576 — — 117,169 7 5,569 Balance - March 31, 2025 1,208,701 1,034,546 ( 2,263 ) 32,611,544 2,175 174,243 Net earnings 38,278 38,278 — — — — Other comprehensive income 43,775 — 43,775 — — — Repurchases of common stock, including excise tax ( 33,348 ) — — ( 204,965 ) ( 13 ) ( 33,335 ) Shares and options issued under stock plans 10,507 — — 48,975 3 10,504 Balance - June 30, 2025 $ 1,267,913 $ 1,072,824 $ 41,512 32,455,554 $ 2,165 $ 151,412 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents BALCHEM CORPORATION Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (unaudited) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net earnings $ 84,900 $ 75,331 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 24,711 22,417 Stock compensation expense 11,277 9,648 Deferred income taxes ( 354 ) ( 124 ) Provision for (recovery of) credit losses 274 ( 108 ) Unrealized loss (gain) on foreign currency transactions and deferred compensation 688 ( 843 ) Loss (gain) on disposal of assets and asset impairment 492 ( 117 ) Changes in assets and liabilities Accounts receivable ( 6,452 ) ( 13,262 ) Inventories ( 31,434 ) ( 13,074 ) Prepaid expenses and other current assets 1,935 ( 618 ) Accounts payable and accrued expenses 4,823 8,682 Income taxes ( 4,832 ) ( 4,410 ) Other 744 187 Net cash provided by operating activities 86,772 83,709 Cash flows from investing activities: Capital expenditures and intangible assets acquired ( 17,138 ) ( 12,372 ) Cash paid for acquisitions, net of cash acquired — ( 323 ) Proceeds from sale of assets 7 267 Investment in affiliates ( 95 ) ( 105 ) Net cash used in investing activities ( 17,226 ) ( 12,533 ) Cash flows from financing activities: Proceeds from revolving loan 80,000 63,000 Principal payments on revolving loan ( 92,000 ) ( 63,000 ) Principal payments on finance leases ( 102 ) ( 97 ) Proceeds from stock options exercised 7,742 6,222 Dividends paid ( 30,772 ) ( 28,265 ) Repurchases of common stock ( 44,484 ) ( 38,589 ) Net cash used in financing activities ( 79,616 ) ( 60,729 ) Effect of exchange rate changes on cash ( 1,326 ) 5,465 (Decrease) increase in cash and cash equivalents ( 11,396 ) 15,912 Cash and cash equivalents beginning of period 74,570 49,515 Cash and cash equivalents end of period $ 63,174 $ 65,427 See accompanying notes to condensed consolidated financial statements. 7 Table of Contents BALCHEM CORPORATION Notes to Condensed Consolidated Financial Statements (Unaudited) (All dollar amounts in thousands, except share and per share data) NOTE 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in the December 31, 2025 consolidated financial statements, and should be read in conjunction with the consolidated financial statements and notes, which appear in the Annual Report on Form 10-K for the year ended December 31, 2025. The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company" or "Balchem"). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the unaudited condensed consolidated financial statements furnished in this Form 10-Q include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal, recurring nature. The condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”) governing interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934 (the "Exchange Act") and therefore do not include some information and notes necessary to conform to annual reporting requirements. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the operating results expected for the full year or any interim period. Certain reclassifications have been made to prior period amounts to conform with the current period's presentation. Recent Accounting Pronouncements Recently Issued Accounting Standards In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, "Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)." The new guidance is intended to enhance transparency and disclosures by requiring public entities to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. While the adoption of ASU 2024-03 is not expected to have an effect on our consolidated financial statements, it is expected to result in incremental disclosures within the notes to our consolidated financial statements. NOTE 2 - STOCKHOLDERS' EQUITY Stock-Based Compensation The Company’s results for the three and six months ended June 30, 2026 and 2025 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings: Increase/(Decrease) for the Increase/(Decrease) for the Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of sales $ 647 $ 536 $ 1,178 $ 974 Operating expenses 5,274 5,302 10,099 8,674 Net earnings ( 4,580 ) ( 4,577 ) ( 8,700 ) ( 7,506 ) The Company's omnibus incentive plan ("the Plan") allows for the granting of stock awards and options to purchase common stock. Both incentive stock options and nonqualified stock options can be awarded under the plan. The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises. As of June 30, 2026, the Plan had 505,548 shares available for future awards. 