What changed in this filing

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Item 1. Financial Statements

2024-10-25 compared with 2024-07-26 · 159 added, 133 removed, 554 unchanged (35% of the section changed)

3 unchanged sentences

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

Assets June 30, 2024 (unaudited) December 31, 2023

Assets September 30, 2024 December 31, 2023

Current assets:

Cash and cash equivalents $ 73,694 $ 64,447

Accounts receivable, net of allowances of $ 1,066 and $ 908 at June 30, 2024 and December 31, 2023 respectively

Accounts receivable, net of allowances of $ 1,014 and $ 908 at September 30, 2024 and December 31, 2023 respectively

120,537 125,284

33 unchanged sentences

Authorized 120,000,000 shares;

32,434,858 and 32,254,728 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

32,507,716 and 32,254,728 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 168,174 145,653

Retained earnings 992,380 897,488

Accumulated other comprehensive (loss) income ( 7,134 ) 8,691

Accumulated other comprehensive income 14,503 8,691

Total stockholders' equity 1,177,226 1,053,984

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net earnings $ 33,837 $ 29,075 $ 94,892 $ 81,895

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 21,638 ( 14,425 ) 5,661 ( 6,117 )

1 unchanged sentence

Change in postretirement benefit plans ( 1 ) 2 151 104

Other comprehensive (loss) income ( 3,262 ) ( 1,668 ) ( 15,825 ) 7,345

Other comprehensive income (loss) 21,637 ( 14,423 ) 5,812 ( 7,078 )

Comprehensive income $ 55,474 $ 14,652 $ 100,704 $ 74,817

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Six Months Ended June 30, 2024 and 2023

For the Three and Nine Months Ended September 30, 2024 and 2023

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

18 unchanged sentences

Balance - June 30, 2024 1,112,364 958,543 ( 7,134 ) 32,434,858 2,164 158,791

Net earnings 33,837 33,837 — — — —

Other comprehensive income 21,637 — 21,637 — — —

Repurchases of common stock, including

excise tax ( 165 ) — — ( 915 ) — ( 165 )

Shares and options issued under stock plans 9,553 — — 73,773 5 9,548

Balance - September 30, 2024 $ 1,177,226 $ 992,380 $ 14,503 $ 32,507,716 $ 2,169 $ 168,174

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, 2024 and 2023

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

Stockholders'

Equity Retained

Earnings Accumulated

Comprehensive

(Loss) Income Common Stock Additional

Shares Amount

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

11 unchanged sentences

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, including

excise tax ( 102 ) — — ( 775 ) — ( 102 )

Shares and options issued under stock plans 3,814 — — 1,717 — 3,814

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.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

32 unchanged sentences

Effect of exchange rate changes on cash 944 160

(Decrease) increase in cash and cash equivalents ( 709 ) 296

Increase in cash and cash equivalents 9,247 10,392

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 six months ended June 30, 2024 are not necessarily indicative of the operating results expected for the full year or any interim period.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results expected for the full year or any interim period.

Recent Accounting Pronouncements

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Stock-Based Compensation

The Company’s results for the three and six months ended June 30, 2024 and 2023 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:

The Company’s results for the three and nine months ended September 30, 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 Increase/(Decrease) for the

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

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As allowed by ASC 718, the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest.

The Company's omnibus incentive plan allows for the granting of stock awards and options to purchase common stock.

The Company's omnibus incentive plan ("the Plan") allows for the granting of stock awards and options to purchase common stock.

Both incentive stock options and nonqualified stock options can be awarded under the plan.

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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 June 30, 2024, the plan had 841,101 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 September 30, 2024, the Plan had 829,101 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 six months ended June 30, 2024 and 2023 is summarized below:

For the Six Months Ended June 30, 2024 Shares (000s) Weighted

Option activity for the nine months ended September 30, 2024 and 2023 is summarized below:

For the Nine Months Ended September 30, 2024 Shares (000s) Weighted

Price Aggregate

4 unchanged sentences

Forfeited ( 2 ) 137.06

Outstanding as of June 30, 2024 1,052 $ 112.90 $ 43,199 6.0

Exercisable as of June 30, 2024 687 $ 98.31 $ 38,241 4.7

For the Six Months Ended June 30, 2023 Shares (000s) Weighted

Outstanding as of September 30, 2024 991 $ 114.49 $ 60,932 6.0

Exercisable as of September 30, 2024 626 $ 99.39 $ 47,926 4.6

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

Price Aggregate

5 unchanged sentences

Canceled ( 1 ) 138.07

Outstanding as of June 30, 2023 1,096 $ 103.96 $ 35,430 6.2

Exercisable as of June 30, 2023 728 $ 87.95 $ 34,170 4.8

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

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 six months ended June 30, 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 %;

expected volatilities of 28 %;

risk-free interest rates of 4.1 %;

and expected lives of 5.0 years.

