What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-10-27 · 180 added, 380 removed, 460 unchanged (55% of the section changed)

3 unchanged sentences

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

Assets September 30, 2023 (unaudited) December 31, 2022

Assets March 31, 2024 (unaudited) December 31, 2023

Current assets:

Cash and cash equivalents $ 60,349 $ 64,447

Accounts receivable, net of allowance for doubtful accounts of $ 842 and $ 1,226 at

September 30, 2023 and December 31, 2022 respectively

Accounts receivable, net of allowances of $ 997 and $ 908 at March 31, 2024 and December 31, 2023 respectively

139,881 125,284

1 unchanged sentence

Prepaid expenses 7,122 7,798

Prepaid income taxes 5,085 —

Derivative assets — 5,993

Other current assets 7,126 7,192

5 unchanged sentences

Right of use assets - finance lease 2,037 2,101

Other assets 16,494 15,118

Other non-current assets 17,216 16,947

Total assets $ 1,588,700 $ 1,597,211

22 unchanged sentences

Authorized 120,000,000 shares;

32,240,144 and

32,152,787 shares issued and outstanding at September 30, 2023 and

December 31, 2022, respectively

32,423,400 and 32,254,728 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 154,026 145,653

Retained earnings 926,474 897,488

Accumulated other comprehensive loss ( 14,232 ) ( 7,154 )

Accumulated other comprehensive (loss) income ( 3,872 ) 8,691

Total stockholders' equity 1,078,791 1,053,984

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net sales $ 239,659 $ 232,540

9 unchanged sentences

Interest expense, net 5,398 5,565

Other expense (income), net 545 ( 1,102 ) ( 458 ) ( 1,239 )

7,139 2,540 16,864 3,908

Other income, net ( 572 ) ( 276 )

Earnings before income tax expense 36,850 29,119

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net earnings $ 28,986 $ 22,710

Other comprehensive loss, net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 12,717 ) 9,424

Unrealized gain (loss) on cash flow hedge — 427 ( 1,065 ) 2,850

Unrealized loss on cash flow hedge — ( 511 )

Change in postretirement benefit plans 154 100

Other comprehensive loss ( 14,423 ) ( 34,445 ) ( 7,078 ) ( 41,876 )

Comprehensive income (loss) $ 14,652 $ ( 9,196 ) $ 74,817 $ 42,085

Other comprehensive (loss) income ( 12,563 ) 9,013

Comprehensive income $ 16,423 $ 31,723

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

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

3 unchanged sentences

Comprehensive

(Loss) Income Common Stock Additional

Income (Loss) Common Stock Additional

Shares Amount

1 unchanged sentence

Net earnings 28,986 28,986 — — — —

Other comprehensive income 9,013 — 9,013 — — —

Repurchases of common stock ( 3,849 ) — — ( 28,109 ) ( 2 ) ( 3,847 )

Shares and options issued under stock plans 7,258 — — 100,949 7 7,251

Balance - March 31, 2023 973,416 837,197 1,859 32,225,627 2,150 132,210

Net earnings 30,110 30,110 — — — —

Other comprehensive loss ( 12,563 ) — ( 12,563 ) — — —

Repurchases of common stock ( 75 ) — — ( 567 ) — ( 75 )

Shares and options issued under stock plans 5,120 — — 14,142 1 5,119

Balance - June 30, 2023 1,006,903 867,307 191 32,239,202 2,151 137,254

Net earnings 29,075 29,075 — — — —

Other comprehensive loss ( 14,423 ) — ( 14,423 ) — — —

Repurchases of common stock ( 101 ) — — ( 775 ) — ( 101 )

Repurchases of common stock, including excise tax ( 5,254 ) — — ( 36,122 ) ( 2 ) ( 5,252 )

Shares and options issued under stock plans 13,638 — — 204,794 13 13,625

Balance - September 30, 2023 $ 1,025,267 $ 896,382 $ ( 14,232 ) 32,240,144 $ 2,151 $ 140,966

See accompanying notes to condensed consolidated financial statements.

BALCHEM CORPORATION

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

For the Three and Nine Months Ended September 30, 2023 and 2022

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

Stockholders'

Equity Retained

Earnings Accumulated

Comprehensive

(Loss) Income Common Stock Additional

Shares Amount

Balance - March 31, 2024 $ 1,078,791 $ 926,474 $ ( 3,872 ) 32,423,400 $ 2,163 $ 154,026

Balance - December 31, 2022 $ 938,284 $ 814,487 $ ( 7,154 ) 32,152,787 $ 2,145 $ 128,806

Net earnings 22,710 22,710 — — — —

Other comprehensive loss ( 1,296 ) — ( 1,296 ) — — —

Repurchases of common stock ( 34,599 ) — — ( 245,685 ) ( 16 ) ( 34,583 )

Dividends ( 10 ) ( 10 ) — — — —

Other comprehensive income 9,013 — 9,013 — — —

Repurchases of common stock, including excise tax ( 3,887 ) — — ( 28,109 ) ( 2 ) ( 3,885 )

Shares and options issued under stock plans 7,296 — — 100,949 7 7,289

Balance - March 31, 2023 $ 973,416 $ 837,197 $ 1,859 32,225,627 $ 2,150 $ 132,210

Net earnings 29,782 29,782 — — — —

Other comprehensive loss ( 6,135 ) — ( 6,135 ) — — —

Repurchases of common stock ( 600 ) — — ( 4,976 ) — ( 600 )

Shares and options issued under stock plans 4,641 — — 9,500 1 4,640

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.