8 Table of Contents Accounting Standards Codification ("ASC") 718, "Compensation-Stock Compensation", requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The weighted average fair values of the stock options granted under the Plan were calculated using either the Black-Scholes model or the Binomial model, whichever was deemed to be most appropriate. For the six months ended June 30, 2026, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions: Six Months Ended June 30, 2026 2025 Dividend yields 0.5 % 0.6 % Expected volatilities 23.5 % 26.0 % Risk-free interest rates 3.8 % 4.5 % Expected lives 5.2 years 5.2 years Option activity for the six months ended June 30, 2026 and 2025 is summarized below: For the Six Months Ended June 30, 2026 Shares (000s) Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Term Outstanding as of December 31, 2025 900 $ 120.48 $ 29,888 5.2 Granted 71 178.68 Exercised ( 77 ) 100.34 Forfeited ( 1 ) 143.43 Canceled ( 2 ) 139.31 Outstanding as of June 30, 2026 891 $ 126.79 $ 38,255 5.3 Exercisable as of June 30, 2026 642 $ 115.27 $ 34,455 4.3 For the Six Months Ended June 30, 2025 Shares (000s) Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Term Outstanding as of December 31, 2024 962 $ 114.81 $ 46,346 5.8 Granted 51 159.18 Exercised ( 68 ) 91.48 Forfeited — — Canceled — — Outstanding as of June 30, 2025 945 $ 118.88 $ 38,084 5.6 Exercisable as of June 30, 2025 638 $ 106.87 $ 33,375 4.4 Other information pertaining to option activity during the three and six months ended June 30, 2026 and 2025 is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Weighted-average fair value of options granted $ — $ — $ 48.90 $ 48.86 Total intrinsic value of stock options exercised ($000s) $ 813 $ 3,370 $ 5,567 $ 4,759 The Company has Restricted Stock Grant Agreements with the Company's non–employee directors and certain employees, which are subject to time-based vesting requirements. The value of the restricted shares is based on the fair value of the award at the date of grant. 9 Table of Contents Non-vested restricted stock activity for the six months ended June 30, 2026 and 2025 is summarized below: Six Months Ended June 30, 2026 2025 Shares (000s) Weighted Average Grant Date Fair Value Shares (000s) Weighted Average Grant Date Fair Value Non-vested balance as of December 31 147 $ 150.15 122 $ 141.62 Granted 62 177.50 54 159.14 Vested ( 51 ) 144.89 ( 30 ) 137.83 Forfeited ( 5 ) 154.65 ( 1 ) 145.96 Non-vested balance as of June 30 153 $ 162.86 145 $ 148.91 The Company also has performance share (“PS”) awards, which provide the recipients the right to receive a certain number of shares of the Common Stock in the future, subject to certain performance hurdles, depending on the date of the grant: (1) an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period (typically three years ), (2) a relative total shareholder return (“TSR”) market condition where vesting is dependent upon the Company’s TSR performance over the performance period (typically three years ) relative to a comparator group consisting of the Russell 2000 index constituents, or (3) an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period (typically three years) and modified based on the Company's TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents. Expense is measured based on the fair value of the grant at the date of grant. A Monte-Carlo simulation has been used to estimate the fair value using the following assumptions: Six Months Ended June 30, 2026 2025 Dividend yields — % — % Expected volatilities 22.8 % 25.5 % Risk-free interest rates 3.5 % 4.3 % Initial TSR's 16.0 % - 8.8 % Non-vested performance share activity for the six months ended June 30, 2026 and 2025 is summarized below: Six Months Ended June 30, 2026 2025 Shares (000s) Weighted Average Grant Date Fair Value Shares (000s) Weighted Average Grant Date Fair Value Non-vested balance as of December 31 81 $ 160.14 79 $ 150.73 Granted 50 173.60 50 147.96 Vested ( 35 ) 148.64 ( 44 ) 130.29 Forfeited — — ( 4 ) 152.69 Non-vested balance as of June 30 96 $ 171.52 81 $ 160.14 As of June 30, 2026 and 2025, there were $ 30,954 and $ 26,849 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans. As of June 30, 2026, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.55 years. The Company estimates that share-based compensation expense for the year ended December 31, 2026 will be $ 21,291 . 10 Table of Contents Repurchases of Common Stock On December 9, 2025, the Company's Board of Directors approved a 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 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. Since the inception of the December 2025 program, a total of 342,788 shares have been repurchased. During the six months ended June 30, 2026 and 2025, the Company purchased 273,129 and 237,834 shares, respectively, from open market purchases and 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. These shares were purchased at an average cost of $ 163.15 and $ 162.25 per share, respectively. The Company records the applicable excise taxes payable related to repurchases of our common stock as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in "Other accrued liabilities" on our condensed consolidated balance sheet. The excise tax payable was $ 161 and $ 779 as of June 30, 2026 and December 31, 2025, respectively. NOTE 3 – INVENTORIES Inventories, net of reserves at June 30, 2026 and December 31, 2025 consisted of the following: June 30, 2026 December 31, 2025 Raw materials $ 52,217 $ 41,858 Work in progress 7,018 6,527 Finished goods 102,316 83,064 Total inventories $ 161,551 $ 131,449 On a regular basis, the Company evaluates its inventory balances for excess quantities and obsolescence by analyzing demand, inventory on hand, sales levels and other information. Based on these evaluations, inventory balances are reserved, if necessary. The reserve for inventory was $ 4,451 and $ 3,414 at June 30, 2026 and December 31, 2025, respectively. NOTE 4 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at June 30, 2026 and December 31, 2025 are summarized as follows: June 30, 2026 December 31, 2025 Land $ 12,247 $ 12,428 Building 141,513 116,395 Equipment 360,187 340,322 Construction in progress 60,700 95,229 574,647 564,374 Less: accumulated depreciation 269,945 257,726 Property, plant and equipment, net $ 304,702 $ 306,648 NOTE 5 - INTANGIBLE ASSETS The Company had goodwill in the amount of $ 808,809 and $ 816,375 as of June 30, 2026 and December 31, 2025, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is due to foreign currency translation adjustments. 