For the six months ended June 30, 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 %;

expected volatilities of 28 %;

risk-free interest rates of 3.9 %;

and expected lives of 4.8 years.

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

The fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions for the nine months ended September 30, 2024 and 2023, respectively:

dividend yields of 0.6 % and 0.5 %;

expected volatilities of 28 % and 28 %;

risk-free interest rates of 4.1 % and 3.9 % and expected lives of 5.0 years and 4.8 years.

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

Expected volatility is based on the Company’s historical volatility levels.

Expected volatilities are based on the Company’s historical volatility levels.

Dividend yields are based on the Company’s historical dividend yields.

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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 six months ended June 30, 2024 and 2023 is as follows:

Other information pertaining to option activity during the three and nine months ended September 30, 2024 and 2023 is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Total intrinsic value of stock options exercised ($000s) $ 5,372 $ 100 $ 16,693 $ 2,280

Non-vested restricted stock activity for the six months ended June 30, 2024 and 2023 is summarized below:

Six Months Ended June 30,

Non-vested restricted stock activity for the nine months ended September 30, 2024 and 2023 is summarized below:

Nine Months Ended September 30,

Shares (000s) Weighted

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Forfeited ( 3 ) 141.23 ( 4 ) 128.06

Non-vested balance as of June 30 119 $ 140.14 125 $ 131.76

Non-vested performance share activity for the six months ended June 30, 2024 and 2023 is summarized below:

Six Months Ended June 30,

Non-vested balance as of September 30 129 $ 141.94 123 $ 132.01

Non-vested performance share activity for the nine months ended September 30, 2024 and 2023 is summarized below:

Nine Months Ended September 30,

Shares (000s) Weighted

6 unchanged sentences

Forfeited — — — —

Non-vested balance as of June 30 79 $ 150.73 76 $ 135.25

Non-vested balance as of September 30 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.

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volatilities of 25 % and 32 %;

and initial TSR’s of 10.3 % and 4.2 %, in each case for the six months ended June 30, 2024 and 2023, respectively.

and initial TSR’s of 10.3 % and 4.2 %, in each case for the nine months ended September 30, 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.

4 unchanged sentences

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

As of June 30, 2024 and 2023, there were $ 26,557 and $ 26,244 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of June 30, 2024, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.9 years.

As of September 30, 2024 and 2023, there were $ 24,300 and $ 22,470 , respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans.

As of September 30, 2024, the unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.7 years.

The Company estimates that share-based compensation expense for the year ended December 31, 2024 will be approximately $ 16,996 .

7 unchanged sentences

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

During the six months ended June 30, 2024 and 2023, the Company purchased 36,194 and 28,676 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 $ 144.04 and $ 136.85 , respectively.

During the nine months ended September 30, 2024 and 2023, the Company purchased 37,109 and 29,451 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 $ 144.89 and $ 136.69 , respectively.

NOTE 3 – INVENTORIES

Inventories, net of reserves at June 30, 2024 and December 31, 2023 consisted of the following:

June 30, 2024 December 31, 2023

Inventories, net of reserves at September 30, 2024 and December 31, 2023 consisted of the following:

September 30, 2024 December 31, 2023

Raw materials $ 43,109 $ 39,517

3 unchanged sentences

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2024 and December 31, 2023 are summarized as follows:

June 30, 2024 December 31, 2023

Property, plant and equipment at September 30, 2024 and December 31, 2023 are summarized as follows:

September 30, 2024 December 31, 2023

Land $ 11,854 $ 11,787

7 unchanged sentences

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 $ 6,146 of restructuring-related impairment and asset disposal charges for the three and six months ended June 30, 2023.

There were no such charges related to restructuring for the three and six months ended June 30, 2024.

Included in "General and administrative expenses" was $ 521 of restructuring-related impairment charges related to an asset that was held for sale for both the three and nine months ended September 30, 2024.

