What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-07-29 · 266 added, 184 removed, 654 unchanged (41% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share and per share data)

Assets June 30, 2022 (unaudited) December 31, 2021

Assets September 30, 2022 (unaudited) December 31, 2021

Current assets:

Cash and cash equivalents $ 56,489 $ 103,239

Accounts receivable, net of allowance for doubtful accounts of $ 1,203 and $ 928 at June 30, 2022 and December 31, 2021 respectively

Accounts receivable, net of allowance for doubtful accounts of $ 1,186 and $ 928 at September 30, 2022 and December 31, 2021 respectively

140,812 117,408

1 unchanged sentence

Prepaid expenses 6,944 6,116

Prepaid income taxes 3,954 —

Derivative assets 14,540 —

23 unchanged sentences

Derivative liabilities — 2,658

Contingent consideration liability 24,793 —

Contingent consideration liabilities 30,547 —

Other long-term obligations 14,873 13,712

7 unchanged sentences

Authorized 120,000,000 shares;

32,120,593 and 32,287,150 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

32,134,902 and 32,287,150 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 124,558 147,716

Retained earnings 816,089 732,138

Accumulated other comprehensive income ( 12,424 ) ( 4,993 )

Accumulated other comprehensive loss ( 46,869 ) ( 4,993 )

Total stockholders' equity 895,922 877,015

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

10 unchanged sentences

Interest expense, net 3,642 556 5,147 1,889

Other (income) expense, net ( 298 ) ( 34 ) ( 137 ) ( 167 )

Other income, net ( 1,102 ) ( 128 ) ( 1,239 ) ( 295 )

2,540 428 3,908 1,594

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Other comprehensive income (loss) ( 34,445 ) ( 3,010 ) ( 41,876 ) ( 6,751 )

Comprehensive income $ 23,647 $ 24,614 $ 51,281 $ 42,401

Comprehensive (loss) income $ ( 9,196 ) $ 22,003 $ 42,085 $ 64,404

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and six months ended June 30, 2022 and 2021

For the three and nine months ended September 30, 2022 and 2021

(Dollars in thousands, except share and per share data)

17 unchanged sentences

Balance - June 30, 2022 901,370 790,840 ( 12,424 ) 32,120,593 2,143 120,811

Net earnings 25,249 25,249 — — — —

Other comprehensive (loss) ( 34,445 ) — ( 34,445 ) — — —

Repurchases of common stock ( 46 ) — — ( 361 ) — ( 46 )

Shares and options issued under stock plans 3,794 — — 14,670 1 3,793

Balance - September 30, 2022 $ 895,922 $ 816,089 $ ( 46,869 ) 32,134,902 $ 2,144 $ 124,558

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (continued)

For the three and nine months ended September 30, 2022 and 2021

(Dollars in thousands, except share and per share data)

Stockholders'

Equity Retained

Earnings Accumulated

Comprehensive

(Loss) Income Common Stock Additional

Shares Amount

Balance - December 31, 2020 $ 828,233 $ 656,740 $ 4,173 32,372,621 $ 2,160 $ 165,160

9 unchanged sentences

Balance - June 30, 2021 869,642 702,882 432 32,404,774 2,162 164,166

Net earnings 25,013 25,013 — — — —

Other comprehensive (loss) ( 3,010 ) — ( 3,010 ) — — —

Repurchases of common stock ( 7,926 ) — ( 61,075 ) ( 4 ) ( 7,922 )

Shares and options issued under stock plans 5,359 — — 38,938 3 5,356

Balance - September 30, 2021 $ 889,078 $ 727,895 $ ( 2,578 ) 32,382,637 $ 2,161 $ 161,600

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

5 unchanged sentences

Provision for doubtful accounts 379 105

Unrealized loss/(gain) on foreign currency transaction and deferred compensation 188 ( 401 )

Unrealized gain on foreign currency transaction and deferred compensation ( 1,262 ) ( 534 )

Asset impairment charge 23 —

9 unchanged sentences

Cash flows from investing activities:

Cash paid for acquisition, net of cash acquired ( 295,660 ) —

Cash paid for acquisitions, net of cash acquired ( 365,780 ) —

Capital expenditures and intangible assets acquired ( 35,793 ) ( 22,391 )

Proceeds from sale of assets 197 240

Proceeds from insurance and sale of assets 198 1,272

Investment in affiliates ( 150 ) —

4 unchanged sentences

Principal payments on acquired debt ( 30,782 ) —

Cash paid for financing costs ( 1,232 ) —

Principal payments on finance lease ( 125 ) ( 118 )

4 unchanged sentences

Effect of exchange rate changes on cash ( 10,186 ) ( 3,229 )

Decrease in cash and cash equivalents ( 27,056 ) ( 4,669 )

(Decrease) increase in cash and cash equivalents ( 46,750 ) 5,442

Cash and cash equivalents beginning of period 103,239 84,571

5 unchanged sentences

The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in the December 31, 2021 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, 2021.

The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company").

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.

4 unchanged sentences

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, 2022 are not necessarily indicative of the operating results expected for the full year or any interim period.

The results of operations for the three and nine months ended September 30, 2022 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.

10 unchanged sentences

The Company adopted the Standard Update in 2021.

The adoption of the Standard update did not have a significant impact on the Company's consolidated financial statements and disclosures.

Due to the discontinuation of LIBOR and under the relief provided by Topic 848, during the third quarter of 2022, the Company modified its existing interest rate swap and replaced LIBOR with 1-month CME Term SOFR (see Note 20, "Derivative Instruments and Hedging Activities ").

The modification of the agreement did not have a significant impact on the Company's consolidated financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):

5 unchanged sentences

NOTE 2 – SIGNIFICANT ACQUISITIONS

On June 21, 2022, Balchem and its wholly-owned subsidiary, Balchem B.V., completed the acquisition of Kechu BidCo AS and its subsidiary companies, including Kappa Bioscience AS, a leading science-based manufacturer of specialty vitamin K2 for the human nutrition industry, headquartered in Oslo, Norway (all acquired companies being hereinafter collectively referred to as “Kappa”).

Cardinal Associates Inc.

("Bergstrom")

On August 30, 2022, the Company's wholly-owned subsidiary Albion Laboratories, Inc.

("Albion") entered into a Stock Purchase Agreement, and closed on such transaction with Cardinal Associates Inc.

("Cardinal"), a corporation organized under the laws of the State of Washington, pursuant to which Albion acquired Cardinal and its Bergstrom Nutrition business (collectively, "Bergstrom").

Bergstrom Nutrition is a leading science-based manufacturer of methylsulfonylmethane (MSM), based in Vancouver, Washington.

MSM is a widely used nutritional ingredient with strong scientific evidence supporting its benefits for joint health, sports nutrition, skin and beauty, healthy aging, and pet health.

