What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-04 compared with 2022-07-29 · 86 added, 82 removed, 169 unchanged (50% of the section changed)

2 unchanged sentences

Actions and performance could differ materially from what is contemplated by the forward-looking statements contained in this report.

Factors that might cause differences from the forward-looking statements include those referred to or identified in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2021 and other factors that may be identified elsewhere in this report.

Factors that might cause differences from the forward-looking statements include those referred to or identified in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2021 and Part II, Item 1A of the Company's Form 10-Q for the quarterly period ended June 30, 2022 and other factors that may be identified elsewhere in this report.

Reference should be made to such factors and all forward-looking statements are qualified in their entirety by the above cautionary statements.

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Balchem will continue to foster these fundamental principles broadly along our entire value chain, develop new ideas and technologies that help us work smarter, and help build a world that is a better place to live.

As of June 30, 2022, we employed approximately 1,359 f ull time employees worldwide.

As of September 30, 2022, we employed approximately 1,382 f ull time employees worldwide.

Although we are facing challenging labor markets, we believe that we have been successful in attracting skilled and experienced personnel in a competitive environment and that our human capital resources are adequate to perform all business functions.

In addition, we continue to enhance technology in order to optimize productivity and performance.

Acquisition of Bergstrom

On August 30, 2022, we completed the acquisition of Bergstom (as defined in Note 2 "Significant Acquisitions"), a leading science-based manufacturer of MSM, based in Vancouver, Washington.

Details related to the Bergstrom acquisition are disclosed in Note 2, "Significant Acquisitions".

The acquisition provides a synergistic scientific advantage in the Company's key strategic therapeutic focus areas such as longevity and performance and is a strong fit with the Company's specialty, science-backed mineral products, which should ultimately lead to growth for the Company's portfolios within the Human Nutrition & Health and Animal nutrition & Health segments.

Acquisition of Kappa

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Details related to the Kappa acquisition are disclosed in Note 2, "Significant Acquisitions".

The acquisition strengthens our scientific and technical expertise, geographic reach, and marketplace leadership, which should ultimately lead to accelerated growth for Balchem's portfolios within the Human Nutrition & Health segment.

COVID-19 Response

The COVID-19 response effort has been a significant focus for us since early 2020.

Our focus has been on employee safety first, keeping our manufacturing sites operational, satisfying customer needs, preserving cash and ensuring strong liquidity, and responding to changes in this dynamic market environment as appropriate.

As a result of our broad based risk mitigation efforts against the direct impacts of the Covid-19 pandemic, our manufacturing sites have been operating at near normal conditions, our research and development teams have continued to innovate in our laboratories, and all of our other employees have been effectively carrying on their responsibilities and functions remotely or in a reduced density hybrid setting.

We are increasingly focused on managing the extraordinary supply chain disruptions that are challenging the markets we operate within that are, at least in part, related to the pandemic and/or the global recovery from the pandemic.

We are experiencing severe input cost inflation, raw material shortages, logistics disruptions, and labor availability issues.

These indirect pandemic related challenges accelerated as 2021 progressed, continued into the first and second quarters of 2022, and are likely to continue for some time.

The acquisition strengthens our scientific and technical expertise, geographic reach, and marketplace leadership, which should ultimately lead to accelerated growth for the Company's portfolios within the Human Nutrition & Health segment.

Segment Results

We sell products for all three segments through our own sales force, independent distributors, and sales agents.

The following tables summarize consolidated net sales by segment and business segment earnings from operations for the three and six months ended June 30, 2022 and 2021:

The following tables summarize consolidated net sales by segment and business segment earnings from operations for the three and nine months ended September 30, 2022 and 2021:

Business Segment Net Sales Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Total $ 244,267 $ 197,869 $ 709,827 $ 585,890

Business Segment Earnings From Operations Three Months Ended

June 30, Six Months Ended

Business Segment Earnings From Operations Three Months Ended September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Unalloca ted 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 expens e of $741 and $1,479 for the three and six months ended June 30, 2022, respectively, and $604 and $1,208 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.