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, respectively.

NOTE 5 - INTANGIBLE ASSETS

The Company had goodwill in the amount of $ 770,026 and $ 778,907 as of June 30, 2024 and December 31, 2023, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The decrease in goodwill is due to changes in foreign currency translation.

Identifiable intangible assets with finite lives at June 30, 2024 and December 31, 2023 are summarized as follows:

(in years) Gross Carrying Amount at June 30, 2024 Accumulated Amortization at June 30, 2024 Gross Carrying Amount at December 31, 2023 Accumulated Amortization at December 31, 2023

The Company had goodwill in the amount of $ 781,109 and $ 778,907 as of September 30, 2024 and December 31, 2023, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is due to changes in foreign currency translation.

Identifiable intangible assets with finite lives at September 30, 2024 and December 31, 2023 are summarized as follows:

(in years) Gross Carrying Amount at September 30, 2024 Accumulated Amortization at September 30, 2024 Gross Carrying Amount at December 31, 2023 Accumulated Amortization at December 31, 2023

Customer relationships & lists 10 - 20

6 unchanged sentences

$ 481,443 $ 303,918 $ 479,235 $ 288,023

Amortization of identifiable intangible assets was approximately $ 5,243 and $ 11,585 for the three and six months ended June 30, 2024, respectively, and $ 6,892 and $ 14,185 for the three and six months ended June 30, 2023, respectively.

Amortization of identifiable intangible assets was approximately $ 3,795 and $ 15,380 for the three and nine months ended September 30, 2024, respectively, and $ 6,947 and $ 21,132 for the three and nine months ended September 30, 2023, respectively.

Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $ 3,747 for the remainder of 2024, $ 15,659 for 2025, $ 15,444 for 2026, $ 14,916 for 2027, $ 14,517 for 2028 and $ 14,091 for 2029.

At June 30, 2024 and December 31, 2023, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350.

At September 30, 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 six months ended June 30, 2024 and 2023.

There were no changes to the useful lives of intangible assets subject to amortization during the nine months ended September 30, 2024 and 2023.

NOTE 6 - EQUITY METHOD INVESTMENT

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Additionally, voting rights ( 2 votes each) are not proportionate to the owners’ obligation to absorb expected losses or receive the expected residual returns of the joint venture.

The Company receives up to 2/3 of the production offtake capacity and absorbs operating expenses approximately proportional to the actual percentage of offtake.

The Company generally receives up to 2/3 of the production offtake capacity, which (percentage of offtake) may be adjusted from time to time to the extent the owners agree as such, and absorbs operating expenses approximately proportional to the actual percentage of offtake.

The joint venture is accounted for under the equity method of accounting since 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 $ 122 and $ 243 for the three and six months ended June 30, 2024, respectively, and $ 139 and $ 278 for the three and six months ended June 30, 2023, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 38 and $ 80 for the three and six months ended June 30, 2024, respectively, and $ 16 and $ 72 for the three and six months ended June 30, 2023, respectively.

The carrying value of the joint venture at June 30, 2024 and December 31, 2023 was $ 3,912 and $ 4,076 , respectively, and is recorded in "Other non-current assets" on the condensed consolidated balance sheets.

The Company recognized a loss of $ 124 and $ 367 for the three and nine months ended September 30, 2024, respectively, and $ 118 and $ 396 for the three and nine months ended September 30, 2023, respectively, relating to its portion of the joint venture's expenses in other expense.

The Company made capital contributions to the investment totaling $ 33 and $ 113 for the three and nine months ended September 30, 2024, respectively, and $ 69 and $ 141 for the three and nine months ended September 30, 2023, respectively.

The carrying value of the joint venture at September 30, 2024 and December 31, 2023 was $ 3,822 and $ 4,076 , respectively, and is recorded in "Other non-current assets" on the condensed consolidated balance sheets.

NOTE 7 – REVOLVING LOAN

2 unchanged sentences

The loans may be used for working capital, letters of credit, and other corporate purposes and may be drawn upon at the Company’s discretion.

As of June 30, 2024 and December 31, 2023, the total balance outstanding on the 2022 Credit Agreement amounted to $ 266,569 and $ 309,569 , respectively.

As of September 30, 2024 and December 31, 2023, the total balance outstanding on the 2022 Credit Agreement amounted to $ 227,000 and $ 309,569 , respectively.