Bergstrom Nutrition's MSM brand "OptiMSM ® " delivers the highest quality and purity MSM on the market and is the only brand of MSM with a U.S.

GRAS "generally regarded as safe" designation.

The addition of OptiMSM ® to the Company's portfolio within Human Nutrition & Health and Animal Nutrition & Health segments provides a synergistic scientific advantage in Balchem's key strategic therapeutic focus areas such as longevity and performance and is a strong fit with Balchem's specialty, science-backed mineral products.

The Company made payments of $ 70,892 for the acquisition, amounting to $ 69,740 to the former shareholders and $ 1,152 to pay off Bergstrom's bank debt and certain other obligations.

Net of cash acquired of $ 773 , total payments made to the former shareholders of Bergstrom on the acquisition date were $ 68,967 .

The acquisition was primarily financed through the 2022 Credit Agreement (see Note 8, "Revolving Loan").

In connection with this transaction, the former shareholders of Bergstrom have an opportunity to receive an additional payment if certain financial performance targets and other metrics are met, and therefore we recorded a contingent consideration liability of $ 7,835 as of September 30, 2022.

The goodwill of $ 34,060 that arose on the acquisition date consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce.

The goodwill is assigned to both the Human Nutrition & Health and Animal Nutrition & Health business segments.

For tax purposes, a joint election under 338(h)(10) was made to treat the stock acquisition as a deemed asset acquisition, therefore generating tax amortizable goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed:

Cash and cash equivalents $ 773

Accounts receivable 4,699

Inventories 3,922

Property, plant and equipment 2,700

Right of use assets 866

Customer relationships 26,500

Developed technology 4,700

Trademarks 2,300

Other assets 197

Accounts payable ( 685 )

Bank debt ( 206 )

Lease liabilities ( 871 )

Other liabilities ( 1,380 )

Goodwill 34,060

Total consideration on acquisition date 77,575

Contingent consideration liability ( 7,835 )

Amount paid to shareholders 69,740

To pay off bank debt and certain other obligations 1,152

Total amount paid $ 70,892

The estimated fair value of tangible and intangible assets acquired and liabilities assumed is based on management’s estimates and assumptions, which are subject to change.

In preparing our preliminary fair value estimates of the intangible assets and certain tangible assets acquired, management, among other things, consulted an independent advisor.

Valuation methods utilized include net realizable value for inventory, multi-period excess earnings method for customer relationships, the relief from royalty method for other intangible assets, and a scenario-based approach for the contingent consideration.

The purchase price and related allocation of assets acquired and liabilities assumed is preliminary pending management's final review of fair value calculations.

Customer relationships are amortized over a 15-year period utilizing a percentage of excess earnings over economic life method.

The corporate trademark and product trademarks are amortized over 2 years and 10 years, respectively, and developed technology is amortized over 12 years, utilizing the straight-line method as the consumption pattern of the related economic benefits cannot be reliably determined.

Transaction and integration costs related to the Bergstrom acquisition are included in general and administrative expenses and were $ 593 and $ 668 for the three and nine months ended September 30, 2022, respectively.

Kechu BidCo AS and Its Subsidiary Companies ("Kappa")

On June 21, 2022, Balchem Corporation and its wholly-owned subsidiary, Balchem B.V., completed the acquisition of Kechu BidCo AS and its subsidiary companies, including Kappa Bioscience AS, a leading science-based manufacturer of specialty vitamin K2 for the human nutrition industry, headquartered in Oslo, Norway (all acquired companies collectively referred to as “Kappa”).

The Company made payments of approximately kr 3,301,341 ("kr" indicates the Norwegian krone) on the acquisition date, amounting to approximately kr 2,997,669 to the former shareholder and approximately kr 303,672 to Kappa's lenders to pay off all Kappa bank debt.

2 unchanged sentences

The acquisition was primarily financed through the 2018 Credit Agreement (see Note 8, "Revolving Loan").

In connection with this transaction, the seller has an opportunity to receive an additional payment in 2024 if certain financial performance targets and other metrics are met, and therefore we recorded contingent consideration of kr 245,000 (translated to $ 24,793 ) as of June 30, 2022.

Kappa manufactures specialty vitamin K2, a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic performance.

6 unchanged sentences

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed.

The transactions were completed in Norwegian kroner ("NOK") and the amounts were translated to U.S.

dollars ("USD") using the foreign currency exchange rate as of June 21, 2022.

Cash and cash equivalents $ 6,365

15 unchanged sentences

Contingent consideration liability ( 24,726 )

Net gains on foreign currency exchange forward contracts ( 512 )

Net gain on foreign currency exchange forward contracts ( 512 )

Amount paid to shareholders 302,025

Kappa bank debt paid on purchase date 30,648

Kappa bank debt paid on acquisition date 30,648

Total amount paid on acquisition date $ 332,673

5 unchanged sentences

Transaction and integration costs related to the Kappa acquisition are included in selling, general, and administrative expenses and were $ 451 for both the three and six months ended June 30, 2022.

There were no such amounts related to this acquisition for the three and six months ended June 30, 2021.

The following preliminary unaudited pro forma information has been prepared as if the acquisition had occurred on January 1, 2021.

Three Months Ended

June 30, Six Months Ended

Net Sales Net Earnings Net Sales Net Earnings

Kappa actual results included in the Company's consolidated income statement from June 21, 2022 through June 30, 2022 $ — $ — $ — $ —

2022 Supplemental pro forma combined financial information $ 247,430 $ 30,172 $ 489,170 $ 58,648

2021 Supplemental pro forma combined financial information $ 213,032 $ 26,344 $ 410,649 $ 50,379

Kappa's net sales and net earnings from June 21, 2022 through June 30, 2022 were not material.

As such, they were not included in the Company's condensed consolidated statements of earnings for the three and six months ended June 30, 2022.

2022 supplemental pro forma net earnings for the three and six months ended June 30, 2022, excluded $ 643 and $ 722 , respectively, of acquisition-related costs incurred.

The pro forma information presented does not purport to be indicative of the results that actually would have been attained if the Kappa acquisition had occurred at the beginning of the periods presented, and is not intended to be a projection of future results.

Transaction and integration costs related to the Kappa acquisition are included in general and administrative expenses and were $ 989 and $ 1,440 for both the three and nine months ended September 30, 2022.

There were no such amounts related to this acquisition for the three and nine months ended September 30, 2021.

NOTE 3 – STOCKHOLDERS’ EQUITY

STOCK-BASED COMPENSATION

The Company’s results for the three and six months ended June 30, 2022 and 2021 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:

The Company’s results for the three and nine months ended September 30, 2022 and 2021 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,

Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

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, 2022, the plans had 534,120 shares available for future awards.

Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee

performance share awards, and three years for non-employee director restricted stock awards.

As of September 30, 2022, the plans had 407,630 shares available for future awards.

Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three to five years for stock options, three years for employee restricted stock awards, three years for employee performance share awards, and three years for non-employee director restricted stock awards.

Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events.

Option activity for the six months ended June 30, 2022 and 2021 is summarized below:

For the six months ended June 30, 2022 Shares (000s) Weighted

Option activity for the nine months ended September 30, 2022 and 2021 is summarized below:

For the nine months ended September 30, 2022 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited ( 12 ) 125.05

Outstanding as of June 30, 2022 952 $ 93.99 $ 34,907 6.4

Exercisable as of June 30, 2022 666 $ 81.11 $ 32,409 5.4

For the six months ended June 30, 2021 Shares (000s) Weighted

Outstanding as of September 30, 2022 1,063 $ 99.74 $ 27,308 6.6

Exercisable as of September 30, 2022 656 $ 81.45 $ 26,312 5.2

For the nine months ended September 30, 2021 Shares (000s) Weighted

Price Aggregate

5 unchanged sentences

Canceled ( 1 ) 74.57

Outstanding as of June 30, 2021 926 $ 86.85 $ 41,107 6.8

Exercisable as of June 30, 2021 580 $ 73.72 $ 33,398 5.6

Outstanding as of September 30, 2021 876 $ 87.91 $ 50,090 6.6

Exercisable as of September 30, 2021 540 $ 74.81 $ 37,961 5.5

ASC 718 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 fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

dividend yields of 0.5 % and 0.5 %;

expected volatilities of 31 % and 33 %;

risk-free interest rates of 2.0 % and 0.5 %;

and expected lives of 4.9 years and 4.9 years, in each case for the six months ended June 30, 2022 and 2021, respectively.

The weighted average fair values of the stock options granted under the Plans were calculated using either the Black-Scholes model or the Binomial model, whichever was deemed to be most appropriate.

For the nine months ended September 30, 2022, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions:

dividend yields of 0.5 %;

expected volatilities of 30 %;

risk-free interest rates of 2.8 %;

and expected lives of 7.3 years.

For nine months ended September 30, 2021, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions:

dividend yields of 0.5 %;

expected volatilities of 33 %;

risk-free interest rates of 0.5 %;

and expected lives of 4.9 years.

The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior.

3 unchanged sentences

Treasury Zero coupon issues with a remaining term equal to the expected life.

Other information pertaining to option activity during the three and six months ended June 30, 2022 and 2021 is as follows:

Other information pertaining to option activity during the three and nine months ended September 30, 2022 and 2021 is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Total intrinsic value of stock options exercised ($000s) $ 815 $ 3,196 $ 1,964 $ 6,927

Non-vested restricted stock activity for the six months ended June 30, 2022 and 2021 is summarized below:

Six Months Ended June 30,

Non-vested restricted stock activity for the nine months ended September 30, 2022 and 2021 is summarized below:

Nine Months Ended September 30,

Shares (000s) Weighted

6 unchanged sentences

Forfeited ( 7 ) 116.72 ( 5 ) 95.71

Non-vested balance as of June 30 120 $ 122.03 181 $ 96.89

Non-vested performance share activity for the six months ended June 30, 2022 and 2021 is summarized below:

Six Months Ended June 30,

Non-vested balance as of September 30 121 $ 122.96 176 $ 97.17

Non-vested performance share activity for the nine months ended September 30, 2022 and 2021 is summarized below:

Nine Months Ended September 30,

Shares (000s) Weighted

6 unchanged sentences

Forfeited ( 3 ) 84.09 ( 11 ) 74.57

Non-vested balance as of June 30 70 $ 127.69 72 $ 110.22

Non-vested balance as of September 30 70 $ 127.69 72 $ 110.22

The performance share (“PS”) awards provide the recipients the right to receive a certain number of shares of the Company’s common stock in the future, subject to an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and relative total shareholder return (TSR) where vesting is dependent upon the Company’s TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents.

3 unchanged sentences

volatilities of 32 % and 33 %;

and initial TSR’s of - 15.7 % and 11.7 %, in each case for the six months ended June 30, 2022 and 2021, respectively.

and initial TSR’s of - 15.7 % and 11.7 %, in each case for the nine months ended September 30, 2022 and 2021, respectively.

Expense is estimated based on the number of shares expected to vest, assuming the requisite service period is rendered and the probable outcome of the performance condition is achieved.

2 unchanged sentences

The PS will cliff vest 100 % at the end of the third year following the grant in accordance with the performance metrics set forth.

As of June 30, 2022 and 2021, there were $ 19,988 and $ 19,796 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of June 30, 2022, the unrecognized

compensation cost is expected to be recognized over a weighted-average period of approximately 1.7 years.

As of September 30, 2022 and 2021, there were $ 23,665 and $ 16,498 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of September 30, 2022, the

unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.1 years.

The Company estimates that share-based compensation expense for the year ended December 31, 2022 will be approximately $ 13,500 .

4 unchanged sentences

The Company’s prior presentation of reflecting treasury stock separately within stockholders’ equity has been adjusted to conform to the presentation prescribed by the State of Maryland, where the Company is incorporated.

In connection therewith, adjustments to balances previously reflected as treasury stock of $ 8,472 , $ 2,210 , and $ 7,873 as of June 30, 2021, March 31, 2021, and December 31, 2020, respectively, were made to the condensed consolidated statements of changes in stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly.

In connection therewith, adjustments to balances previously reflected as treasury stock of $ 11,080 , $ 8,472 , $ 2,210 , and $ 7,873 as of September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively, were made to the condensed consolidated statements of changes in stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly.

There was no impact to total stockholders’ equity in any of the years presented as a result of these updates.

1 unchanged sentence

The Company also repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans.

During the six months ended June 30, 2022 and 2021, the Company purchased 250,661 and 86,124 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes.

During the nine months ended September 30, 2022 and 2021, the Company purchased 251,022 and 147,199 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes.

These shares were purchased at an average cost of $ 140.41 and $ 127.46 , respectively.

NOTE 4 – INVENTORIES

Inventories at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022 December 31, 2021

Inventories at September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022 December 31, 2021

Raw materials $ 41,371 $ 28,639

3 unchanged sentences

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2022 and December 31, 2021 are summarized as follows:

June 30, 2022 December 31, 2021

Property, plant and equipment at September 30, 2022 and December 31, 2021 are summarized as follows:

September 30, 2022 December 31, 2021

Land $ 10,993 $ 11,692

6 unchanged sentences

NOTE 6 – INTANGIBLE ASSETS

The Company had goodwill in the amount of $ 731,772 and $ 523,949 as of June 30, 2022 and December 31, 2021, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is the result of the acquisition of Kappa, partially offset by the change due to foreign exchange translation adjustments.

The Company had goodwill in the amount of $ 749,035 and $ 523,949 as of September 30, 2022 and December 31, 2021, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is the result of the acquisitions of Kappa and Bergstrom, partially offset by the change due to foreign exchange translation adjustments.