11 Table of Contents Identifiable intangible assets with finite lives at June 30, 2026 and December 31, 2025 are summarized as follows: Amortization Period (in years) Gross Carrying Amount at June 30, 2026 Accumulated Amortization at June 30, 2026 Gross Carrying Amount at December 31, 2025 Accumulated Amortization at December 31, 2025 Customer relationships and lists 10 - 20 $ 366,663 $ 242,935 $ 370,763 $ 237,769 Trademarks and trade names 2 - 17 51,591 43,823 52,256 43,655 Developed technology 5 - 12 41,818 24,452 42,385 23,415 Other 2 - 18 25,532 22,751 25,178 22,454 Other intangible assets with finite lives $ 118,941 $ 91,026 $ 119,819 $ 89,524 Amortization of identifiable intangible assets was $ 4,301 and $ 8,700 for the three and six months ended June 30, 2026, respectively, and $ 4,261 and $ 8,321 for the three and six months ended June 30, 2025, respectively. Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $ 8,603 for the remainder of 2026, $ 16,526 for 2027, $ 16,079 for 2028, $ 15,667 for 2029, $ 15,282 for 2030 and $ 15,164 for 2031. At June 30, 2026 and December 31, 2025, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350. Identifiable intangible assets are reflected in "Customer relationships and lists, net" and “Other intangible assets with finite lives, net” on the Company’s condensed consolidated balance sheets. There were no changes to the useful lives of intangible assets subject to amortization during the six months ended June 30, 2026 and 2025. NOTE 6 - EQUITY METHOD INVESTMENT In January 2014, BCP Ingredients, Inc. ("BCP"), a subsidiary of the Company, and Taminco US Inc. (note: Taminco was subsequently acquired by Eastman Chemical Company) formed a joint venture ( 66.66 % / 33.34 % ownership), St. Gabriel CC Company, LLC, to design, develop, and construct an expansion of BCP’s St. Gabriel aqueous choline chloride plant. BCP contributed the St. Gabriel plant, at cost, and all continued expansion and improvements are funded by the owners. The joint venture became operational as of July 1, 2016, at which point, Taminco US Inc. was succeeded by Taminco US LLC. St. Gabriel CC Company, LLC is a Variable Interest Entity (VIE) because the total equity at risk is not sufficient to permit the joint venture to finance its own activities without additional subordinated financial support. Additionally, voting rights ( 2 votes each) are not proportionate to the owners’ obligation to absorb expected losses or receive the expected residual returns of the joint venture. BCP receives the majority of the production offtake capacity, which may be adjusted from time to time to the extent the owners agree as such, and absorbs operating expenses approximately proportional to the actual percentage of offtake. The joint venture is accounted for under the equity method of accounting since BCP is not the primary beneficiary as BCP does not have the power to direct the activities of the joint venture that most significantly impact its economic performance. BCP recognized a loss of $ 126 and $ 250 for the three and six months ended June 30, 2026, respectively, and $ 123 and $ 245 for the three and six months ended June 30, 2025, respectively, relating to its portion of the joint venture's expenses in other expense. BCP made capital contributions to the investment totaling $ 53 and $ 95 for the three and six months ended June 30, 2026, respectively, and $ 75 and $ 105 for the three and six months ended June 30, 2025, respectively. The carrying value of the joint venture at June 30, 2026 and December 31, 2025 was $ 3,562 and $ 3,717 , respectively, and is recorded in "Other non-current assets" on the condensed consolidated balance sheets. NOTE 7 – REVOLVING LOAN On July 27, 2022, the Company entered into an Amended and Restated Credit Agreement (the "2022 Credit Agreement") with certain lenders in the form of a senior secured revolving credit facility, due on July 27, 2027. The 2022 Credit Agreement allows for up to $ 550,000 of borrowing. The loans may be used for working capital, letters of credit, and other corporate purposes and may be drawn upon at the Company’s discretion. As of June 30, 2026 and December 31, 2025, the total balance outstanding on the 2022 Credit Agreement amounted to $ 152,000 and $ 164,000 , respectively. There are no installment payments required on the revolving loans; they may be voluntarily prepaid in whole or in part without premium or penalty, and all outstanding amounts are due on the maturity date. 12 Table of Contents Amounts outstanding under the 2022 Credit Agreement are subject to an interest rate equal to a fluctuating rate as defined by the 2022 Credit Agreement plus an applicable rate. The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the 2022 Credit Agreement, and the interest rate was 4.75 % at June 30, 2026. The Company is also required to pay a commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the 2022 Credit Agreement and ranges from 0.150 % to 0.225 % ( 0.150 % at June 30, 2026). The unused portion of the revolving loan amounted to $ 398,000 at June 30, 2026. The Company is also required to pay, as applicable, letter of credit fees, administrative agent fees, and other fees to the arrangers and lenders. Costs associated with the issuance of the revolving loans are capitalized and amortized on a straight-line basis over the term of the 2022 Credit Agreement, which is not materially different than the effective interest method. Capitalized costs net of accumulated amortization were $ 311 and $ 455 at June 30, 2026 and December 31, 2025, respectively, and are included in "Other non-current assets" on the condensed consolidated balance sheets. Amortization expense pertaining to these costs totaled $ 73 and $ 144 for both the three and six months ended June 30, 2026 and 2025 