BALCHEM CORPORATION

1 unchanged sentence

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

6 unchanged sentences

Unrealized gain on foreign currency transactions and deferred compensation ( 726 ) ( 349 )

Asset impairment and loss on disposal of assets 6,858 282

Gain on disposal of assets ( 144 ) ( 968 )

Change in fair value of contingent consideration liability — 1,600

8 unchanged sentences

Cash flows from investing activities:

Cash paid for acquisitions, net of cash acquired ( 1,252 ) ( 365,780 )

Capital expenditures and intangible assets acquired ( 6,910 ) ( 9,664 )

Cash paid for acquisitions, net of cash acquired — ( 341 )

Proceeds from sale of assets 213 —

Proceeds from settlement of net investment hedge 2,740 —

Investment in affiliates ( 42 ) ( 56 )

3 unchanged sentences

Principal payments on revolving loan ( 34,000 ) ( 22,000 )

Principal payments on acquired debt — ( 30,782 )

Cash paid for financing costs — ( 1,232 )

Principal payments on finance lease ( 57 ) ( 55 )

1 unchanged sentence

Dividends paid ( 25,555 ) ( 22,867 )

Purchase of common stock ( 4,025 ) ( 35,245 )

Net cash (used in) provided by financing activities ( 83,175 ) 268,080

Repurchases of common stock ( 5,202 ) ( 3,849 )

Net cash used in financing activities ( 30,023 ) ( 33,318 )

Effect of exchange rate changes on cash ( 724 ) 2,180

Increase (decrease) in cash and cash equivalents 10,392 ( 46,750 )

Decrease in cash and cash equivalents ( 4,098 ) ( 6,361 )

Cash and cash equivalents beginning of period 64,447 66,560

13 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 nine months ended September 30, 2023 are not necessarily indicative of the operating results expected for the full year or any interim period.

Recently Adopted Accounting Pronouncements

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results expected for the full year or any interim period.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures." The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid.

The amendment is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendment in this Update should be applied on a prospective basis, with retrospective application permitted.

The Company is in the process of evaluating the impact that the adoption of ASU 2023-09 will have to the financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures." The ASU expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

The ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources.

Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning December 15, 2024.

Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.

The adoption of this guidance will not affect the Company's consolidated results of operations, financial position or cash flows.

The Company is currently evaluating the effect the guidance will have on its disclosures.

Recently Adopted Accounting Standards

In August 2023, the FASB issued Accounting Standards Update ("ASU") 2023-05, "Business Combinations - Joint Venture Formations (Subtopic 805-60):

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While ASU 2023-05 is not currently applicable to Balchem, the Company will apply this guidance in future reporting periods after the guidance is effective to any future arrangements meeting the definition of a joint venture.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting", and in December 2022 subsequently issued ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.” These ASU’s provide temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The Standards Updates provide optional expedients and exceptions for applying accounting principles generally accepted in the United States to contract modifications and hedging relationships that reference LIBOR or another reference rate that are expected to be discontinued.

The Standards Updates were effective upon issuance and can generally be applied through December 31, 2024.

Due to the discontinuation of LIBOR and under the relief provided by Topic 848, during the third quarter of 2022, the Company modified its interest rate swap and replaced LIBOR with 1-month CME Term SOFR.

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

The interest rate swap matured on June 27, 2023.

NOTE 2 – SIGNIFICANT ACQUISITIONS

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 100 % of the voting equity interests of Cardinal and its Bergstrom Nutrition business (collectively, "Bergstrom").

Bergstrom Nutrition is a leading science-based manufacturer of 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.

The addition of OptiMSM ® , Bergstrom Nutrition's MSM brand, to the Company's portfolio within the Human Nutrition and Health and Animal Nutrition and 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 $ 72,143 for the acquisition, amounting to $ 71,937 to the former shareholders or on behalf of the former shareholders and $ 206 to pay off Bergstrom's bank debt.

Net of cash acquired of $ 773 , total payments made to the former shareholders or on behalf of the former shareholders of Bergstrom were $ 71,164 .

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 in the second quarter of 2024 if certain financial performance targets and other metrics are met, and therefore, the Company recorded a contingent consideration liability, which was valued at $ 1,500 as of September 30, 2023 and was included in "Accrued expenses" on the condensed consolidated balance sheets.

The Company also made an additional post-closing payment of $ 910 in the third quarter of 2023 that was negotiated as a deduction of the cash consideration at closing.

As a result, total payments related to the transaction are expected to be $ 73,643 , comprised of the cash consideration at closing of $ 70,892 , a working capital adjustment of $ 341 , an additional post-closing payment of $ 910 , and the fair value of the earn-out payment of $ 1,500 .

The goodwill of $ 31,550 that arose on the acquisition date consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce.

80 % of the goodwill is assigned to the Human Nutrition and Health business segment and 20 % of the goodwill is assigned to the Animal Nutrition and Health business segment.

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 fair values of the assets acquired and liabilities assumed:

Cash and cash equivalents $ 773

Accounts receivable 4,699

Inventories 3,972

Property, plant and equipment 2,243

Right of use assets 866

Customer relationships 29,900

Developed technology 4,600

Trademarks 2,300

Other assets 197

Accounts payable ( 699 )

Bank debt ( 206 )

Lease liabilities ( 871 )

Other liabilities ( 462 )

Goodwill 31,550

Total consideration on acquisition date and working capital adjustment 78,862

Net decrease to contingent consideration liability and other post-closing payments ( 5,425 )

Total expected consideration 73,437

To pay off bank debt 206

Total expected payments $ 73,643

The fair value of tangible and intangible assets acquired and liabilities assumed is based on management’s estimates and assumptions.

In preparing our 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.

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 $( 3,342 ) and $( 9,222 ) for the three and nine months ended September 30, 2023, respectively.

These amounts included favorable adjustments to transaction costs of $ 3,500 and $ 9,900 for the three and nine months ended September 30, 2023,

respectively.

Transaction and integration costs related to the Bergstrom acquisition were $ 593 and $ 668 for the three and nine months ended September 30, 2022.

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”).

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

Primarily, vitamin K2 supports the transport and distribution of calcium in the body.

Vitamin K2 is important at all life stages, from pregnancy and early life to healthy aging.

The acquisition strengthens the Company's 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 and Health segment.

The Company made payments of approximately kr 3,305,653 ("kr" indicates the Norwegian krone), amounting to approximately kr 3,001,981 to the former shareholders and approximately kr 303,672 to Kappa's lenders to pay off all Kappa bank debt.

Net of cash acquired of kr 63,064 , total payments to the former shareholders were kr 2,938,917 .

Net of gains on foreign currency forward contracts of $ 512 , these payments translated to approximately $ 333,112 , amounting to approximately $ 302,464 paid to the former shareholders and approximately $ 30,648 to Kappa's lenders.

Net of cash acquired of $ 6,365 , total payments made to the former shareholders of Kappa were approximately $ 296,099 .

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

In connection with this transaction, the former shareholders of Kappa have an opportunity to receive an additional payment in the second quarter of 2024 if certain financial performance targets and other metrics are met.