Refer to Note 2, "Significant Acquisitions", for more information.

Identifiable intangible assets with finite lives at June 30, 2022 and December 31, 2021 are summarized as follows:

Identifiable intangible assets with finite lives at September 30, 2022 and December 31, 2021 are summarized as follows:

(in years) Gross Carrying Amount at

8 unchanged sentences

$ 477,650 $ 250,327 $ 327,330 $ 232,665

Amortization of identifiable intangible assets was approximately $ 5,850 and $ 11,761 for the three and six months ended June 30, 2022, respectively, and $ 6,229 and $ 12,713 for the three and six months ended June 30, 2021, respectively.

Amortization of identifiable intangible assets was approximately $ 7,922 and $ 19,683 for the three and nine months ended September 30, 2022, respectively, and $ 6,155 and $ 18,868 for the three and nine months ended September 30, 2021, respectively.

Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $ 5,300 for the remainder of 2022, $ 30,188 for 2023, $ 21,740 for 2024, $ 17,906 for 2025, $ 17,362 for 2026 and $ 16,553 for 2027.

At June 30, 2022 and December 31, 2021, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350.

At September 30, 2022 and December 31, 2021, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350.

Identifiable intangible assets are reflected in “Intangible assets with finite lives, net” in 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, 2022 and 2021.

There were no changes to the useful lives of intangible assets subject to amortization during the nine months ended September 30, 2022 and 2021.

NOTE 7 – EQUITY-METHOD INVESTMENT

9 unchanged sentences

The joint venture is accounted for under the equity method of accounting since the Company is not the primary beneficiary as the Company does not have the power to direct the activities of the joint venture that most significantly impact its economic performance.

The Company recognized a lo ss of $ 140 and $ 280 for the three and six months ended June 30, 2022, respectively, and $ 130 and $ 274 for the three and six months ended June 30, 2021, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 75 and $ 133 fo r the three and six months ended June 30, 2022, respectively, and received a net return of capital totaling $ 28 and $ 15 for the three and six months ended June 30, 2021, respectively.

The carrying value of the joint venture at June 30, 2022 and December 31, 2021 was $ 4,352 and $ 4,499 , respectively, and is recorded in "Other assets."

The Company recognized a loss of $ 140 and $ 420 for the three and nine months ended September 30, 2022, respectively, and $ 142 and $ 416 for the three and nine months ended September 30, 2021, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 89 and $ 222 for the three and nine months ended September 30, 2022, respectively, and $ 46 and $ 31 for the three and nine months ended September 30, 2021, respectively.

The carrying value of the joint venture at September 30, 2022 and December 31, 2021 was $ 4,301 and $ 4,499 , respectively, and is recorded in "Other assets."

NOTE 8 – REVOLVING LOAN

On June 27, 2018, the Company and a bank syndicate entered into a credit agreement (the "2018 Credit Agreement"), which replaced the existing credit facility that had provided for a senior secured term loan of $ 350,000 and a revolving loan of $ 100,000 .

The 2018 Credit Agreement, which expires on June 27, 2023, provides for revolving loans up to $ 500,000 (collectively referred to as the “loans”).

On June 27, 2018, the Company and a bank syndicate entered into a credit agreement (the "2018 Credit Agreement"), which provided for revolving loans up to $ 500,000 , due on June 27, 2023.

During the second quarter of 2022, the Company borrowed $ 345,000 under the 2018 Credit Agreement to fund the Kappa acquisition (see Note 2, "Significant Acquisitions").

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.

The initial proceeds from the 2018 Credit Agreement were used to repay the outstanding balance of $ 210,750 on its senior secured term loan, which was due May 2019.

During the second quarter of 2022, the Company borrowed an additional $ 345,000 to fund the Kappa acquisition (see Note 2, "Significant Acquisitions").

As of June 30, 2022 and December 31, 2021 , the total balance outstanding on the 2018 Credit Agreement amounted to $ 433,569 and $ 108,569 , respectively.

The Company used initial proceeds from the 2022 Credit Agreement to repay the outstanding balance of $ 433,569 due in June 2023 under the 2018 Credit Agreement.

During the third quarter of 2022, the Company borrowed another $ 70,000 to fund the Bergstrom acquisition (see Note 2, "Significant Acquisitions").

As of September 30, 2022, the total balance outstanding on the 2022 Credit Agreement amounted to $ 462,569 .

As of December 31, 2021, the total balance outstanding on the 2018 Credit Agreement amounted to $ 108,569 .

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.

On July 27, 2022, the Company entered into an Amended and Restated Credit Agreement with lenders in the form of a senior secured revolving credit facility, due July 27, 2027.

The Amended and Restated Credit Agreement allows for up to $ 550,000 of borrowing.

The Company used initial proceeds from the Amended and Restated Credit Agreement to repay the outstanding balance of $ 433,569 on the previous revolving credit facility, due June 2023.

In connection with the entering into the Amended and Restated Credit Agreement, the Company also modified its existing interest rate swap under the relief provided for in ASC 848, "Reference Rate Reform" (see Note 20 "Derivative Instruments and Hedging Activities").

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 2018 Credit Agreement, and the interest rate was 2.538 % at June 30, 2022.

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 2018 Credit Agreement and ranges from 0.15 % to 0.275 % ( 0.15 % at June 30, 2022).

The unused portion of the revolving loan amounted to $ 66,431 at June 30, 2022.

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 4.214 % at September 30, 2022.

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 0.15 % to 0.225 % ( 0.175 % at September 30, 2022).

The unused portion of the revolving loan amounted to $ 87,431 at September 30, 2022.

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 2018 Credit Agreement, which is not materially different than the effective interest method.

Costs associated with the issuance of the extinguished debt instrument were capitalized and amortized over the term of the respective financing arrangement using the effective interest method.

Capitalized costs net of accumulated amortization totaled $ 280 and $ 421 at June 30, 2022 and December 31, 2021, respectively, and are included in other assets on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 70 and $ 141 for the three and six months ended June 30, 2022 and 2021, respectively, and are included in "Interest expense" in the accompanying condensed consolidated statements of earnings.

Costs associated with the issuance of the revolving loans and certain costs associated with the issuance of the extinguished debt instrument 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 totaled $ 1,389 and $ 421 at September 30, 2022 and December 31, 2021, respectively, and are included in other assets on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 121 and $ 262 for the three and nine months ended September 30, 2022 and $ 71 and $ 212 for the three and nine months ended September 30, 2021, respectively, and are included in "Interest expense" 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, 2022, the Company was in compliance with these covenants.

At September 30, 2022, the Company was in compliance with these covenants.

Indebtedness under the Company’s loan agreements is secured by assets of the Company.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

Net Earnings Per Share - Diluted $ 0.78 $ 0.77 $ 2.59 $ 2.18

The number of anti-dilutive shares were 294,568 and 237,453 for the three and six months ended June 30, 2022, respectively, and 153,868 and 304,324 for the three and six months ended June 30, 2021 , respectively.

The number of anti-dilutive shares were 362,203 and 369,183 for the three and nine months ended September 30, 2022, respectively, and 151,924 and 156,238 for the three and nine months ended September 30, 2021 , 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 10 – INCOME TAXES

The Company’s effective tax rate for the three months ended June 30, 2022 and 2021, was 24.1 % and 24.3 %, respectively, and 23.6 % and 23.1 % for the six months ended June 30, 2022 and 2021.

The decrease in the effective tax rate for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to the prior year being negatively impacted by clarifying regulations related to tax reform, which was offset by lower tax benefits from stock-based compensation in the current quarter.

The increase in the effective tax rate for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to lower tax benefits from stock-based compensation and a reduction in certain tax credits.

The Company’s effective tax rate for the three months ended September 30, 2022 and 2021, was 18.8 % and 22.0 %, respectively, and 22.2 % and 22.7 % for the nine months ended September 30, 2022 and 2021.

The decrease in the effective tax rate for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily due to a favorable provision to return adjustment related to an increase in certain tax credits and deductions.

The decrease in the effective tax rate for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily due to a favorable provision to return adjustment related to an increase in certain tax credits and deductions, which was offset by a change in mix of earnings in higher taxing jurisdictions.

Balchem will continue to evaluate and analyze the impact of the U.S.

3 unchanged sentences

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are

measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

7 unchanged sentences

and in various states and foreign countries.

As of June 30, 2022, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2017.

As of June 30, 2022 and December 31, 2021, the Company had approximately $ 5,902 and $ 5,881 , respectively, of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.

As of September 30, 2022, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2017.

As of September 30, 2022 and December 31, 2021, the Company had approximately $ 5,690 and $ 5,881 , respectively, of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.

The Company includes interest expense or income as well as potential penalties on unrecognized tax positions as a component of "Income tax expense" in the condensed consolidated statements of earnings.

The total amounts of accrued interest and penalties related to uncertain tax positions at June 30, 2022 and December 31, 2021 were approximately $ 2,214 and $ 2,106 , respectively, and are included in "Other long-term obligations."

The total amounts of accrued interest and penalties related to uncertain tax positions at September 30, 2022 and December 31, 2021 were approximately $ 2,167 and $ 2,106 , respectively, and are included in "Other long-term obligations."

NOTE 11 – SEGMENT INFORMATION

16 unchanged sentences

The Company also creates cereal systems for ready-to-eat cereals, grain-based snacks, and cereal based ingredients.

Through the Kappa acquisition, this segment recently began manufacturing specialty vitamin K2, which is a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic performance.

Through the Kappa and Bergstrom acquisitions, respectively, this segment recently began manufacturing specialty vitamin K2, which is a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic performance, and MSM, which is a widely used nutritional ingredient that provides benefits for joint health, sports nutrition, skin and beauty, and healthy aging.

Animal Nutrition & Health

The Company’s Animal Nutrition & Health ("ANH") segment provides nutritional products derived from its microencapsulation and chelation technologies in addition to basic choline chloride.

For ruminant animals, the Company’s microencapsulated products boost health and milk production by delivering nutrient supplements that are biologically available, providing required nutritional levels.

For ruminant animals, the Company’s microencapsulated

products boost health and milk production by delivering nutrient supplements that are biologically available, providing required nutritional levels.

The Company’s proprietary chelation technology provides enhanced nutrient absorption for various species of production and companion animals and is marketed for use in animal feed throughout the world.

ANH also manufactures and supplies choline chloride, an essential nutrient for monogastric animal health, predominantly to the poultry, pet and swine

ANH also manufactures and supplies choline chloride, an essential nutrient for monogastric animal health, predominantly to the poultry, pet and swine industries.

Choline, which is manufactured and sold in both dry and aqueous forms, plays a vital role in the metabolism of fat.

In poultry, choline deficiency can result in reduced growth rates and perosis in young birds, while in swine production choline is a necessary and required component of gestating and lactating sow diets for both liver health and prevention of leg deformity.

Through the Bergstrom acquisition, this segment recently began manufacturing MSM, which is a widely used nutritional ingredient that provides benefits for pet health.

Sales of value-added encapsulated products are highly dependent on overall industry economics as well as the Company's ability to leverage the results of university and field research on the animal health and production benefits of our products.

2 unchanged sentences

Specialty Products

Ethylene oxide, at the 100% level and blended with carbon dioxide, is sold as a sterilant gas, primarily for use in the health care industry.

The Company re-packages and distributes a number of performance gases and chemicals for various uses by its customers, notably ethylene oxide, propylene oxide, and ammonia.

Ethylene oxide is sold as a sterilant gas, primarily for use in the health care industry.

It is used to sterilize a wide range of medical devices because of its versatility and effectiveness in treating hard or soft surfaces, composites, metals, tubing and different types of plastics without negatively impacting the performance of the device being sterilized.

The Company’s 100% ethylene oxide product and blends are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to.

The Company’s inventory of these specially built drums and cylinders, along with its five filling facilities, represents a significant capital investment.

Contract sterilizers and medical device manufacturers are principal customers for this product.

The Company also sells single use canisters with 100% ethylene oxide for use in sterilizing re-usable devices typically processed in autoclave units in hospitals.

As a fumigant, ethylene oxide blends are highly effective in killing bacteria, fungi, and insects in spices and other seasoning materials.

The Company also distributes a number of other gases for various uses, most notably propylene oxide and ammonia.

Propylene oxide is marketed and sold in the U.S.

as a fumigant to aid in the control of insects and microbiological spoilage;

and to reduce bacterial and mold contamination in certain shelled and processed nut meats, processed spices, cacao beans, cocoa powder, raisins, figs and prunes.

The Company distributes its propylene oxide product in the U.S.

primarily in recyclable, single-walled, carbon steel cylinders according to standards outlined by the Environmental Protection Agency ("EPA") and the Department of Transportation ("DOT").

Propylene oxide is also sold worldwide to customers in approved reusable and recyclable drum and cylinder packaging for various chemical synthesis applications, such as increasing paint durability and manufacturing specialty starches and textile coatings.

Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder packaging approved for use in the countries these products are shipped to.

The Company's inventory of cylinders for these products also represents a significant capital investment.

Propylene oxide is marketed and sold as a fumigant to aid in the control of insects and microbiological spoilage;

and to reduce bacterial and mold contamination in certain shelled and processed nut meats, processed spices, cacao beans, cocoa powder, raisins, figs and prunes, and for various chemical synthesis applications, such as increasing paint durability and manufacturing specialty starches and textile coatings Ammonia is used primarily as a refrigerant, and also for heat treatment of metals and various chemical synthesis applications, and is distributed in reusable and recyclable drum and cylinder packaging approved for use in the countries these products are shipped to.