and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings. The 2022 Credit Agreement contains quarterly covenants requiring the consolidated leverage ratio to be less than a certain maximum ratio and the consolidated interest coverage ratio to exceed a certain minimum ratio. At June 30, 2026, the Company was in compliance with these covenants. Indebtedness under the Company’s loan agreements is secured by assets of the Company. On July 24, 2026, the Company entered into Amendment No. 1 to the 2022 Credit Agreement (the "Credit Agreement Amendment"). The Credit Agreement Amendment increased the aggregate revolving commitment amount from $ 550,000 to $ 650,000 , extended the maturity date of the credit facility from July 27, 2027 to July 24, 2031, and made certain other amendments to the facility terms. The Company used initial proceeds from the Credit Agreement Amendment to repay the outstanding balance of $ 152,000 due in July 2027 under the 2022 Credit Agreement. NOTE 8– NET EARNINGS PER SHARE The following presents a reconciliation of the net earnings and shares used in calculating basic and diluted net earnings per share: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net Earnings - Basic and Diluted $ 44,615 $ 38,278 $ 84,900 $ 75,331 Shares (000s) Weighted Average Common Shares - Basic 31,902 32,354 31,919 32,397 Effect of Dilutive Securities – Stock Options, Restricted Stock, and Performance Shares 298 328 323 347 Weighted Average Common Shares - Diluted 32,200 32,682 32,242 32,744 Net Earnings Per Share - Basic $ 1.40 $ 1.18 $ 2.66 $ 2.33 Net Earnings Per Share - Diluted $ 1.39 $ 1.17 $ 2.63 $ 2.30 The number of anti-dilutive shares were 124,920 and 123,510 for the three and six months ended June 30, 2026, respectively, and 223,890 and 224,070 for the three and six months ended June 30, 2025, respectively. Anti-dilutive shares could potentially dilute basic earnings per share in future periods and therefore, were not included in diluted earnings per share. NOTE 9 – INCOME TAXES The Company’s effective tax rate for the three months ended June 30, 2026 and 2025, was 22.8 % and 21.9 %, respectively. The higher effective tax rate for the quarter was primarily due to lower tax benefits from stock-based compensation . The effective tax rate for the six months ended June 30, 2026 and 2025, was 23.0 % and 22.3 %, respectively. The higher effective tax rate for the six months ended June 30, 2026 was primarily due to an increase in certain state taxes and lower tax benefits from stock-based compensation. 13 Table of Contents On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States whi ch includes a broad range of tax provision. The Company has assessed that the OBBBA will not have a material impact on its estimated annual effective tax rate in 2026. The Company files income tax return s in the U.S. and in various states and foreign countries. As of June 30, 2026, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2021. The Company had $ 6,945 and $ 6,731 of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets, as of June 30, 2026 and December 31, 2025, respectively. The Company includes interest expense or income as well as potential penalties on uncertain tax positions as a component of "Income tax expense" in the condensed consolidated statements of earnings. Total accrued interest and penalties related to uncertain tax positions at June 30, 2026 and December 31, 2025 were $ 2,564 and $ 2,350 , respectively, and are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets. The European Union ("EU") member states formally adopted the EU's Pillar Two Directive on December 15, 2022, which was established by the Organization for Economic Co-operation and Development. Pillar Two generally provides for a 15 percent minimum effective tax rate for the jurisdictions where multinational enterprises operate. While the Company does not anticipate that this will have a material impact on its tax provision or effective tax rate, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates. NOTE 10 – SEGMENT INFORMATION Balchem Corporation reports three reportable segments: Human Nutrition and Health ("HNH"), Animal Nutrition and Health ("ANH"), and Specialty Products ("SP"). Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated". The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer. The CODM receives a profit and loss reporting package which provides segment information including revenue, cost of goods sold, gross margin, total operating expenses, and earnings from operations. The CODM utilizes this monthly profit and loss reporting package to analyze segment performance and appropriately allocate resources. Pursuant to ASU 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures", the significant segment information is summarized as follows: For the Three Months Ended June 30, 2026 HNH ANH SP Other and Unallocated Total Net sales $ 176,894 $ 64,454 $ 40,511 $ 2,138 $ 283,997 Cost of sales 109,873 (1) 50,087 (1) 17,942 (1) 2,412 (1) 180,314 Gross margin 67,021 14,367 22,569 ( 274 ) 103,683 Operating expenses 24,640 (2) 9,140 (3) 9,676 (4) 1,006 (5) 44,462 Earnings from operations 42,381 5,227 12,893 ( 1,280 ) 59,221 Other expenses: Interest expense, net 1,938 Other income, net ( 498 ) 1,440 Earnings before income tax expense 57,781 Income tax expense 13,166 Net earnings $ 44,615 14 Table of Contents (1) Cost of sales are primarily comprised of raw materials consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and other overhead expenses necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight and duty costs, outbound freight costs for shipping products to customers, warehousing costs, quality control and obsolescence expense. (2) Operating expenses within HNH are primarily comprised of compensation-related costs, professional