There was no contingent consideration liability recorded as of September 30, 2023.

The goodwill of $ 216,383 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 the Human Nutrition and Health business segment and is not deductible for income tax purposes.

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

Accounts receivable 8,036

Inventories 17,600

Property, plant and equipment 9,854

Right of use assets 3,349

Customer relationships 88,813

Developed technology 15,643

Trademarks 5,046

Other assets 2,399

Accounts payable ( 3,301 )

Bank debt ( 30,648 )

Lease liabilities ( 3,349 )

Other liabilities ( 4,461 )

Deferred income taxes, net ( 24,716 )

Goodwill 216,383

Total consideration on acquisition date 307,013

Decrease to contingent consideration liability ( 4,037 )

Net gain on foreign currency exchange forward contracts ( 512 )

Total expected consideration 302,464

Kappa bank debt paid on acquisition date 30,648

Total expected payments $ 333,112

The fair value of tangible and intangible assets acquired and liabilities assumed is based on management’s estimates and assumptions.

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

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

Transaction and integration costs related to the Kappa acquisition are included in general and administrative expenses and were $ 46 and $ 525 for the three and nine months ended September 30, 2023, respectively, and $ 989 and $ 1,440 for the three and nine months ended September 30, 2022.

The following selected unaudited pro forma information presents the consolidated results of operations as if the business combinations in 2022 had occurred as of January 1, 2021.

Three Months Ended September 30, Nine Months Ended September 30,

Net Sales Net Earnings Net Sales Net Earnings

Kappa & Bergstrom actual results included in the Company's consolidated income statement in three and nine months ended September 30, 2023 $ 16,568 $ 4,732 $ 44,313 $ 3,517

2023 Supplemental pro forma combined financial $ 229,948 $ 30,937 $ 693,740 $ 88,155

2022 Supplemental pro forma combined financial $ 247,614 $ 26,831 $ 749,489 $ 86,275

The above selected unaudited pro forma information includes the following acquisition-related adjustments:

(1) additional amortization of intangible assets and depreciation of fixed assets;

(2) adjustments related to the fair value of the acquired inventory, (3) adjustments to interest expense on borrowings at rates in effect during the related period, factoring in estimated payments based on free cash flow, and (4) other one-time adjustments.

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

NOTE 2 - STOCKHOLDERS' EQUITY

Stock-Based Compensation

The Company’s results for the three and nine months ended September 30, 2023 and 2022 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The Company’s results for the three months ended March 31, 2024 and 2023 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:

Increase/(Decrease) for the

Three Months Ended March 31,

Cost of sales $ 400 $ 414

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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 September 30, 2023, the plan had 1,035,010 shares available for future awards, which included an additional 800,000 shares approved by the Company's shareholders during its annual meeting of shareholders held on June 22, 2023.

As of March 31, 2024, the plan had 841,421 shares available for future awards, which included an additional 800,000 shares approved by the Company's shareholders during its annual meeting of shareholders held on June 22, 2023.

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 nine months ended September 30, 2023 and 2022 is summarized below:

For the Nine Months Ended September 30, 2023 Shares (000s) Weighted

Option activity for the three months ended March 31, 2024 and 2023 is summarized below:

For the Three Months Ended March 31, 2024 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited ( 1 ) 134.45

Canceled ( 1 ) 138.07

Outstanding as of September 30, 2023 1,095 $ 104.00 $ 26,825 5.9

Exercisable as of September 30, 2023 728 $ 88.01 $ 26,512 4.6

For the Nine Months Ended September 30, 2022 Shares (000s) Weighted

Outstanding as of March 31, 2024 1,065 $ 112.48 $ 45,223 6.3

Exercisable as of March 31, 2024 699 $ 97.89 $ 39,881 4.9

For the Three Months Ended March 31, 2023 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited ( 3 ) 128.27

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

Outstanding as of March 31, 2023 1,120 $ 104.04 $ 29,327 6.5

Exercisable as of March 31, 2023 743 $ 88.07 $ 28,781 5.2

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 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, 2023, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions:

For the three months ended March 31, 2024, the fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions:

dividend yields of 0.6 %;

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and expected lives of 5.0 years.

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:

For the three months ended March 31, 2023, 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 %;

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

Other information pertaining to option activity during the three and nine months ended September 30, 2023 and 2022 is as follows:

Other information pertaining to option activity during the three months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Weighted-average fair value of options granted $ 44.52 $ 40.91

Total intrinsic value of stock options exercised ($000s) $ 10,377 $ 1,584

Non-vested restricted stock activity for the nine months ended September 30, 2023 and 2022 is summarized below:

Nine Months Ended September 30,

Non-vested restricted stock activity for the three months ended March 31, 2024 and 2023 is summarized below:

Three Months Ended March 31,

Shares (000s) Weighted

6 unchanged sentences

Forfeited ( 1 ) 129.93 ( 1 ) 125.18

Non-vested balance as of September 30 123 $ 132.01 121 $ 122.96

Non-vested performance share activity for the nine months ended September 30, 2023 and 2022 is summarized below:

Nine Months Ended September 30,

Non-vested balance as of March 31 118 $ 139.95 128 $ 131.41

Non-vested performance share activity for the three months ended March 31, 2024 and 2023 is summarized below:

Three Months Ended March 31,

Shares (000s) Weighted

6 unchanged sentences

Forfeited — — — —

Non-vested balance as of September 30 76 $ 135.25 70 $ 127.69

Non-vested balance as of March 31 79 $ 150.73 76 $ 135.25

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.

Expense is measured based on the fair value at the date of grant utilizing a Black-Scholes methodology to produce a Monte-Carlo simulation model which allows for the incorporation of the performance hurdles that must be met before the PS vests.

Expense is measured based on the fair value of the grant at the date of grant.

A Monte-Carlo simulation has been used to estimate the fair value.

The assumptions used in the fair value determination were risk free interest rates of 4.2 % and 4.2 %;

1 unchanged sentence

volatilities of 25 % and 32 %;

and initial TSR’s of 4.2 % and - 15.7 %, in each case for the nine months ended September 30, 2023 and 2022, respectively.

and initial TSR’s of 10.3 % and 4.2 %, in each case for the three months ended March 31, 2024 and 2023, 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 September 30, 2023 and 2022, there were $ 22,470 and $ 23,665 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of September 30, 2023, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.8 years.