The Company’s performance gases and chemicals are distributed worldwide in specially designed, reusable and recyclable drum and cylinder packaging, to assure compliance with safety, quality and environmental standards as outlined by the applicable regulatory agencies in the countries our products are shipped to.

The Company’s inventory of these specially built drums and cylinders, along with its five filling facilities, represents a significant capital investment.

The Company also sells single use canisters for use in sterilizing re-usable devices typically processed in autoclave units in hospitals.

The Company’s micronutrient agricultural nutrition business sells chelated minerals primarily to producers of high value crops.

5 unchanged sentences

The segment information is summarized as follows:

Business Segment Assets June 30,

Business Segment Assets September 30,

2022 December 31,

6 unchanged sentences

Business Segment Net Sales Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

Business Segment Earnings Before Income Taxes Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

Depreciation/Amortization Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Total $ 14,097 $ 12,159 $ 37,958 $ 36,622

Capital Expenditures Six Months Ended

Capital Expenditures Nine Months Ended

September 30,

Human Nutrition & Health $ 22,513 $ 14,492

7 unchanged sentences

Unallocated corporate expenses consist of:

(i) Transaction and integration costs, ERP implementation costs, and unallocated legal fees totaling $ 872 and $ 1,176 for the three and six months ended June 30, 2022, respectively, and $ 466 and $ 700 for the three and six months ended June 30, 2021, respectively, and (ii) Unallocated amortization expense of $ 811 and $ 1,620 for the three and six months ended June 30, 2022, respectively, and $ 674 and $ 1,349 for the three and six months ended June 30, 2021, respectively, related to an intangible asset in connection with a company-wide ERP system implementation and capitalized loan issuance costs that were included in interest expense in the Company's condensed consolidated statements of earnings.

(i) Transaction and integration costs, ERP implementation costs, and unallocated legal fees totaling $ 1,640 and $ 2,816 for the three and nine months ended September 30, 2022, respectively, and $ 305 and $ 1,005 for the three and nine months ended September 30, 2021, respectively, and (ii) Unallocated amortization expense of $ 855 and $ 2,475 for the three and nine months ended September 30, 2022, respectively, and $ 675 and $ 2,024 for the three and nine months ended September 30, 2021, respectively, related to an intangible asset in connection with a company-wide ERP system implementation and capitalized loan issuance costs that were included in interest expense in the Company's condensed consolidated statements of earnings.

NOTE 12 – REVENUE

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

22 unchanged sentences

NOTE 13 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the six months ended June 30, 2022 and 2021 for income taxes and interest is as follows:

Six Months Ended

Cash paid during the nine months ended September 30, 2022 and 2021 for income taxes and interest is as follows:

Nine Months Ended

September 30,

Income taxes $ 26,277 $ 19,563

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

12 unchanged sentences

Total other comprehensive (loss)/income $ ( 34,445 ) $ ( 3,010 ) $ ( 41,876 ) $ ( 6,751 )

Included in "Net foreign currency translation adjustment" were gains of $ 3,963 and $ 5,086 , related to a net investment hedge, which were net of taxes of $ 1,309 and $ 1,642 for the three and six months ended June 30, 2022, respectively.

Included in "Net foreign currency translation adjustment" w as a loss of $ 1,024 and a gain of $ 2,173 , re lated to a net investment hedge, which were net of taxes of $ 336 and $ 690 for the three and six months ended June 30, 2021, respectively.

Included in "Net foreign currency translation adjustment" were gains of $ 5,065 and $ 10,151 , related to a net investment hedge, which were net of taxes of $ 1,635 and $ 3,277 for the three and nine months ended September 30, 2022, respectively.

Included in "Net foreign currency translation adjustment" were gains of $ 1,715 and $ 3,888 , re lated to a net investment hedge, which were net of taxes of $ 553 and $ 1,243 for the three and nine months ended September 30, 2021, respectively.

See Note 20, "Derivative Instruments and Hedging Activities."

Accumulated other comprehensive (loss)/income at June 30, 2022 and December 31, 2021 consisted of the following:

Accumulated other comprehensive (loss)/income at September 30, 2022 and December 31, 2021 consisted of the following:

Foreign currency

3 unchanged sentences

Other comprehensive (loss)/income ( 44,667 ) 2,850 ( 59 ) ( 41,876 )

Balance June 30, 2022 $ ( 13,395 ) $ 792 $ 179 $ ( 12,424 )

Balance September 30, 2022 $ ( 48,269 ) $ 1,219 $ 181 $ ( 46,869 )

NOTE 15 – EMPLOYEE BENEFIT PLANS

5 unchanged sentences

On June 21, 2022, the Company completed the acquisition of Kappa, which sponsors one defined contribution plan for its employees.

In addition, on August 30, 2022, the Company completed the acquisition of Bergstrom, which sponsors one defined contribution plan for its employees.

The plan allows participants to make pretax and after tax contributions.

Bergstrom matches certain percentages of those contributions.

Postretirement Medical Plans

2 unchanged sentences

Net periodic benefit costs for such retirement medical plans were as follows:

Six Months Ended

Nine Months Ended

September 30,

Service cost $ 59 $ 65

3 unchanged sentences

Net periodic benefit cost $ 84 $ 119

T he amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 are $ 1,221 and $ 1,293 , respectively, and are included in "Other long-term obligations." These plans are unfunded and approved claims are paid from Company funds.

T he amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 are $ 1,247 and $ 1,293 , respectively, and are included in "Other long-term obligations." 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.

2 unchanged sentences

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, 2022 and December 31, 2021 were $ 641 and $ 684 , respectively, and were included in "Other long-term obligations."

The amounts recorded for these obligations on the Company's condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 were $ 607 and $ 684 , respectively, and were included in "Other long-term obligations."

Net periodic benefit costs for such benefit pensions plans were as follows:

Six Months Ended

Nine Months Ended

September 30,

Service cost with interest to end of year $ 30 $ 52

6 unchanged sentences

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 deferred compensation liability was $ 8,252 as of June 30, 2022, of which $ 8,220 was included in "Other long-term obligations" and $ 32 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets.

The deferred compensation liability was $ 8,027 as of September 30, 2022, of which $ 8,011 was included in "Other long-term obligations" and $ 16 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets.

The deferred compensation liability was $ 6,270 as of December 31, 2021, of which $ 6,251 was included in "Other long-term obligations" and $ 19 was included in "Accrued compensation and other benefits" on the Company’s condensed consolidated balance sheets.

The related rabbi trust assets were $ 8,255 and $ 6,267 as of June 30, 2022 and December 31, 2021, respectively, and were included in "Other non-current assets" on the Company's condensed consolidated balance sheets.

The related rabbi trust assets were $ 8,032 and $ 6,267 as of September 30, 2022 and December 31, 2021, respectively, and were included in "Other non-current assets" on the Company's condensed consolidated balance sheets.

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at June 30, 2022 are as follows:

July 1, 2022 to December 31, 2022 $ 1,896

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at September 30, 2022 are as follows:

October 1, 2022 to December 31, 2022 $ 1,111

Thereafter 6,225

6 unchanged sentences

BCP and the site's prior owner are currently negotiating with the EPA and the State of Missouri with respect to a proposed Administrative Settlement Agreement and Order on Consent that defines the scope and performance of the focused RI/FS.

From time to time, the Company is a party to various litigation, claims and assessments.

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, or liquidity.

From time to time, the Company is involved in a variety of lawsuits, claims and proceedings, including those related to environmental matters.

Subject to the uncertainties inherent in estimating future costs for contingent liabilities, except as expressly set forth in this note, management believes that any liability which may result from such matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, liquidity or cash flows.

NOTE 17 – 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, 2022 and December 31, 2021 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheets.

The Company estimates that the fair value of all financial instruments at September 30, 2022 and December 31, 2021 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.

2 unchanged sentences

The Company’s financial instruments also include cash equivalents, 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.

Cash and cash equivalents at June 30, 2022 and December 31, 2021 includes $ 927 and $ 933 in money market funds, respectively.

Non-current assets at June 30, 2022 and December 31, 2021 includes $ 8,255 and $ 6,267 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

The money market and rabbi trust funds ar e valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”

Cash and cash equivalents at September 30, 2022 and December 31, 2021 includes $ 921 and $ 933 in money market funds, respectively.

Non-current assets at September 30, 2022 and December 31, 2021 includes $ 8,032 and $ 6,267 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

The money market and rabbi trust funds are valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”

The contingent consideration liabilities included on the balance sheet at of September 30, 2022 amount to $ 30,547 and were valued using level three inputs, as defined by ASC 820, "Fair Value Measurement".

The Company also has derivative financial instruments, consisting of a cross-currency swap and an interest rate swap, which are included in "Derivative assets" or "Derivative liabilities" in the Company's condensed consolidated balance sheets (see Note 20, "Derivative Instruments and Hedging Activities").

The fair values of these derivative instruments are determined based on Level 2 inputs, using significant inputs that are observable either directly or indirectly, including interest rate curves and implied volatilities.

The derivative assets related to the cross-currency swap and the interest rate swap were $ 6,228 and $ 1,048 at June 30, 2022, respectively.

The derivative assets related to the cross-currency swap and the interest rate swap were $ 12,928 and $ 1,612 at September 30, 2022, respectively.

The derivative liability related to the cross-currency swap and the interest rate swap was $ 500 and $ 2,158 at December 31, 2021, respectively.

9 unchanged sentences

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.

Payments for the services the Company provided amounted to $ 1,022 and $ 1,997 for the three and six months ended June 30, 2022, respectively, and $ 920 and $ 1,747 for the three and six months ended June 30, 2021, respectively.

The raw materials purchased and subsequently sold amounted to $ 10,910 and $ 20,221 for the three and six months ended June 30, 2022, respectively, and $ 6,580 and $ 12,042 for the three and six months ended June 30, 2021, respectively.

Payments for the services the Company provided amounted to $ 1,188 and $ 3,185 for the three and nine months ended September 30, 2022, respectively, and $ 901 and $ 2,648 for the three and nine months ended September 30, 2021, respectively.

The raw materials purchased and subsequently sold amounted to $ 11,937 and $ 32,158 for the three and nine months ended September 30, 2022, respectively, and $ 6,419 and $ 18,461 for the three and nine months ended September 30, 2021, 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 $ 8,233 and $ 14,722 for the three and six months ended June 30, 2022, respectively, and $ 5,210 and $ 9,601 for the three and six months ended June 30, 2021, respectively.

At June 30, 2022 and December 31, 2021, the Company had receivables of $ 8,224 and $ 10,504 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC of $ 9,249 and $ 23,971 for the three and nine months ended September 30, 2022, respectively, and $ 4,944 and $ 14,545 for the three and nine months ended September 30, 2021, respectively.

At September 30, 2022 and December 31, 2021, the Company had receivables of $ 13,126 and $ 10,504 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC for services rendered and raw materials sold.

3 unchanged sentences

Gabriel CC Company, LLC, recorded in receivables as of December 31, 2021.

There were no such receivables as of June 30, 2022.

There were no such receivables as of September 30, 2022.

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, 2022 and December 31, 2021.

Gabriel CC Company, LLC, recorded in accounts payable as of both September 30, 2022 and December 31, 2021.

NOTE 19 – LEASES

3 unchanged sentences

As a result of electing the practical expedient within ASU 2016-02, variable lease payments are combined and recognized on the balance sheet in the event that those charges and any related increases are explicitly stated in the lease.

Such payments include common area maintenance charges, property taxes, and insurance charges and are recorded in the right of use asset and corresponding liability when the payments are stated in the lease with (a) fixed or in-substance fixed amounts, or (b) a variable payment based on an index or rate.

Due to the acquisitive nature of the Company and the potential for synergies upon integration of acquired entities, the Company determined that the reasonably certain criterion could not be met for any renewal periods beginning two years from June 30, 2022.

In addition, the Company has historically not been exercising purchase options under the equipment leases as it

does not make economic sense to buy the equipment.

Such payments include common area

maintenance charges, property taxes, and insurance charges and are recorded in the right of use asset and corresponding liability when the payments are stated in the lease with (a) fixed or in-substance fixed amounts, or (b) a variable payment based on an index or rate.

In addition, the Company has historically not been exercising purchase options under the equipment leases as it does not make economic sense to buy the equipment.

Instead, the Company has historically replaced the equipment with new leases.

2 unchanged sentences

On June 22, 2022, the Company signed a ten-year real estate sublease for approximately 40,000 square feet of office space, which will serve as the Company's corporate headquarters and a laboratory facility.

The sublease will not commence until the sublandlord substantially completes its work per the sublease agreement, which will most likely occur in the third quarter of 2022.

This new sublease will replace the current lease for the Company's corporate headquarters, however the Company anticipates that it will continue to lease the laboratory space in the previous corporate headquarters.

The sublease will not commence until the sublandlord substantially completes its work per the sublease agreement, which will occur in the fourth quarter of 2022.

The Company will recognize a right of use asset and a lease liability at the commencement date based on ASC 842, Lease Accounting.

As of June 30, 2022 the Company did not record a right of use asset or lease liability on the balance sheet in connection with this lease.

As of September 30, 2022 the Company did not record a right of use asset or lease liability on the balance sheet in connection with this lease.

The Company has not identified any embedded leases.

9 unchanged sentences

The warehouse can be purchased at a pre-determined price beginning in 2023.

At June 30, 2022 and December 31, 2021, the Company had finance lease liabilities of $ 2,387 and $ 2,470 , respectively, which were recorded under "Lease liabilities" (current and non-current) on the condensed consolidated balance sheets.

Right of use assets and lease liabilities at June 30, 2022 and December 31, 2021 are summarized as follows:

Right of use assets June 30, 2022 December 31, 2021

At September 30, 2022 and December 31, 2021, the Company had finance lease liabilities of $ 2,345 and $ 2,470 , respectively, which were recorded under "Lease liabilities" (current and non-current) on the condensed consolidated balance sheets.

Right of use assets and lease liabilities at September 30, 2022 and December 31, 2021 are summarized as follows:

Right of use assets September 30, 2022 December 31, 2021

Operating leases $ 11,617 $ 6,929

1 unchanged sentence

Total $ 13,819 $ 9,288

Lease liabilities - current June 30, 2022 December 31, 2021

Lease liabilities - current September 30, 2022 December 31, 2021

Operating leases $ 3,727 $ 2,194

1 unchanged sentence

Total $ 3,900 $ 2,361

Lease liabilities - non-current June 30, 2022 December 31, 2021

Lease liabilities - non-current September 30, 2022 December 31, 2021

Operating leases $ 8,069 $ 4,811

1 unchanged sentence

Total $ 10,241 $ 7,114

For the three and six months ended June 30, 2022 and 2021, 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:

For the three and nine months ended September 30, 2022 and 2021, 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

15 unchanged sentences

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, 2022 aggregated to approximately $ 811 and $ 1,592 , respectively, and $ 770 and $ 1,486 for the three and six months ended June 30, 2021, respectively.

Rent expense charged to operations under operating lease agreements for the three and nine months ended September 30, 2022 aggregated to approximately $ 1,190 and $ 2,782 , respectively, and $ 788 and $ 2,274 for the three and nine months ended September 30, 2021, respectively.

NOTE 20 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

5 unchanged sentences

On May 28, 2019, the Company entered into a pay-fixed ( 2.05 %), receive-floating interest rate swap with a notional amount of $ 108,569 and a maturity date of June 27, 2023.

The Company's risk management objective and strategy with respect to the interest rate swap is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on a portion of its outstanding debt.

The receive-floating interest rate was based on the London Interbank Offered Rate ("LIBOR") in the original trade agreement.

Due to the discontinuation of LIBOR, in the third quarter of 2022, the Company modified its existing interest rate swap to reference 1-month CME Term SOFR (CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate) in the amended trade terms.

This modification was made under the relief provided for in ASC 848, "Reference Rate Reform" and therefore the derivative continues to qualify for hedge accounting.

payments on a portion of its outstanding debt.

The Company is meeting its objective since changes in the cash flows of the interest rate swap are expected to exactly offset the changes in the cash flows attributable to fluctuations in the contractually specified interest rate on the interest payments associated with the 2022 Credit Agreement.

The net interest expense related to the interest rate swap contract was $ 364 and $ 877 for the three and six months ended June 30, 2022, and $ 534 and $ 1,055 for the three and six months ended June 30, 2021, respectively, and was recorded in the condensed consolidated statements of earnings under "Interest expense, net." In addition, in connection with the Company's entering into the Amended

and Restated Credit Agreement on July 27, 2022 (see Note 8 "Revolving Loan"), the Company also modified its existing interest rate swap under the relief provided for in ASC 848, "Reference Rate Reform".

The net interest income related to the interest rate swap contract was $ 35 for the three months ended September 30, 2022.

The net interest expense related to the interest rate swap contract was $ 842 for the nine months ended September 30, 2022, and $ 538 and $ 1,593 for the three and nine months ended September 30, 2021, respectively.

The net interest income and expense were recorded in the condensed consolidated statements of earnings under "Interest expense, net."

On May 28, 2019, the Company also entered into a pay-fixed ( 0.00 %), receive-fixed ( 2.05 %) cross-currency swap to manage foreign exchange risk related to the Company's net investment in Chemogas.

The derivative has a notional amount of $ 108,569 , an effective date of May 28, 2019, and a maturity date of June 27, 2023.

The interest income related to the cross-currency swap contract was $ 563 and $ 1,113 for the three and six months ended June 30, 2022, and $ 563 and $ 1,119 for the three and six months ended June 30, 2021, respectively, which were recorded in the condensed consolidated statements of earnings under "Interest expense, net."

The interest income related to the cross-currency swap contract was $ 569 and $ 1,682 for the three and nine months ended September 30, 2022, and $ 563 and $ 1,682 for the three and nine months ended September 30, 2021, respectively, which were recorded in the condensed consolidated statements of earnings under "Interest expense, net."

The derivative instruments are with a single counterparty and are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract.

As such, the derivative instruments are categorized as a master netting arrangement and presented as a net "Derivative asset" or "Derivative liability" on the condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the fair value of the derivative instruments is presented as follows in the Company's condensed consolidated balance sheets:

Derivative assets (liabilities) June 30, 2022 December 31, 2021

As of September 30, 2022 and December 31, 2021, the fair value of the derivative instruments is presented as follows in the Company's condensed consolidated balance sheets:

Derivative assets (liabilities) September 30, 2022 December 31, 2021

Interest rate swap $ 1,612 $ ( 2,158 )

7 unchanged sentences

If determined not to be highly effective, the Company will discontinue hedge accounting.

As of June 30, 2022, the Company assessed the hedging relationships for the interest rate swap and cross-currency swap and determined them to be highly effective.

As of September 30, 2022, the Company assessed the hedging relationships for the interest rate swap and cross-currency swap and determined them to be highly effective.

As such, the net change in fair values of the derivative instruments was recorded in accumulated other comprehensive income.

Losses and gains on our hedging instruments are recognized in accumulated other comprehensive income (loss) and categorized as follows for the three and six months ended June 30, 2022 and 2021:

Location within Statements of Comprehensive Income Three Months Ended

June 30, Six Months Ended

Losses and gains on our hedging instruments are recognized in accumulated other comprehensive income (loss) and categorized as follows for the three and nine months ended September 30, 2022 and 2021:

Location within Statements of Comprehensive Income Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

The Company did not designate these contracts as hedged transactions under the applicable sections of ASC Topic 815, "Derivatives and Hedging".

For the six months ended June 30, 2022, the net gains on these forward contracts of $ 512 were recorded in other income or loss in the condensed consolidated statements of earnings.

As of June 30, 2022, the Company did not maintain any open foreign currency exchange forward contracts as all four contracts expired before June 30, 2022.

For the nine months ended September 30, 2022, the net gains on these forward contracts of $ 512 were recorded in other income or loss in the condensed consolidated statements of earnings.

As of September 30, 2022, the Company did not maintain any open foreign currency exchange forward contracts as all four contracts expired before June 30, 2022.

The following table summarizes the key terms of the four forward exchange contracts:.

5 unchanged sentences

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-Q

Item 1. Financial Statements