services, including advertising and marketing costs, and amortization expense in connection with certain acquired intangible assets. (3) Operating expenses within ANH are primarily comprised of compensation-related costs and professional services, including advertising and marketing costs. (4) Operating expenses within SP are primarily comprised of compensation-related costs, professional services, and amortization expense in connection with certain acquired intangible assets. (5) Operating expenses within Other and Unallocated are primarily comprised of compensation-related costs. For the Six Months Ended June 30, 2026 HNH ANH SP Other and Unallocated Total Net sales $ 348,522 $ 126,643 $ 75,238 $ 4,303 $ 554,706 Cost of sales 215,645 (6) 97,287 (6) 32,206 (6) 4,801 (6) 349,939 Gross margin 132,877 29,356 43,032 ( 498 ) 204,767 Operating expenses 50,476 (7) 18,437 (8) 18,204 (9) 2,803 (10) 89,920 Earnings from operations 82,401 10,919 24,828 ( 3,301 ) 114,847 Other expenses: Interest expense, net 4,151 Other expense, net 393 4,544 Earnings before income tax expense 110,303 Income tax expense 25,403 Net earnings $ 84,900 (6) Cost of sales are primarily comprised of raw materials consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and other overhead expenses necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight and duty costs, outbound freight costs for shipping products to customers, warehousing costs, quality control and obsolescence expense. (7) Operating expenses within HNH are primarily comprised of compensation-related costs, professional services, including advertising and marketing costs, and amortization expense in connection with certain acquired intangible assets. (8) Operating expenses within ANH are primarily comprised of compensation-related costs and professional services, including advertising and marketing costs. (9) Operating expenses within SP are primarily comprised of compensation-related costs, professional services, and amortization expense in connection with certain acquired intangible assets. (10) Operating expenses within Other and Unallocated are primarily comprised of compensation-related costs and transaction and integration costs. 15 Table of Contents For the Three Months Ended June 30, 2025 HNH ANH SP Other and Unallocated Total Net sales $ 160,773 $ 56,028 $ 37,185 $ 1,481 $ 255,467 Cost of sales 99,467 (11) 44,486 (11) 16,571 (11) 1,830 (11) 162,354 Gross margin 61,306 11,542 20,614 ( 349 ) 93,113 Operating expenses 22,964 (12) 8,028 (13) 9,345 (14) 1,334 (15) 41,671 Earnings from operations 38,342 3,514 11,269 ( 1,683 ) 51,442 Other expenses: Interest expense, net 2,766 Other income, net ( 335 ) 2,431 Earnings before income tax expense 49,011 Income tax expense 10,733 Net earnings $ 38,278 (11) Cost of sales are primarily comprised of raw materials consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and other overhead expenses necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight and duty costs, outbound freight costs for shipping products to customers, warehousing costs, quality control and obsolescence expense. (12) Operating expenses within HNH are primarily comprised of compensation-related costs, professional services, including advertising and marketing costs, and amortization expense in connection with certain acquired intangible assets. (13) Operating expenses within ANH are primarily comprised of compensation-related costs and professional services, including advertising and marketing costs. (14) Operating expenses within SP are primarily comprised of compensation-related costs, professional services, and amortization expense in connection with certain acquired intangible assets. (15) Operating expenses within Other and Unallocated are primarily comprised of compensation-related costs and transaction and integration costs. For the Six Months Ended June 30, 2025 HNH ANH SP Other and Unallocated Total Net sales $ 319,230 $ 113,305 $ 70,460 $ 2,991 $ 505,986 Cost of sales 198,850 (16) 89,403 (16) 32,557 (16) 3,895 (16) 324,705 Gross margin 120,380 23,902 37,903 ( 904 ) 181,281 Operating expenses 44,064 (17) 15,152 (18) 17,049 (19) 2,559 (20) 78,824 Earnings from operations 76,316 8,750 20,854 ( 3,463 ) 102,457 Other expenses: Interest expense, net 5,690 Other income, net ( 184 ) 5,506 Earnings before income tax expense 96,951 Income tax expense 21,620 Net earnings $ 75,331 16 Table of Contents (16) Cost of sales are primarily comprised of raw materials consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and other overhead expenses necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight and duty costs, outbound freight costs for shipping products to customers, warehousing costs, quality control and obsolescence expense. (17) Operating expenses within HNH are primarily comprised of compensation-related costs, professional services, including advertising and marketing costs, and amortization expense in connection with certain acquired intangible assets. (18) Operating expenses within ANH are primarily comprised of compensation-related costs and professional services, including advertising and marketing costs. (19) Operating expenses within SP are primarily comprised of compensation-related costs, professional services, and amortization expense in connection with certain acquired intangible assets. (20) Operating expenses within Other and Unallocated are primarily comprised of compensation-related costs and transaction and integration costs. Business Segment Assets June 30, 2026 December 31, 2025 Human Nutrition and Health $ 1,249,206 $ 1,243,522 Animal Nutrition and Health 184,755 176,608 Specialty Products 168,224 172,076 Other and Unallocated (21) 84,819 94,046 Total $ 1,687,004 $ 1,686,252 (21) Other and Unallocated assets consist of certain