Grants may be subject to a mandatory holding period of one year from the vesting date.

For PS grants made for the 2024-2026 performance period, grants are subject to such holding period.

As of March 31, 2024 and 2023, there were $ 30,380 and $ 30,507 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of March 31, 2024, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.2 years.

The Company estimates that share-based compensation expense for the year ended December 31, 2024 will be approximately $ 16,700 .

2 unchanged sentences

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

Since the inception of the program in June 1999, a total of 3,099,999 shares have been purchased.

Since the inception of the program in June 1999, a total of 3,139,228 shares have been repurchased.

The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors.

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

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

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

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

During the nine months ended September 30, 2023, the Company purchased 29,451 shares from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan at an average cost of $ 136.69 .

During the nine months ended September 30, 2022, the Company purchased 251,022 shares from open market purchases and from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan at an average cost of $ 140.41 .

During the three months ended March 31, 2024 and 2023, the Company purchased 36,122 and 28,109 shares, respectively, from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan at an average cost of $ 144.02 and $ 136.94 , respectively.

NOTE 3 – INVENTORIES

Inventories, net of reserves at September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023 December 31, 2022

Inventories, net of reserves at March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024 December 31, 2023

Raw materials $ 32,759 $ 39,517

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NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at September 30, 2023 and December 31, 2022 are summarized as follows:

September 30, 2023 December 31, 2022

Property, plant and equipment at March 31, 2024 and December 31, 2023 are summarized as follows:

March 31, 2024 December 31, 2023

Land $ 11,654 $ 11,787

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Property, plant and equipment, net $ 274,033 $ 276,039

In accordance with Topic 360, the Company reviews long-lived assets for impairment on an annual basis and also whenever events indicate that the carrying amount of the assets may not be fully recoverable.

In accordance with Topic 360, the Company reviews long-lived assets for impairment whenever events indicate that the carrying amount of the assets may not be fully recoverable.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, which is generally based on discounted cash flows.

Included in “General and administrative expenses” were $ 1,618 and $ 7,764 of restructuring-related impairment and asset disposal charges for the three and nine months ended September 30, 2023.

There were no such charges for the three and nine months ended September 30, 2022.

There were no impairment charges recorded for the three months ended March 31, 2024 and 2023.

NOTE 5 - INTANGIBLE ASSETS

The Company had goodwill in the amount of $ 766,545 and $ 769,509 as of September 30, 2023 and December 31, 2022, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is primarily due to foreign currency translation adjustments.

Identifiable intangible assets with finite lives at September 30, 2023 and December 31, 2022 are summarized as follows:

(in years) Gross Carrying Amount at September 30, 2023 Accumulated Amortization at September 30, 2023 Gross Carrying Amount at December 31, 2022 Accumulated Amortization at December 31, 2022

The Company had goodwill in the amount of $ 771,538 and $ 778,907 as of March 31, 2024 and December 31, 2023, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is primarily due to foreign currency translation adjustments.

Identifiable intangible assets with finite lives at March 31, 2024 and December 31, 2023 are summarized as follows:

(in years) Gross Carrying Amount at March 31, 2024 Accumulated Amortization at March 31, 2024 Gross Carrying Amount at December 31, 2023 Accumulated Amortization at December 31, 2023

Customer relationships & lists 10 - 20

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$ 475,760 $ 293,716 $ 479,235 $ 288,023

Amortization of identifiable intangible assets was approximately $ 6,947 and $ 21,132 for the three and nine months ended September 30, 2023, respectively, and $ 7,922 and $ 19,683 for the three and nine months ended September 30, 2022, respectively.

Amortization of identifiable intangible assets was approximately $ 6,342 and $ 7,293 for the three months ended March 31, 2024 and 2023, respectively.

Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $ 12,832 for the remainder of 2024, $ 15,715 for 2025, $ 15,516 for 2026, $ 14,992 for 2027, $ 14,594 for 2028 and $ 14,171 for 2029.

At September 30, 2023 and December 31, 2022, 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 nine months ended September 30, 2023 and 2022.

At March 31, 2024 and December 31, 2023, 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” on the Company’s condensed consolidated balance sheets.

There were no changes to the useful lives of intangible assets subject to amortization during the three months ended March 31, 2024 and 2023.

NOTE 6 - EQUITY METHOD INVESTMENT

In 2013, the Company and Eastman Chemical Company (formerly Taminco Corporation) formed a joint venture ( 66.66 % / 33.34 % ownership), St.

In 2013, the Company and Eastman Chemical Company formed a joint venture ( 66.66 % / 33.34 % ownership), St.

Gabriel CC Company, LLC, to design, develop, and construct an expansion of the Company’s St.

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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 loss of $ 118 and $ 396 for the three and nine months ended September 30, 2023, respectively, and $ 140 and $ 420 for the three and nine months ended September 30, 2022, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 69 and $ 141 for the three and nine months ended September 30, 2023, respectively, and $ 89 and $ 222 for the three and nine months ended September 30, 2022.

The carrying value of the joint venture at September 30, 2023 and December 31, 2022 was $ 4,039 and $ 4,295 , respectively, and is recorded in "Other assets".

The Company recognized a loss of $ 121 and $ 139 for the three months ended March 31, 2024 and 2023, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 42 and $ 56 for the three months ended March 31, 2024 and 2023, respectively.

The carrying value of the joint venture at March 31, 2024 and December 31, 2023 was $ 3,997 and $ 4,076 , respectively, and is recorded in "Other non-current assets" on the condensed consolidated balance sheets.

NOTE 7 – REVOLVING LOAN

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.

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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 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, 2023 and December 31, 2022, the total balance outstanding on the 2022 Credit Agreement amounted to $ 380,569 and $ 440,569 .

As of March 31, 2024 and December 31, 2023, the total balance outstanding on the 2022 Credit Agreement amounted to $ 301,569 and $ 309,569 , respectively.

There are no installment payments required on the revolving loans;

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Amounts outstanding under the 2022 Credit Agreement are subject to an interest rate equal to a fluctuating rate as defined by the 2022 Credit Agreement plus an applicable rate.

The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the 2022 Credit Agreement, and the interest rate was 6.545 % at September 30, 2023.

The Company is also required to pay a commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the 2022 Credit Agreement and ranges from 0.150 % to 0.225 % ( 0.175 % at September 30, 2023).