(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 expens e of $734 and $2,213 for the three and nine months ended September 30, 2022, respectively, and $604 and $1,812 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.

RESULTS OF OPERATIONS

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

Three months ended June 30, 2022 compared to three months ended June 30, 2021.

Three Months Ended June 30, Increase

Three months ended September 30, 2022 compared to three months ended September 30, 2021.

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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Net earnings $ 25,249 $ 25,013 $ 236 0.9 %

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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Total $ 244,267 $ 197,869 $ 46,398 23.4 %

• The increase in net sales within the Human Nutrition & Health segment for the second quarter of 2022 as compared to the second quarter of 2021 was driven both by sales growth within food and beverage markets as well as higher sales within the minerals and nutrients business.

• The increase in net sales within the Human Nutrition & Health segment for the third quarter of 2022 as compared to the third quarter of 2021 was driven by sales growth within food and beverage markets, the contribution from recent acquisitions, as well as sales growth within the minerals and nutrients business, partially offset by an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 28.3%, with average selling prices contributing 22.0%, volume and mix contributing 6.7%, and the change in foreign currency exchange rates contributing -0.4%.

• The increase in net sales within the Animal Nutrition & Health segment for the second quarter of 2022 compared to the second quarter of 2021 was the result of higher sales in monogastric and companion animal markets, partially offset by lower

sales in ruminant animal markets and an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 14.9%, with average selling prices contributing 28.1%, the change in foreign currency exchange rates contributing -3.4%, and volume and mix contributing -9.9%.

• The increase in Specialty Products segment sales for the second quarter of 2022 compared to 2021 was due to higher sales of products in the medical device sterilization market, partially offset by lower plant nutrition sales, and an unfavorable impact related to changes in foreign currency exchange rates.

• The increase in net sales within the Animal Nutrition & Health segment for the third quarter of 2022 compared to the third quarter of 2021 was the result of higher sales in both monogastric and ruminant species markets, the contribution from the recent acquisition of Bergstrom which included a small Animal Nutrition business, partially offset by an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 16.7%, with average selling prices contributing 24.1%, volume and mix contributing -3.0%, and the change in foreign currency exchange rates contributing -4.3%.

• The increase in Specialty Products segment sales for the third quarter of 2022 compared to 2021 was due to higher sales of products in the performance gases business, partially offset by lower plant nutrition sales, and an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 7.3% with average selling prices

contributing 18.0%, the change in foreign currency exchange rates contributing -3.8%, and volume and mix contributing -6.9%.

• Sales relating to Other increased from the prior year due to higher demand.

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

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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% of net sales 28.0 % 30.8 %

Gross margin dollars increased in the second quarter of 2022 compared to the second quarter of 2021 due to the aforementioned higher sales of $34,328, partially offset by an increase in cost of goods sold of $21,899.

The 15.3% increase in cost of goods sold was driven mainly by the higher sales as well as the significant inflation of manufacturing input costs, primarily related to raw materials, partially offset by the timing of costs associated with the recovery from a flash flood event at our Verona manufacturing facility in the prior year.

Gross margin dollars increased in the third quarter of 2022 compared to the third quarter of 2021 due to the aforementioned higher sales of $46,398, partially offset by an increase in cost of goods sold of $38,902.

The 28.4% increase in cost of goods sold was driven mainly by the higher sales as well as the significant inflation of manufacturing input costs, primarily related to raw materials, and the timing of insurance proceeds received in the prior year.

Operating Expenses

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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% of net sales 14.2 % 14.4 %

The increase in operating expenses was primarily due to certain higher compensation-related costs of $1,544 and higher advertising and marketing expenses of $555.

The increase in operating expenses was primarily due to incremental operating expenses related to acquisitions of $4,193, an increase in outside services of $1,588, and additional amortization of $1,426, partially offset by lower compensation-related costs of 2,148.

Earnings from Operations

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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% of net sales (operating margin) 13.8 % 16.4 %

• Earnings from operations for the Human Nutrition & Health segment increased primarily due to the aforementioned higher sales.

Gross margin as a percentage of sales remained relatively flat as a significant increase in certain manufacturing input

costs, largely related to raw materials, was offset by the timing of costs associated with the recovery of a flash flood event at our Verona facility in the prior year.

Additionally, total operating expenses for this segment increased by $1,453, primarily due to higher compensation-related costs of $785.

• Animal Nutrition & Health segment earnings from operations increased primarily due to the aforementioned higher sales and a 500 basis point increase in gross margin as a percentage of sales, due to the timing of costs associated with the recovery of a flash flood event at our Verona facility in the prior year, partially offset by a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment increased by $550, primarily due to higher advertising and marketing expenses of $317 and higher compensation-related costs of $250.

• Earnings from operations for the Human Nutrition & Health segment increased primarily due to the aforementioned higher sales and higher average selling prices, partially offset by higher manufacturing input costs, higher amortization and operating expenses related to the recent acquisitions, and the timing of an insurance reimbursement received in the prior year.

Gross margin as a percentage of sales decreased by 207 basis points, due to a significant increase in certain manufacturing input costs, largely related to raw materials, and the timing of an insurance reimbursement received in the prior year.

Additionally, total operating expenses for this segment increased by $5,857, primarily due to incremental operating expenses related to acquisitions of $3,677 and additional amortization of $1,449.

• Animal Nutrition & Health segment earnings from operations increased primarily due to the aforementioned higher sales and higher average selling prices, partially offset by increases in manufacturing input costs and distribution costs.

as a percentage of sales decreased by 408 basis points, due to a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment decreased by $973, which was largely related to a decrease in compensation-related costs.

• The increase in earnings from operations for the Specialty Products segment was primarily due to the aforementioned higher sales, partially offset by a 109 basis point decrease in gross margin as a percentage of sales, due to a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, total operating expenses for this segment increased by $502, primarily related to higher compensation-related costs of $458.

• The increase in Other and unallocated was primarily driven by the aforementioned higher sales, partially offset by an increase in transaction costs, primarily related to the Kappa acquisition.

Total operating expenses for this segment remained flat.

• The increase in Other and unallocated was primarily driven by the aforementioned higher sales, partially offset by an increase in transaction costs, primarily related to the acquisitions.

Other Expenses (Income)

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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$ 2,540 $ 428 $ 2,112 493.5 %

Interest expense for the three months ended June 30, 2022 and 2021 was primarily related to outstanding borrowings under the 2018 Credit Agreement.

Interest expense for the three months ended September 30, 2022 and 2021 was primarily related to outstanding borrowings under the 2022 Credit Agreement.

The increase in interest expense is due to the additional borrowings in connection with the acquisitions and rising interest rates.

Income Tax Expense

Three Months Ended June 30, Increase

Three Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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Effective tax rate 18.8 % 22.0 %

The decrease in the effective tax rate 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.

Six months ended June 30, 2022 compared to six months ended June 30, 2021.

Six Months Ended June 30, Increase

The decrease in the effective tax rate was primarily due to a favorable provision to return adjustment related to an increase in certain tax credits and deductions.

Nine months ended September 30, 2022 compared to nine months ended September 30, 2021.

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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Net earnings $ 83,961 $ 71,155 $ 12,806 18.0 %

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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Total $ 709,827 $ 585,890 $ 123,937 21.2 %

• The increase in net sales within the Human Nutrition & Health segment for the six months ended June 30, 2022 as compared to 2021 was primarily attributed to sales growth within food and beverage markets.

• The increase in net sales within the Human Nutrition & Health segment for the nine months ended September 30, 2022 as compared to 2021 was primarily attributed to sales growth within food and beverage markets, the contribution from recent acquisitions, as well as higher sales within the minerals and nutrients business, partially offset by an unfavorable impact related to change in foreign currency exchange rates.

Total sales for this segment grew 21.3%, with average selling prices contributing 18.2%, volume and mix contributing 3.4%, and the change in foreign currency exchange rates contributing -0.3%.

• The increase in net sales within the Animal Nutrition & Health segment for the six months ended June 30, 2022 compared to 2021 was primarily the result of higher sales in monogastric markets.

• The increase in net sales within the Animal Nutrition & Health segment for the nine months ended September 30, 2022 compared to 2021 was primarily the result of higher sales in monogastric and ruminant species markets, partially offset by an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 22.1%, with average selling prices contributing 28.0%, volume and mix contributing -2.6%, and the change in foreign currency exchange rates contributing -3.3%.

• The increase in Specialty Products segment sales for the six months ended June 30, 2022 compared to 2021 was primarily due to higher sales of products in the medical device sterilization market.

• The increase in Specialty Products segment sales for the nine months ended September 30, 2022 compared to 2021 was primarily due to higher sales of products in the medical device sterilization market, partially offset by lower plant nutrition sales, and an unfavorable impact related to changes in foreign currency exchange rates.

Total sales for this segment grew 11.1%, with average selling prices contributing 17.1%, volume and mix contributing -3.2%, and the change in foreign currency exchange rates contributing -2.7%.

• Sales relating to Other increased from the prior year due to higher demand.

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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% of net sales 29.8 % 30.6 %

Gross margin dollars increased for the six months ended June 30, 2022 compared to 2021 due to the aforementioned higher sales of $77,539, partially offset by an increase in cost of goods sold of $52,331.

The 19.4% increase in cost of goods sold was mainly driven by the significant inflation of manufacturing input costs, primarily related to raw materials, partially offset by the timing of costs associated with a flash flood event at our Verona manufacturing facility in the prior year.

Gross margin dollars increased for the nine months ended September 30, 2022 compared to 2021 due to the aforementioned higher sales of $123,937, partially offset by an increase in cost of goods sold of $91,233.

The 22.4% increase in cost of goods sold was mainly driven by the higher sales, significant inflation of manufacturing input costs, primarily related to raw materials, and the timing of an insurance reimbursement, partially offset by the timing of costs associated with a flash flood event in the prior year.

Operating Expenses

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

1 unchanged sentence

% of net sales 14.1 % 14.6 %

The increase in operating expenses was primarily due to higher compensation-related costs of $4,201, an increase in advertising and marketing of $1,043, and higher travel expenses of $735.

The increase in operating expenses was primarily due to an increase in outside services of $4,445, incremental operating expenses related to the acquisitions of $3,717, higher compensation-related costs of $2,008, and transaction costs of $1,934.

Earnings from Operations

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

5 unchanged sentences

% of net sales (operating margin) 15.8 % 16.0 %

• Earnings from operations for the Human Nutrition & Health segment increased primarily due to the aforementioned higher sales and a 100 basis point increase in gross margin as a percentage of sales, primarily related to the timing of costs associated with the recovery of a flash flood event at our Verona manufacturing facility in the prior year, partially offset by a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment increased by $4,110, primarily due to higher compensation-related costs of $2,086.

• Animal Nutrition & Health segment earnings from operations increased primarily due to the aforementioned higher sales and a 530 basis point increase in gross margin as a percentage of sales primarily related to the timing of costs associated with the recovery of a flash flood event at our Verona manufacturing facility in the prior year, partially offset by a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment increased by $1,759, primarily related to higher compensation-related costs of $932 and an increase in advertising and marketing of $505.

• Earnings from operations for the Human Nutrition & Health segment increased primarily due to the aforementioned higher sales, partially offset by a 139 basis point decrease in gross margin as a percentage of sales, primarily due to a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment increased by $9,964, primarily due to incremental operating expenses related to the acquisitions of $3,674, outside services of $2,572, and higher compensation-related costs of $1,062.

• Animal Nutrition & Health segment earnings from operations increased primarily due to the aforementioned higher sales and a 207 basis point increase in gross margin as a percentage of sales primarily related to the timing of costs associated with the recovery of a flash flood event in the prior year, partially offset by a significant increase in certain manufacturing input costs, largely related to raw materials.

Additionally, operating expenses for this segment increased by $786, primarily related to higher outside services of $849.

• The increase in earnings from operations for the Specialty Products segment was primarily due to the aforementioned higher sales, partially offset by a 208 basis point decrease in gross margin as a percentage of sales, primarily due to a significant increase in certain manufacturing input costs, largely related to raw materials.

• Earnings from operations relating to Other increased from the prior year primarily due to the aforementioned higher sales, partially offset by an increase in transaction costs, mainly related to the Kappa acquisition.

Additionally, operating expenses for this segment increased by $1,315, primarily related to higher compensation-related costs.

Other Expenses (Income)

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

2 unchanged sentences

$ 3,908 $ 1,594 $ 2,314 145.2 %

Interest expense for the six months ended June 30, 2022 and 2021 was primarily related to outstanding borrowings under the 2018 Credit Agreement.

Interest expense for the nine months ended September 30, 2022 and 2021 was primarily related to outstanding borrowings under the 2022 Credit Agreement.

The increase in interest expense is due to the additional borrowings in connection with the acquisitions and rising interest rates.

Income Tax Expense

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

1 unchanged sentence

Effective tax rate 22.2 % 22.7 %

The increase in the effective tax rate was primarily due to lower tax benefits from stock-based compensation and a reduction in certain tax credits.

The decrease in the effective tax rate 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.

FINANCIAL CONDITION

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

In June 2022 we drew down an additional $345,000 from our revolving credit facility to fund the acquisition of Kappa.

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 a contingent consideration liability of kr245,000 (translated to $24,793) as of June 30, 2022.

Excluding the events previously mentioned, there were no other material changes during the six months ended June 30, 2022 outside the ordinary course of business in the specified contractual obligations set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.

In June 2022, we drew down $345,000 from our revolving credit facility to fund the acquisition of Kappa.

In August 2022, we drew down an additional $70,000 from our revolving credit facility to fund the acquisition of Bergstrom.

In connection with this transaction, the seller has 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 part of the consideration given in the third quarter of 2022 (see Note 2, "Significant Acquisitions").

Excluding the events previously mentioned, there were no other material changes during the nine months ended September 30, 2022 outside the ordinary course of business in the specified contractual obligations set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.

We expect our operations to continue generating sufficient cash flow to fund working capital requirements and necessary capital investments.

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

Cash and cash equivalents decreased to $76,183 at June 30, 2022 from $103,239 at December 31, 2021.

At June 30, 2022, the Company had $61,390 of cash and cash equivalents held by foreign subsidiaries.

Cash and cash equivalents decreased to $56,489 at September 30, 2022 from $103,239 at December 31, 2021.

At September 30, 2022, the Company had $39,191 of cash and cash equivalents held by foreign subsidiaries.

We presently intend to permanently reinvest these funds in foreign operations by continuing to make additional plant related investments, and potentially invest in partnerships or acquisitions;

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

Working capital was $232,998 at June 30, 2022 as compared to $178,430 at December 31, 2021, an increase of $54,568.

Working capital was $226,026 at September 30, 2022 as compared to $178,430 at December 31, 2021, an increase of $47,596.

Working capital reflects the payment of the 2021 declared dividend in 2022 of $20,708, payments on the revolving loan and acquired debt of $111,782, and capital expenditures and intangible assets acquired of $35,793.

Six Months Ended June 30, Increase

Nine Months Ended September 30, Increase

(in thousands) 2022 2021 % Change

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As previously noted, on June 21, 2022, we completed the acquisition of Kappa, a leading science-based manufacturer of specialty vitamin K2 for the human nutrition industry, headquartered in Oslo, Norway.

Cash paid for the acquisition, net of cash acquired, amounted to $295,660 .

On August 30, 2022, we completed another acquisition of Bergstrom, a leading science-based manufacturer of MSM, based in Vancouver, Washington.

Cash paid for these acquisitions, net of cash acquired, amounted to $365,780 .

We continue to invest in corporate projects, improvements across all production facilities, and intangible assets.

Total investments in property, plant and equipment and inta ngible assets were $20,799 and $13,760 f or the six months ended June 30, 2022 and 2021, respectively.

Total investments in property, plant and equipment and inta ngible assets were $35,793 and $22,391 f or the nine months ended September 30, 2022 and 2021, respectively.

Financing Activities

As previously noted, the acquisition of Kappa was primarily funded through the 2018 Credit Agreement.

We borrowed $365,000 against the revolving loan and made total loan payments of $40,000 during the six months ended June 30, 2022, resulting in $66,431 available under the 2018 Credit Agreement as of June 30, 2022.

In addition, we also made payments of $30,648 on the acquired debt related to the acquisition of Kappa.

As previously noted, the acquisition of Kappa was primarily funded through the 2018 Credit Agreement and the acquisition of Bergstrom was funded through the 2022 Credit Agreement.

We borrowed $435,000 against the revolving loan and made total loan payments of $81,000 during the nine months ended September 30, 2022, resulting in $87,431 available under the 2022 Credit Agreement as of September 30, 2022.

In addition, we made payments of $30,782 on the acquired debt related to the acquisitions.

We have an approved stock repurchase program.

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

Proceeds from stock options exercis ed were $1,328 and $3,886 for the six months ended June 30, 2022 and 2021, respectively.

Dividend payments were $20,704 and $18,700 for the six mont hs ended June 30, 2022 and 2021, respectively.

Proceeds from stock options exercis ed were $2,172 and $6,351 for the nine months ended September 30, 2022 and 2021, respectively.

Dividend payments were $20,708 and $18,704 for the nine mont hs ended September 30, 2022 and 2021, respectively.

Other Matters Impacting Liquidity

We currently provide postretirement benefits in the form of two retirement medical plans, as discussed in Note 15 – Employee Benefit Plans.

The liabil ity recorded in "Other long-term liabilities" on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 was $1,221 and $1,293, respectively, an d the plans are not funded.

The liabil ity recorded in "Other long-term liabilities" on the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 was $1,247 and $1,293, respectively, an d the plans are not funded.

Historical cash payments made under these plans have typically been less than $100 per year.

2 unchanged sentences

Assets of the plan are held in a rabbi trust, which are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company.

The deferred compensation liability as of June 30, 2022 and December 31, 2021 was $8,220 and $6,251, respectively, and was included in "other long-term obligations" on our balance sheet.

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

The deferred compensation liability as of September 30, 2022 and December 31, 2021 was $8,011 and $6,251, respectively, and was included in "other long-term obligations" on our balance sheet.

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

Chemogas has an unfunded defined benefit plan.

The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees.

The amount recorded for these obligations on our balance sheets as of June 30, 2022 and December 31, 2021 were $641 and $684, respective ly, and were included in "other long-term obligations."

The amount recorded for these obligations on our balance sheets as of September 30, 2022 and December 31, 2021 were $607 and $684, respective ly, and were included in "other long-term obligations."

Critical Accounting Policies

There were no changes to the Company's Critical Accounting Policies, as described in its December 31, 2021 Annual Report on Form 10-K, during the six months ended June 30, 2022.

There were no changes to the Company's Critical Accounting Policies, as described in its December 31, 2021 Annual Report on Form 10-K, during the nine months ended September 30, 2022.

Related Party Transactions

We were engaged in related party transactions with St.

Gabriel CC Company, LLC during the three and six months ended June 30, 2022.

Gabriel CC Company, LLC during the three and nine months ended September 30, 2022.

Refer to Note 18, "Related Party Transactions".

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 2. Management’s Discussion and Analysis