cash, capitalized loan issuance costs, other assets, investments, and income taxes, which the Company does not allocate to its individual business segments. It also includes assets associated with a few minor businesses which individually do not meet the quantitative thresholds for separate presentation. Depreciation/Amortization Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Human Nutrition and Health $ 8,471 $ 7,544 $ 17,118 $ 14,847 Animal Nutrition and Health 1,841 1,829 3,700 3,590 Specialty Products 1,674 1,796 3,429 3,522 Other and Unallocated 234 234 464 458 Total $ 12,220 $ 11,403 $ 24,711 $ 22,417 Capital Expenditures Six Months Ended June 30, 2026 2025 Human Nutrition and Health $ 7,939 $ 6,026 Animal Nutrition and Health 7,168 4,424 Specialty Products 1,422 1,685 Other and Unallocated 174 107 Total $ 16,703 $ 12,242 17 Table of Contents NOTE 11 – REVENUE The following table presents revenues disaggregated by revenue source: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Product Sales Revenue $ 283,363 $ 255,041 $ 553,579 $ 505,102 Royalty Revenue 634 426 1,127 884 Total Revenue $ 283,997 $ 255,467 $ 554,706 $ 505,986 The following table presents revenues disaggregated by geography, based on customers' delivery addresses: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 United States $ 205,193 $ 186,706 $ 402,575 $ 372,428 Foreign Countries 78,804 68,761 152,131 133,558 Total Revenue $ 283,997 $ 255,467 $ 554,706 $ 505,986 NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the six months ended June 30, 2026 and 2025 for income taxes and interest is as follows: Six Months Ended June 30, 2026 2025 Income taxes $ 29,184 $ 26,263 Interest $ 4,342 $ 5,903 NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in accumulated other comprehensive income (loss) were as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net foreign currency translation adjustment (1) $ ( 4,534 ) $ 43,776 $ ( 14,636 ) $ 65,498 Net change in postretirement benefit plan (see Note 14 for further information) Amortization of gain ( 10 ) ( 1 ) ( 21 ) ( 3 ) Prior service loss (gain) arising during the period — — 411 ( 319 ) Total before tax ( 10 ) ( 1 ) 390 ( 322 ) Tax 4 — ( 92 ) 83 Net of tax ( 6 ) ( 1 ) 298 ( 239 ) Total other comprehensive (loss) income $ ( 4,540 ) $ 43,775 $ ( 14,338 ) $ 65,259 (1) Includes losses of $ 95 and gains of $ 1,734 on intra-entity foreign currency transactions for the three and six months ended June 30, 2026, respectively, and gains of $ 2,184 and $ 5,301 for the three and six months ended June 30, 2025, respectively. 18 Table of Contents Accumulated other comprehensive income (loss) at June 30, 2026 and December 31, 2025 consisted of the following: Foreign currency translation adjustment Postretirement benefit plan Total Balance December 31, 2025 $ 41,353 $ 194 $ 41,547 Other comprehensive (loss) income ( 14,636 ) 298 ( 14,338 ) Balance June 30, 2026 $ 26,717 $ 492 $ 27,209 NOTE 14 – EMPLOYEE BENEFIT PLANS Defined Contribution Plans The Company sponsors one 401(k) savings plan for eligible employees, which allows participants to make pretax or after tax contributions, and the Company matches certain percentages of those contributions with shares of the Company’s Common Stock. The plan also has a discretionary profit sharing portion. All amounts contributed to the plan are deposited into a trust fund administered by independent trustees. The Company also sponsors various defined contribution plans for employees working in our foreign operations and matches certain employee contributions. These contributions are deposited into trust funds administered by independent trustees. Postretirement Medical Plans The Company provides postretirement benefits in the form of two unfunded postretirement medical plans; one that is under a collective bargaining agreement and covers eligible retired employees of the Verona facility and one for officers of the Company pursuant to the Balchem Corporation Officer Retiree Program. Net periodic benefit costs for such retirement medical plans were as follows: Six Months Ended June 30, 2026 2025 Service cost $ 46 $ 58 Interest cost 26 35 Amortization of gain ( 27 ) ( 5 ) Net periodic benefit cost $ 45 $ 88 T he amounts record ed for these obligations on the Company’s condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 are $ 1,128 and $ 1,122 , respectively, and are included in "Other long-term obligations" on the Company's condensed consolidated balance sheets. These plans are unfunded and approved claims are paid from Company funds. Historical cash payments made under such plans have typically been less than $ 200 per year. Defined Benefit Pension Plan The Company provides an unfunded defined benefit pension plan for employees working in Belgium. The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees. The amounts recorded for these obligations on the Company's condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 were $ 911 and $ 869 , respectively, and were included in "Other long-term obligations" on the Company's condensed consolidated balance sheets. 