The unused portion of the revolving loan amounted to $ 169,431 at September 30, 2023.

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 6.554 % at March 31, 2024.

The unused portion of the revolving loan amounted to $ 248,431 at March 31, 2024.

The Company is also required to pay, as applicable, letter of credit fees, administrative agent fees, and other fees to the arrangers and lenders.

Costs associated with the issuance of the revolving loans are capitalized and amortized on a straight-line basis over the term of the 2022 Credit Agreement, which is not materially different than the effective interest method.

Capitalized costs net of accumulated amortization were $ 1,102 and $ 1,317 at September 30, 2023 and December 31, 2022, respectively, and are included in "Other Assets" on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 71 and $ 215 for the three and nine months ended September 30, 2023, respectively, and $ 121 and $ 262 for the three and nine months ended September 30, 2022, respectively, and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings.

Capitalized costs net of accumulated amortization were $ 959 and $ 1,030 at March 31, 2024 and December 31, 2023, respectively, and are included in "Other non-current assets" on the condensed consolidated balance sheets.

Amortization expense pertaining to these costs totaled $ 71 for both the three months ended March 31, 2024 and 2023, and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings.

The 2022 Credit Agreement contains quarterly covenants requiring the consolidated leverage ratio to be less than a certain maximum ratio and the consolidated interest coverage ratio to exceed a certain minimum ratio.

At September 30, 2023, the Company was in compliance with these covenants.

At March 31, 2024, the Company was in compliance with these covenants.

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

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net Earnings - Basic and Diluted $ 28,986 $ 22,710

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Net Earnings Per Share - Diluted $ 0.89 $ 0.70

The number of anti-dilutive shares were 332,339 and 355,419 for the three and nine months ended September 30, 2023, respectively, and 362,203 and 369,183 for the three and nine months ended September 30, 2022, respectively .

The number of anti-dilutive shares were 448,915 and 509,785 for the three months ended March 31, 2024 and 2023, respectively.

Anti-dilutive shares could potentially dilute basic earnings per share in future periods and therefore, were not included in diluted earnings per share.

NOTE 9 – INCOME TAXES

The Company’s effective tax rate for the three months ended September 30, 2023 and 2022, was 20.3 % and 18.8 %, respectively, and 21.3 % and 22.2 % for the nine months ended September 30, 2023 and 2022, respectively.

The increase in the quarter to date rate was primarily due to certain higher state taxes and lower tax benefits from stock-based compensation.

The decrease in the year to date rate was primarily due to certain lower state taxes and higher tax benefits from stock-based compensation.

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023, was 21.3 % and 22.0 %, respectively.

The lower effective tax rate was primarily due to higher tax benefits from stock-based compensation and certain lower foreign taxes.

Income taxes are accounted for under the asset and liability method.

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and in various states and foreign countries.

As of September 30, 2023, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2018.

The Company had approx imately $ 4,572 and $ 5,815 of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets, as of September 30, 2023 and December 31, 2022, respectively.

As of March 31, 2024, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2019.

The Company had approx imately $ 4,708 and $ 4,650 of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets, as of March 31, 2024 and December 31, 2023, respectively.

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.

Total accrued interest and penalties related to uncertain tax positions at September 30, 2023 and December 31, 2022 was approximately $ 1,622 and $ 1,735 , respectively, and are inclu ded in "Other long-term obligations".

Total accrued interest and penalties related to uncertain tax positions at March 31, 2024 and December 31, 2023 were approximately $ 1,472 and $ 1,413 , respectively, and are inclu ded in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.

The European Union ("EU") member states formally adopted the EU's Pillar Two Directive, which was established by the Organization for Economic Co-operation and Development.

Pillar Two generally provides for a 15 percent minimum effective tax rate for the jurisdictions where multinational enterprises operate.

While the Company does not anticipate that this will have a material impact on its tax provision or effective tax rate, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.

NOTE 10 – SEGMENT INFORMATION

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The segment information is summarized as follows:

Business Segment Assets September 30,

Business Segment Assets March 31,

2024 December 31,

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Total $ 1,588,700 $ 1,597,211

Business Segment Net Sales Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Business Segment Net Sales Three Months Ended March 31,

Human Nutrition and Health $ 152,744 $ 132,653

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Other and Unallocated (2)

1,545 6,367 5,840 15,931

Total $ 239,659 $ 232,540

Business Segment Earnings Before Income Taxes Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Business Segment Earnings Before Income Taxes Three Months Ended March 31,

Human Nutrition and Health $ 33,257 $ 18,435

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( 1,840 ) ( 1,471 )

Interest and other expense ( 7,139 ) ( 2,540 ) ( 16,864 ) ( 3,908 )

Interest and other expenses ( 4,826 ) ( 5,289 )

Total $ 36,850 $ 29,119

Depreciation/Amortization Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Depreciation/Amortization Three Months Ended March 31,

Human Nutrition and Health $ 9,540 $ 9,662

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Other and Unallocated (2)

216 1,008 986 2,962

Total $ 13,668 $ 13,646

Capital Expenditures Nine Months Ended September 30,

Capital Expenditures Three Months Ended March 31,

Human Nutrition and Health $ 4,260 $ 8,212

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Unallocated corporate expenses consist of:

(i) Transaction and integration costs and unallocated legal fees totaling $ 384 and $ 1,600 fo r th e three and nine months ended September 30, 2023, respectively, and $ 1,640 and $ 2,816 for the three and nine months ended September 30, 2022, respectively, and (ii) Unallocated amortization expense of $ 0 and $ 312 for the three and nine months ended September 30, 2023, and $ 734 and $ 2,213 for the three and nine months ended September 30, 2022, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

(i) Transaction and integration costs of $ 440 and $ 565 fo r th e three months ended March 31, 2024 and 2023, respectively, and (ii) Unallocated amortization expense of $ 0 and $ 312 for the three months ended March 31, 2024 and 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

NOTE 11 – REVENUE

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Sales and usage-based taxes are excluded from revenues.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Product Sales $ 218,033 $ 233,823 $ 660,773 $ 677,136

Co-manufacturing 6,917 8,109 21,437 26,235

Consignment 4,324 1,484 9,297 4,064

Three Months Ended March 31,

Product Sales Revenue $ 239,126 $ 231,760

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The following table presents revenues disaggregated by geography, based on the shipping addresses of customers:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

United States $ 182,086 $ 166,884

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The Company’s primary operation is the manufacturing and sale of health and nutrition ingredient products, in which the Company receives an order from a customer and fulfills that order.