There are no installment payments required on the revolving loans;

1 unchanged sentence

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 6.569 % at June 30, 2024.

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 June 30, 2024).

The unused portion of the revolving loan amounted to $ 283,431 at June 30, 2024.

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 6.070 % at September 30, 2024.

The unused portion of the revolving loan amounted to $ 323,000 at September 30, 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 $ 886 and $ 1,030 at June 30, 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 $ 73 and $ 144 for both the three and six months ended June 30, 2024 and 2023 and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings.

Capitalized costs net of accumulated amortization were $ 814 and $ 1,030 at September 30, 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 $ 72 and $ 216 for the three and nine months ended September 30, 2024, respectively, and $ 71 and $ 215 for the three and nine months ended September 30, 2023, respectively, and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings.

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

At June 30, 2024, the Company was in compliance with these covenants.

At September 30, 2024, the Company was in compliance with these covenants.

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Net Earnings Per Share - Diluted $ 1.03 $ 0.90 $ 2.90 $ 2.52

The number of anti-dilutive shares were 339,366 and 357,534 for the three and six months ended June 30, 2024, respectively, and 352,759 and 391,269 for the three and six months ended June 30, 2023, respectively.

The number of anti-dilutive shares were 189,830 and 326,020 for the three and nine months ended September 30, 2024, respectively, and 332,339 and 355,419 for the three and nine months ended September 30, 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 June 30, 2024 and 2023, was 22.2 % and 21.6 %, respectively.

The higher effective tax rate for the quarter was primarily due to lower tax benefits from stock-based compensation and certain higher state taxes, partially offset by certain lower foreign taxes.

The effective tax rate was 21.8 % for each of the six months ended June 30, 2024 and 2023.

C ertain lower foreign taxes for the six months ended June 30, 2024 were offset by certain higher state taxes.

The Company’s effective ta x rate for the three months ended September 30, 2024 and 2023, was 22.9 % and 20.3 %, respectively, and 22.2 % and 21.3 % for the nine months ended September 30, 2024 and 2023, respectively.

The higher effective tax rate for both the three and nine months ended September 30, 2024 was primarily due to lower tax benefits from stock-based compensatio n and certain higher state 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 June 30, 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 approximately $ 4,766 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 June 30, 2024 and December 31, 2023, respectively.

As of September 30, 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 approximately $ 4,825 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 September 30, 2024 and December 31, 2023, respectively.

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

Total accrued interest and penalties related to uncertain tax positions at June 30, 2024 and December 31, 2023 were approximately $ 1,530 and $ 1,413 , respectively, and are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.

Total accrued interest and penalties related to uncertain tax positions at September 30, 2024 and December 31, 2023 were approximately $ 1,588 and $ 1,413 , respectively, and are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.

The European Union ("EU") member states formally adopted the EU's Pillar Two Directive on December 15, 2022, which was established by the Organization for Economic Co-operation and Development.

6 unchanged sentences

The segment information is summarized as follows:

Business Segment Assets June 30,

Business Segment Assets September 30,

2024 December 31,

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Business Segment Net Sales Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Business Segment Earnings Before Income Taxes Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Depreciation/Amortization Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Total $ 10,903 $ 13,804 $ 37,077 $ 40,878

Capital Expenditures Six Months Ended June 30,

Capital Expenditures Nine Months Ended September 30,

Human Nutrition and Health $ 11,850 $ 18,745

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Unallocated corporate expenses consist of:

(i) Transaction and integration costs of $ 132 and $ 572 for the three and six months ended June 30, 2024, respectively, and $ 651 and $ 1,216 for the three and six months ended June 30, 2023, respectively, and (ii) Unallocated amortization expense of $ 0 and $ 0 for the three and six months ended June 30, 2024, respectively, and $ 0 and $ 312 for the three and six months ended June 30, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

(i) Transaction and integration costs of $ 223 and $ 795 for the three and nine months ended September 30, 2024, respectively, and $ 384 and $ 1,600 for the three and nine months ended September 30, 2023, respectively, and (ii) Unallocated amortization expense of $ 0 and $ 0 for the three and nine months ended September 30, 2024, respectively, and $ 0 and $ 312 for the three and nine months ended September 30, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.