19 Table of Contents Net periodic benefit costs for such benefit pension plan were as follows: Six Months Ended June 30, 2026 2025 Service cost with interest to end of year $ 112 $ 107 Interest cost 52 40 Expected return on plan assets ( 33 ) ( 29 ) Amortization of loss 6 2 Total net periodic benefit cost $ 137 $ 120 Deferred Compensation Plan The Company provides 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, and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company. The Company may, at its discretion, provide matching contributions to eligible employee deferred compensation contributions, with no obligation to make such contributions in future periods. The deferred compensation liability was $ 14,095 as of June 30, 2026, of which $ 14,070 was included in "Other long-term obligations" and $ 25 was included in "Accrued compensation and other benefits" on the Company's condensed 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 the Company’s consolidated balance sheets. The related assets of the irrevocable trust funds (also known as "rabbi trust funds") were $ 14,084 as of June 30, 2026, of which $ 14,059 was included in "Other non-current assets" and $ 25 was included in "Other current assets" on the Company's condensed consolidated balance sheet. The rabbi trust funds were $ 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 condensed consolidated balance sheets. NOTE 15 – COMMITMENTS AND CONTINGENCIES The Company is obligated to make rental payments under non-cancelable operating and finance leases. Aggregate future minimum rental payments required under these leases at December 31, 2025 are disclosed in Note 18, Leases . The Company’s Verona, Missouri facility, while held by a prior owner, Syntex Agribusiness, Inc. (“Syntex”), was designated by the U.S. Environmental Protection Agency (the "EPA") as a Superfund site and placed on the National Priorities List in 1983 because of dioxin contamination on portions of the site. Remediation was conducted by Syntex under the oversight of the EPA and the Missouri Department of Natural Resources. The Company is indemnified by the sellers under its May 2001 asset purchase agreement covering its acquisition of the Verona, Missouri facility for potential liabilities associated with the Superfund site. One of the sellers, in turn, has the benefit of certain contractual indemnification by Syntex in relation to the implementation of the above-described Superfund remedy. In June 2023, in response to a Special Notice Letter received from the EPA in 2022, BCP Ingredients, Inc. ("BCP"), the Company's subsidiary that owns and operates the site, Syntex, EPA, and the State of Missouri entered into an Administrative Settlement Agreement and Order on Consent (“ASAOC”) for a focused remedial investigation/feasibility study ("RI/FS") under which (a) BCP will conduct a source investigation of potential source(s) of releases of 1,4-dioxane and chlorobenzene at a portion of the site and (b) BCP and Syntex will complete a RI/FS to determine a potential remedy, if any is required. Activities under the ASAOC are underway and are expected to continue for some period of time. Separately, in June 2022, the EPA conducted an inspection of BCP’s Verona, Missouri facility (“2022 EPA Inspection”) which was followed by BCP entering into an Administrative Order for Compliance on Consent (“AOC”) with the EPA in relation to its risk management program at the Verona facility. Further, in January 2023, BCP entered into an Amended AOC with the EPA whereby the parties agreed to the extension of certain timelines. BCP timely completed all requirements under the Amended AOC. In November 2023, BCP received a notice from the Environment and Natural Resources Division of the U.S Department of Justice (“DOJ”) primarily related to the 2022 EPA Inspection, which extended the opportunity to discuss alleged violations of Sections 112(r)(7) of the Clean Air Act and regulations in 40 C.F.R. Part 68, commonly known as the Risk Management Plan Rule (“RMP Rule”). BCP participated in such discussions during 2024, and in December 2024, BCP reached a settlement with the EPA and DOJ to resolve these alleged violations. Pursuant to the settlement, which was entered into on January 31, 2025, BCP agreed to: (a) pay a $ 300 civil penalty; (b) complete a new scrubber system project; and (c) spend $ 350 to implement projects benefiting the surrounding community, such as emergency equipment for the local fire department and two vehicles to be used as mobile health clinics. The amount associated with this settlement was consistent with the amount previously accrued as a loss contingency. BCP has completed most of its obligations under this settlement and will continue to take steps to timely complete any remaining items. 20 Table of Contents In addition to the above, from time to time, the Company is a party to various legal proceedings, litigation, claims and assessments. While it is not possible to predict the ultimate disposition of each of these matters, management believes that the ultimate outcome of such matters will not have a material effect on the Company's consolidated financial position, results of operations, liquidity or cash flows. NOTE 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has a number of financial instruments, none of which are held for trading purposes. The Company estimates that the fair value of all financial instruments at June 30, 2026 and December 31, 2025 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The following fair value hierarchy is used to classify assets and liabilities and the table below presents the carrying amounts and the estimated fair values of the Company's financial assets and liabilities measured on a recurring basis as defined by ASC 820, "Fair Value Measurement." • Level 1 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. • Level 2 - Inputs include observable inputs other than quoted prices in active markets. • Level 3 - Inputs are unobservable inputs for which there is little or no market data available. Carrying Amount Fair Value Measurements Level 1 Level 2 Level 3 June 30, 2026 Assets: Money market funds (1) $ 1,517 $ 1,517 $ — $ — Rabbi trust funds - current (2) 25 25 — — Rabbi trust funds - non-current (2) 14,059 14,059 — — December 31, 2025 Assets: Money market funds (1) $ 1,464 $ 1,464 $ — $ — Rabbi trust funds - current (2) 25 25 — — Rabbi trust funds - non-current (2) 12,773 12,773 — — (1) Money market funds are categorized as cash equivalents. (2) Rabbi trust funds - current and Rabbi trust funds - non-current are included in "Other current assets" and "Other non-current assets" on the consolidated balance sheets, respectively. The Company’s financial instruments also include accounts receivable, accounts payable, and accrued liabilities, which are carried at cost and approximate fair value due to the short-term maturity of these instruments. The carrying value of debt approximates fair value based upon prices of identical or similar instruments in the marketplace, which are considered Level 2 inputs. NOTE 17 – RELATED PARTY TRANSACTIONS The Company provides services under a contractual agreement to St. Gabriel CC Company, LLC. These services include accounting, information technology, quality control, and purchasing services, as well as operation of the St. Gabriel CC Company, LLC plant. The Company also sells raw materials to St. Gabriel CC Company, LLC. These raw materials are used in the production of finished goods that are, in turn, sold by Saint Gabriel CC Company, LLC to the Company for resale to unrelated parties. As such, the sale of these raw materials to St. Gabriel CC Company, LLC in this scenario lacks economic substance and therefore the Company does not include them in net sales within the condensed consolidated statements of earnings. 21 Table of Contents Payments for the services the Company provided amounted to $ 1,172 and $ 2,289 for the three and six months ended June 30, 2026, respectively, and $ 1,212 and $ 2,339 for the three and six months ended June 30, 2025, respectively. The raw materials purchased and subsequently sold amounted to $ 11,501 and $ 21,452 for the three and six months ended June 30, 2026, respectively, and $ 10,821 and $ 20,746 for the three and six months ended June 30, 2025, respectively. These services and raw materials are primarily recorded in cost of goods sold, net of the finished goods received from St. Gabriel CC Company, LLC of $ 9,103 and $ 17,148 during the three and six months ended June 30, 2026, respectively, and $ 8,983 and $ 16,901 for the three and six months ended June 30, 2025, respectively. At June 30, 2026 and December 31, 2025, the Company had receivables of $ 4,232 and $ 4,225 , respectively, recorded in accounts receivable from St. Gabriel CC Company, LLC for services rendered and raw materials sold. At June 30, 2026 and December 31, 2025, the Company had payables of $ 2,888 and $ 3,369 , respectively, recorded in accounts payable for finished goods received from St. Gabriel CC Company, LLC. The Company had payables in the amount of $ 296 related to non-contractual monies owed to St. Gabriel CC Company, LLC, recorded in accounts payable as of both June 30, 2026 and December 31, 2025. NOTE 18 – LEASES The Company has both real estate leases and equipment leases. The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio. The Company's borrowing history shows that interest rates of a term loan or a line of credit depend on the duration of the loan rather than the nature of the assets purchased by those funds. Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms. Based on the Company's risk rating, the Company applied the following discount rates for new leases entered into during the second quarter of 2026: (1) 1 - 2 years, 4.96 % (2) 3 - 4 years, 5.55 % (3) 5 - 9 years, 5.89 % and (4) 10 + years, 6.61 %. Right of use assets and lease liabilities at June 30, 2026 and December 31, 2025 are summarized as follows: Right of use assets June 30, 2026 December 31, 2025 Operating leases $ 12,703 $ 14,672 Finance leases 1,417 1,520 Total $ 14,120 $ 16,192 Lease liabilities - current June 30, 2026 December 31, 2025 Operating leases $ 3,172 $ 3,614 Finance leases 210 205 Total $ 3,382 $ 3,819 Lease liabilities - non-current June 30, 2026 December 31, 2025 Operating leases $ 9,895 $ 11,324 Finance leases 1,438 1,544 Total $ 11,333 $ 12,868 22 Table of Contents For the three and six months ended June 30, 2026 and 2025, the Company's total lease costs were as follows, which included amounts recognized in earnings, amounts capitalized on the balance sheets, and the cash flows arising from lease transactions: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Lease Cost Operating lease cost $ 1,260 $ 1,368 $ 2,562 $ 2,693 Finance lease cost Amortization of ROU asset 53 52 105 104 Interest on lease liabilities 21 24 43 48 Total finance lease 74 76 148 152 Total lease cost $ 1,334 $ 1,444 $ 2,710 $ 2,845 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,270 $ 1,385 $ 2,573 $ 2,742 Operating cash flows from finance leases 21 24 43 48 Financing cash flows from finance leases 51 48 102 97 $ 1,342 $ 1,457 $ 2,718 $ 2,887 Right-of-use assets obtained in exchange for new operating lease liabilities, net of right-of-use assets disposed $ 87 $ 655 $ 220 $ 1,857 Weighted-average remaining lease term - operating leases 5.57 years 8.76 years 5.57 years 8.76 years Weighted-average remaining lease term - finance leases 6.75 years 7.86 years 6.75 years 7.86 years Weighted-average discount rate - operating leases 7.1 % 7.6 % 7.1 % 7.6 % Weighted-average discount rate - finance leases 5.1 % 5.1 % 5.1 % 5.1 % Rent expense charged to operations under operating lease agreements for the three and six months ended June 30, 2026 aggregated to approximately $ 1,260 and $ 2,562 , respectively, and $ 1,368 and $ 2,693 for the three and six months ended June 30, 2025, respectively. Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at June 30, 2026 are as follows: Year July 1, 2026 to December 31, 2026 $ 2,405 2027 3,734 2028 2,944 2029 2,521 2030 2,065 2031 1,826 Thereafter 2,539 Total undiscounted lease payments 18,034 Less: Present value adjustment ( 3,319 ) Present value of lease liabilities $ 14,715 23 Table of Contents