The Company’s product sales are considered point-in-time revenue and consist of three sub-streams:

product sales, co-manufacturing, and consignment.

Under the co-manufacturing agreements, the Company is responsible for the manufacture of a finished good where the customer provides the majority of the raw materials.

The Company controls the manufacturing process and the ultimate end-product before it is shipped to the customer.

Based on these factors, the Company has determined that it is the principal in these agreements and therefore revenue is recognized in the gross amount of consideration the Company expects to be entitled to for the goods provided.

The Company’s product sales are considered point-in-time revenue.

Royalty Revenues

Royalty revenue consists of agreements with customers to use the Company’s intellectual property in exchange for a sales-based royalty.

Royalties are considered over time revenue and are recorded in the HNH segment.

Royalties are considered over time revenue and are recorded in the Human Nutrition and Health segment.

Contract Liabilities

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NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the nine months ended September 30, 2023 and 2022 for income taxes and interest is as follows:

Nine Months Ended September 30,

Cash paid during the three months ended March 31, 2024 and 2023 for income taxes and interest is as follows:

Three Months Ended March 31,

Income taxes $ 949 $ 42

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NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The changes in accumulated other comprehensive loss were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

The changes in accumulated other comprehensive (loss) income were as follows:

Three Months Ended March 31,

Net foreign currency translation adjustment $ ( 12,717 ) $ 9,424

Net change of cash flow hedge (see Note 19 for further

Unrealized gain (loss) on cash flow hedge — 564 ( 1,406 ) 3,770

Tax — ( 137 ) 341 ( 920 )

Unrealized loss on cash flow hedge — ( 676 )

Net of tax — ( 511 )

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further information)

Amortization of prior service cost — 2 — 6

Amortization of loss 2 — 6 —

Prior service credit and gain arising during the period — — 132 ( 41 )

Amortization of (gain) loss ( 3 ) 2

Prior service loss arising during the period 206 132

Total before tax 203 134

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Net of tax 154 100

Total other comprehensive loss $ ( 14,423 ) $ ( 34,445 ) $ ( 7,078 ) $ ( 41,876 )

Included in "Net foreign currency translation adjustment" were losses of $ 0 and $ 1,455 related to a net investment hedge, which were net of tax benefit of $ 0 and $ 1,114 for the three and nine months ended September 30, 2023, 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 tax expense of $ 1,635 and $ 3,277 for the three and nine months ended September 30, 2022, respectively.

Total other comprehensive (loss) income $ ( 12,563 ) $ 9,013

Included in "Net foreign currency translation adjustment" was a loss of $ 1,021 related to a net investment hedge, which was net of tax benefit of $ 332 for the three months ended March 31, 2023.

The Company settled its derivative instruments on their maturity date of June 27, 2023.

See Note 19, Derivative Instruments and Hedging Activities .

Accumulated other comprehensive (loss) income at September 30, 2023 and December 31, 2022 consisted of the following:

Accumulated other comprehensive (loss) income at March 31, 2024 and December 31, 2023 consisted of the following:

Foreign currency

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Balance December 31, 2023 $ 8,408 $ — $ 283 $ 8,691

Other comprehensive income (loss) ( 6,117 ) ( 1,065 ) 104 ( 7,078 )

Balance September 30, 2023 $ ( 14,518 ) $ — $ 286 $ ( 14,232 )

Other comprehensive (loss) income ( 12,717 ) — 154 ( 12,563 )

Balance March 31, 2024 $ ( 4,309 ) $ — $ 437 $ ( 3,872 )

NOTE 14 – EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company sponsors one 401(k) savings plan for eligible employees, which allows participants to make pretax contributions and the Company matches certain percentages of those pretax contributions.

The remaining plan also has a discretionary profit sharing portion and matches 401(k) contributions with shares of the Company’s Common Stock.

The Company sponsors one 401(k) savings plan for eligible employees, which allows participants to make pretax or after tax contributions and the Company matches certain percentages of those contributions.

The plan also has a discretionary profit sharing portion and matches 401(k) contributions with shares of the Company’s Common Stock.

All amounts contributed to the plan are deposited into a trust fund administered by independent trustees.

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 sponsored one defined contribution plan for its employees.

The Bergstrom plan was merged into the Company sponsored 401(k) savings plan on January 1, 2023.

Postretirement Medical Plans

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

Nine Months Ended September 30,

Three Months Ended March 31,

Service cost $ 28 $ 27

Interest cost 14 15

Amortization of prior service cost — 6

Amortization of loss 6 —

Amortization of (gain) loss ( 3 ) 2

Net periodic benefit cost $ 39 $ 44

T he amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 are $ 1,462 and $ 1,465 , 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 March 31, 2024 and December 31, 2023 are $ 1,298 and $ 1,395 , respectively, and are included in "Other long-term obligations" on the Company's condensed consolidated balance sheets.

These plans are unfunded and approved claims are paid from Company funds.

Historical cash payments made under such plans have typically been less than $ 200 per year.

Defined Benefit Pension Plans

On May 27, 2019, the Company acquired Chemogas, which has an unfunded defined benefit pension plan.

On May 27, 2019, the Company acquired Chemogas Holding NV, a privately held specialty gases company headquartered in Grimbergen, Belgium ("Chemogas"), which has an unfunded defined benefit pension plan.

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 September 30, 2023 and December 31, 2022 were $ 379 and $ 393 , 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 March 31, 2024 and December 31, 2023 were $ 400 and $ 420 , respectively, and were included in "Other long-term obligations" on the Company's condensed consolidated balance sheets.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Service cost with interest to end of year $ 18 $ 16

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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 $ 9,611 as of September 30, 2023, of which $ 9,594 was included in "Other long-term obligations" and $ 17 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets.

The deferred compensation liability was $ 8,543 as of December 31, 2022, of which $ 8,527 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 related rabbi trust assets were $ 9,613 and $ 8,547 as of September 30, 2023 and December 31, 2022, respectively, and were included in "Other non-current assets" on the Company's condensed consolidated balance sheets.

The deferred compensation liability was $ 10,800 as of March 31, 2024, of which $ 10,782 was included in "Other long-term obligations" and $ 18 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets.

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

The related assets of the irrevocable trust funds (also known as "rabbi trust funds") were $ 10,789 and $ 10,188 as of March 31, 2024 and December 31, 2023, respectively, and were included in "Other non-current assets" on the Company's condensed consolidated balance sheets.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

The Company is obligated to make rental payments under non-cancelable operating and finance leases.

Aggregate future minimum rental payments required under these leases at September 30, 2023 are disclosed in Note 19, Leases.

Aggregate future minimum rental payments required under these leases at March 31, 2024 are disclosed in Note 18, Leases .

The Company’s Verona, Missouri facility, while held by a prior owner, Syntex Agribusiness, Inc.

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One of the sellers, in turn, has the benefit of certain contractual indemnification by Syntex in relation to the implementation of the above-described Superfund remedy.

In February 2022, BCP Ingredients, Inc.

("BCP"), the Company's subsidiary that operates the site, and Syntex received a Special Notice Letter from the EPA to initiate negotiations regarding the performance of a focused remedial investigation/feasibility study ("RI/FS") at the site with regard to the presence of certain contaminants, including 1,4-dioxane and chlorobenzene.

In June 2023, BCP, Syntex, EPA, and the State of Missouri entered into an Administrative Settlement Agreement and Order on Consent (“ASAOC”) for RI/FS under which (a) BCP will conduct a source investigation of potential source(s) of releases of 1,4-dioxane and chlorobenzene at a portion of the site and (b) BCP and Syntex will complete a RI/FS to determine a potential remedy, if any is required.

Activities under the ASAOC are underway and expected to continue for some period of time.

Separately, in June 2022, the EPA conducted an inspection of BCP’s Verona, Missouri facility which was followed by BCP entering into an Administrative Order for Compliance on Consent (“AOC”) with the EPA in relation to its risk management program at the Verona facility.

In June 2023, in response to a Special Notice Letter received from the EPA in 2022, BCP Ingredients, Inc.

("BCP"), the Company's subsidiary that operates the site, Syntex, EPA, and the State of Missouri entered into an Administrative Settlement Agreement and Order on Consent (“ASAOC”) for a focused remedial investigation/feasibility study ("RI/FS") under which (a) BCP will conduct a source investigation of potential source(s) of releases of 1,4-dioxane and chlorobenzene at a portion of the site and (b) BCP and Syntex will complete a RI/FS to determine a potential remedy, if any is required.

Activities under the ASAOC are underway and are expected to continue for some period of time.

Separately, in June 2022, the EPA conducted an inspection of BCP’s Verona, Missouri facility (“2022 EPA Inspection”) which was followed by BCP entering into an Administrative Order for Compliance on Consent (“AOC”) with the EPA in relation to its risk management program at the Verona facility.

Further, in January 2023, BCP entered into an Amended AOC with the EPA whereby the parties agreed to the extension of certain timelines.

BCP has timely completed all requirements under the Amended AOC as of June 30, 2023.

In connection with the EPA’s inspection from June 2022, the Company believes that a loss contingency in this matter is probable and reasonably estimable and has recorded a loss contingency in an amount that is not material to its financial performance or operations.

BCP timely completed all requirements under the Amended AOC.

In November 2023, BCP received a notice from the Environment and Natural Resources Division of the U.S Department of Justice (“DOJ”) primarily related to the 2022 EPA Inspection, which extended the opportunity to discuss alleged violations of Sections 112(r)(7) of the Clean Air Act and regulations in 40 C.F.R.

Part 68, commonly known as the Risk Management Plan Rule (“RMP Rule”).

BCP has engaged in, and intends to continue to participate in, such discussions in 2024.

In connection with the 2022 EPA Inspection, the Company believes that a loss contingency in this matter is probable and reasonably estimable and has recorded a loss contingency in an amount that is not material to its financial performance or operations.

In addition to the above, from time to time, the Company is a party to various legal proceedings, litigation, claims and assessments.

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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 September 30, 2023 and December 31, 2022 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 March 31, 2024 and December 31, 2023 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.

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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 September 30, 2023 and December 31, 2022 includes $ 24,746 and $ 934 in money market funds and other interest-bearing deposit accounts, respectively.

Non-current assets at September 30, 2023 and December 31, 2022 includes $ 9,613 and $ 8,547 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

Cash and cash equivalents at March 31, 2024 and December 31, 2023 includes $ 4,428 and $ 959 in money market funds and other interest-bearing deposit accounts, respectively.

Non-current assets at March 31, 2024 and December 31, 2023 included $ 10,789 and $ 10,188 , 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 as of September 30, 2023 and December 31, 2022 amount to $ 1,500 and $ 11,400 , respectively, and were valued using level three inputs, as defined by ASC 820, "Fair Value Measurement".

The Company also had derivative financial instruments, consisting of a cross-currency swap and an interest rate swap, which were included in "Derivative assets" in the Company's condensed consolidated balance sheets.

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

The Company settled its cross-currency swap and interest rate swap on June 27, 2023 and had no other derivatives outstanding as of September 30, 2023.

The derivative assets related to the cross-currency swap and the interest rate swap were $ 4,587 and $ 1,406 at December 31, 2022, respectively.

The contingent consideration liabilities included on the balance sheet amount to $ 100 as of both March 31, 2024 and December 31, 2023 and were valued using level three inputs, as defined by ASC 820, "Fair Value Measurement".

NOTE 17 – RELATED PARTY TRANSACTIONS

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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 $ 1,094 and $ 3,294 for the three and nine months ended September 30, 2023, respectively and $ 1,188 and $ 3,185 for the three and nine months ended September 30, 2022, respectively.

The raw materials purchased and subsequently sold amounted to $ 7,274 and $ 27,069 for the three and nine months ended September 30, 2023, respectively, and $ 11,937 and $ 32,158 for the three and nine months ended September 30, 2022, respectively.

Payments for the services the Company provided amounted to $ 1,092 and $ 1,172 for the three months ended March 31, 2024 and 2023, respectively.

The raw materials purchased and subsequently sold amounted to $ 6,332 and $ 10,013 for the three months ended March 31, 2024 and 2023, 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 $ 5,903 and $ 22,198 during the three and nine months ended September 30, 2023, respectively, and $ 9,249 and $ 23,971 for the three and nine months ended September 30, 2022, respectively.

At September 30, 2023 and December 31, 2022, the Company had receivables of $ 8,369 and $ 8,820 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC of $ 4,971 and $ 8,072 during the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024 and December 31, 2023, the Company had receivables of $ 7,424 and $ 8,314 , respectively, recorded in accounts receivable from St.

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

At September 30, 2023 and December 31, 2022, the Company had payables of $ 5,972 and $ 5,224 , respectively, recorded in accounts payable for finished goods received from St.

At March 31, 2024 and December 31, 2023, the Company had payables of $ 5,013 and $ 6,050 , respectively, recorded in accounts payable for finished goods received from St.

Gabriel CC Company, LLC.

The Company had payables in the amount of $ 296 related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable at both September 30, 2023 and December 31, 2022.

The Company had payables in the amount of $ 296 and $ 329 , respectively, related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of March 31, 2024 and December 31, 2023.

NOTE 18 – LEASES

8 unchanged sentences

Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms.

Based on the Company's risk rating, the Company applied the following discount rates for new leases entered into during the third quarter of 2023:

Based on the Company's risk rating, the Company applied the following discount rates for new leases entered into during the first quarter of 2024:

(1) 1 - 2 years, 6.76 % (2) 3 - 4 years, 7.35 % (3) 5 - 9 years, 7.69 % and (4) 10 + years, 8.41 %.

Right of use assets and lease liabilities at September 30, 2023 and December 31, 2022 are summarized as follows:

Right of use assets September 30, 2023 December 31, 2022

Right of use assets and lease liabilities at March 31, 2024 and December 31, 2023 are summarized as follows:

Right of use assets March 31, 2024 December 31, 2023

Operating leases $ 16,973 $ 17,763

1 unchanged sentence

Total $ 19,010 $ 19,864

Lease liabilities - current September 30, 2023 December 31, 2022

Lease liabilities - current March 31, 2024 December 31, 2023

Operating leases $ 3,794 $ 3,949

1 unchanged sentence

Total $ 4,054 $ 4,221

Lease liabilities - non-current September 30, 2023 December 31, 2022

Lease liabilities - non-current March 31, 2024 December 31, 2023

Operating leases $ 13,971 $ 14,601

1 unchanged sentence

Total $ 15,866 $ 16,544

For the three and nine months ended September 30, 2023 and 2022, 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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

For the three months ended March 31, 2024 and 2023, 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 March 31,

Operating lease cost $ 1,341 $ 1,270

10 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities, net of right-of-use assets disposed $ 398 $ 457

Weighted-average remaining lease term - operating leases 5.49 years 3.83 years 5.49 years 3.83 years

Weighted-average remaining lease term - finance leases 9.29 years 10.65 years 9.29 years 10.65 years

Weighted-average remaining lease term - operating leases 9.25 years 5.42 years

Weighted-average remaining lease term - finance leases 8.86 years 9.73 years

Weighted-average discount rate - operating leases 7.5 % 3.7 %

Weighted-average discount rate - finance leases 5.0 % 5.0 %

Rent expense charged to operations under operating lease agreements for the three and nine months ended September 30, 2023 aggregated to approximately $ 1,326 and $ 3,972 , respectively, and $ 1,190 and $ 2,782 for the three and nine months ended September 30, 2022, respectively.

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at September 30, 2023 are as follows:

October 1, 2023 to December 31, 2023 $ 1,301

Rent expense charged to operations under operating lease agreements for the three months ended March 31, 2024 and 2023 aggregated to approximately $ 1,341 and $ 1,270 , respectively.

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at March 31, 2024 are as follows:

April 1, 2024 to December 31, 2024 $ 4,033

Thereafter 5,746

2 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, which was designated as cash flow hedge.

The net interest income related to the interest rate swap contract was $ 0 and $ 1,518 for the three and nine months ended September 30, 2023, respectively, and $ 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.

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

The net interest income related to the interest rate swap contract was $ 684 for the three months ended March 31, 2023.

There was no such income for the three months ended March 31, 2024 as the interest rate swap was settled on its maturity date of June 27, 2023.

The net interest income was 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, which was designated as net investment hedge.

The derivative had 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 $ 0 and $ 1,119 for the three and nine months ended September 30, 2023, respectively, and $ 569 and $ 1,682 for the three and nine months ended September 30, 2022, respectively.

The interest income related to the cross-currency swap contract was $ 550 for the three months ended March 31, 2023.

There was no such income for the three months ended March 31, 2024 as the cross-currency swap was settled on its maturity date of June 27, 2023.

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

The Company settled its derivative instruments on their maturity date of June 27, 2023 and had no other derivatives outstanding as of September 30, 2023.

The proceeds from the settlement of the cross-currency swap in the amount of $ 2,740 were classified as investing activities in the Consolidated Statements of Cash Flows.

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

Derivative assets December 31, 2022

Interest rate swap $ 1,406

Cross-currency swap 4,587

Derivative assets $ 5,993

Gains and losses on our hedging instruments were recognized in accumulated other comprehensive income (loss) and categorized as follows for the three and nine months ended September 30, 2023 and 2022:

The Company settled its derivative instruments on their maturity date of June 27, 2023 and had no other derivatives outstanding as of March 31, 2024.

The proceeds from the settlement of the cross-currency swap in the amount of $ 2,740 were classified as investing activities in the Consolidated Statements of Cash Flows in the second quarter of 2023.

Losses on our hedging instruments were recognized in accumulated other comprehensive income (loss) and categorized as follows for the three months ended March 31, 2023.

There were no such losses for the three months ended March 31, 2024:

Location within Statements of Comprehensive Income Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Cash flow hedge (interest rate swap), net of tax Unrealized gain (loss) on cash flow hedge, net $ — $ 427 $ ( 1,065 ) $ 2,850

March 31, 2023

Cash flow hedge (interest rate swap), net of tax Unrealized (loss) on cash flow hedge, net $ ( 511 )

Net investment hedge (cross-currency swap), net of tax Net foreign currency translation adjustment ( 1,021 )

Total $ ( 1,532 )

In connection with the Kappa acquisition (see Note 2, Significant Acquisitions ), the Company entered into four short-term foreign currency exchange forward contracts to manage fluctuations in foreign currency exchange rates.

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

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, 2023, the Company did not maintain any open foreign currency exchange forward contracts as all four contracts expired during 2022.

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