NOTE 11 – REVENUE

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the six months ended June 30, 2024 and 2023 for income taxes and interest is as follows:

Six Months Ended June 30,

Cash paid during the nine months ended September 30, 2024 and 2023 for income taxes and interest is as follows:

Nine Months Ended September 30,

Income taxes $ 31,575 $ 30,899

Interest $ 14,500 $ 20,085

NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

11 unchanged sentences

Net of tax ( 1 ) 2 151 104

Total other comprehensive (loss) income $ ( 3,262 ) $ ( 1,668 ) $ ( 15,825 ) $ 7,345

Included in "Net foreign currency translation adjustment" were losses of $ 434 and $ 1,455 related to a net investment hedge, which were net of tax benefits of $ 782 and $ 1,114 for the three and six months ended June 30, 2023, respectively.

Total other comprehensive income (loss) $ 21,637 $ ( 14,423 ) $ 5,812 $ ( 7,078 )

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 benefits of $ 0 and $ 1,114 for the three and nine months ended September 30, 2023, respectively.

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 June 30, 2024 and December 31, 2023 consisted of the following:

Accumulated other comprehensive income (loss) at September 30, 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 (loss) income ( 15,977 ) — 152 ( 15,825 )

Balance June 30, 2024 $ ( 7,569 ) $ — $ 435 $ ( 7,134 )

Other comprehensive income 5,661 — 151 5,812

Balance September 30, 2024 $ 14,069 $ — $ 434 $ 14,503

NOTE 14 – EMPLOYEE BENEFIT PLANS

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

Six Months Ended June 30,

Nine Months Ended September 30,

Service cost $ 84 $ 81

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Net periodic benefit cost $ 118 $ 133

T he amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 are $ 1,336 and $ 1,395 , respectively, and are included in "Other long-term obligations" on the Company's condensed consolidated balance sheets.

T he amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 are $ 1,381 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.

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

The amounts recorded for these obligations on the Company's condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 were $ 393 and $ 420 , respectively, and were included in "Other long-term obligations" on the Company's condensed consolidated balance sheets.

The amounts recorded for these obligations on the Company's condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 were $ 405 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 pension plans were as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Service cost with interest to end of year $ 58 $ 46

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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 $ 10,965 as of June 30, 2024, of which $ 10,946 was included in "Other long-term obligations" and $ 19 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets.

The deferred compensation liability was $ 11,432 as of September 30, 2024, of which $ 11,411 was included in "Other long-term obligations" and $ 21 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 $ 10,962 and $ 10,188 as of June 30, 2024 and December 31, 2023, respectively, and were included in "Other non-current assets" on the Company's c ondensed consolidated balance sheets.

The related assets of the irrevocable trust funds (also known as "rabbi trust funds") were $ 11,429 and $ 10,188 as of September 30, 2024 and December 31, 2023, respectively, and were included in "Other non-current assets" on the Company's c ondensed 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 June 30, 2024 are disclosed in Note 18, Leases .

Aggregate future minimum rental payments required under these leases at September 30, 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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The Company has a number of financial instruments, none of which are held for trading purposes.

The Company estimates that the fair value of all financial instruments at June 30, 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 Company estimates that the fair value of all financial instruments at September 30, 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 June 30, 2024 and December 31, 2023 includes $ 5,472 and $ 959 in money market funds and other interest-bearing deposit accounts, respectively.

Non-current assets at June 30, 2024 and December 31, 2023 included $ 10,962 and $ 10,188 , respectively, of rabbi trust funds related to the Company's deferred compensation plan.

Cash and cash equivalents at September 30, 2024 and December 31, 2023 includes $ 10,088 and $ 959 in money market funds and other interest-bearing deposit accounts, respectively.

Non-current assets at September 30, 2024 and December 31, 2023 included $ 11,429 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 were $ 9 and $ 100 as of June 30, 2024 and December 31, 2023, respectively, 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 $ 1,120 and $ 2,212 for the three and six months ended June 30, 2024, respectively, and $ 1,028 and $ 2,200 for the three and six months ended June 30, 2023, respectively.

The raw materials purchased and subsequently sold amounted to $ 7,301 and $ 13,633 for the three and six months ended June 30, 2024, respectively, and $ 9,782 and $ 19,795 for the three and six months ended June 30, 2023, respectively.

Payments for the services the Company provided amounted to $ 1,109 and $ 3,321 for the three and nine months ended September 30, 2024, respectively, and $ 1,094 and $ 3,294 for the three and nine months ended September 30, 2023, respectively.

The raw materials purchased and subsequently sold amounted to $ 7,616 and $ 21,249 for the three and nine months ended September 30, 2024, respectively, and $ 7,274 and $ 27,069 for the three and nine months ended September 30, 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 $ 5,713 and $ 10,684 during the three and six months ended June 30, 2024, respectively, and $ 8,223 and $ 16,295 for the three and six months ended June 30, 2023, respectively.

At June 30, 2024 and December 31, 2023, the Company had receivables of $ 2,959 and $ 8,314 , respectively, recorded in accounts receivable from St.

Gabriel CC Company, LLC of $ 5,766 and $ 16,450 during the three and nine months ended September 30, 2024, respectively, and $ 5,903 and $ 22,198 for the three and nine months ended September 30, 2023, respectively.

At September 30, 2024 and December 31, 2023, the Company had receivables of $ 2,446 and $ 8,314 , respectively, recorded in accounts receivable from St.

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

At June 30, 2024 and December 31, 2023, the Company had payables of $ 2,096 and $ 6,050 , respectively, recorded in accounts payable for finished goods received from St.

At September 30, 2024 and December 31, 2023, the Company had payables of $ 1,588 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 and $ 329 , respectively, related to non-contractual monies owed to St.

Gabriel CC Company, LLC, recorded in accounts payable as of June 30, 2024 and December 31, 2023.

Gabriel CC Company, LLC, recorded in accounts payable as of September 30, 2024 and December 31, 2023.

NOTE 18 – LEASES

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

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

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

(1) 1 - 2 years, 6.75 % (2) 3 - 4 years, 7.34 % (3) 5 - 9 years, 7.68 % and (4) 10 + years, 8.40 %.

Right of use assets and lease liabilities at June 30, 2024 and December 31, 2023 are summarized as follows:

Right of use assets June 30, 2024 December 31, 2023

Right of use assets and lease liabilities at September 30, 2024 and December 31, 2023 are summarized as follows:

Right of use assets September 30, 2024 December 31, 2023

Operating leases $ 15,547 $ 17,763

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Total $ 17,330 $ 19,864

Lease liabilities - current June 30, 2024 December 31, 2023

Lease liabilities - current September 30, 2024 December 31, 2023

Operating leases $ 3,211 $ 3,949

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Total $ 3,403 $ 4,221

Lease liabilities - non-current June 30, 2024 December 31, 2023

Lease liabilities - non-current September 30, 2024 December 31, 2023

Operating leases $ 13,089 $ 14,601

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Total $ 14,887 $ 16,544

For the three and six months ended June 30, 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:

For the three and nine months ended September 30, 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

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Weighted-average discount rate - finance leases 5.1 % 5.0 % 5.1 % 5.0 %

Rent expense charged to operations under operating lease agreements for the three and six months ended June 30, 2024 aggregated to approximately $ 1,351 and $ 2,692 , respectively, and $ 1,376 and $ 2,646 for the three and six months ended June 30, 2023, respectively.

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at June 30, 2024 are as follows:

July 1, 2024 to December 31, 2024 $ 2,875

Rent expense charged to operations under operating lease agreements for the three and nine months ended September 30, 2024 aggregated to approximately $ 1,365 and $ 4,057 , respectively, and $ 1,326 and $ 3,972 for the three and nine months ended September 30, 2023, respectively.

Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at September 30, 2024 are as follows:

October 1, 2024 to December 31, 2024 $ 1,418

Thereafter 5,828

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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 $ 834 and $ 1,518 for the three and six months ended June 30, 2023, respectively.

There was no such income for the three and six months ended June 30, 2024 as the interest rate swap was settled on its maturity date of June 27, 2023.

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.

There was no such income for the three and nine months ended September 30, 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."

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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 $ 569 and $ 1,119 for the three and six months ended June 30, 2023, respectively.

There was no such income for the three and six months ended June 30, 2024 as the cross-currency swap was settled on its 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.

There was no such income for the three and nine months ended September 30, 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 June 30, 2024.

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

There were no such losses for the three and six months ended June 30, 2024:

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.

There were no such losses for the three and nine months ended September 30, 2024:

Location within Statements of Comprehensive Income Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023

September 30, 2023 Nine Months Ended

September 30, 2023

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

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements