What changed in this filing

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Item 1. Business

2025-02-21 compared with 2024-02-16 · 48 added, 53 removed, 156 unchanged (39% of the section changed)

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Human Nutrition and Health

The Human Nutrition and Health ("HNH") segment provides human grade choline nutrients and mineral amino acid chelated products through this segment for nutrition and health applications.

The Human Nutrition and Health ("HNH") segment provides human grade choline nutrients and mineral amino acid chelated products for nutrition and health applications.

Choline is recognized to play a key role in the development and structural integrity of brain cell membranes in infants, processing dietary fat, reproductive development and neural functions, such as memory and muscle function.

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Management believes that success in the commodity-oriented choline chloride marketplace is highly dependent on the Company’s ability to maintain its strong reputation for excellent product quality and customer service.

The Company continues to drive production efficiencies in order to maintain its competitive-cost position to effectively compete in a competitive global marketplace.

The Company continues to drive production efficiencies in order to maintain its cost position to effectively compete in a global marketplace.

Specialty Products

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As a result, the farmer/grower gets healthier crops that are more resistant to disease and pests, larger yields and healthier food for the consumer with extended shelf life for produce being shipped long distances.

Significant Acquisitions

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

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The raw materials utilized by us in the manufacture of our products are sourced from suppliers both domestically and internationally.

Such raw materials include materials derived from petrochemicals, minerals, metals, agricultural commodities and other readily available commodities and are subject to price fluctuations due to market conditions.

In 2023, supply reliability improved due to a weaker macroeconomic (demand) environment though we experienced some difficulties in procuring certain materials due to the challenging geopolitical environment impacting some supply lanes.

In a year of mixed inflationary and

deflationary trends across key categories we source, we were able to secure most necessary materials from our suppliers and continued to strive to ensure a sustainable supply chain to support our growing business operations.

Such raw materials are derived from petrochemicals, minerals, metals, agricultural goods and other readily available commodities and are subject to price fluctuations due to market conditions.

In 2024, supply reliability stabilized, although procuring certain raw materials remained a challenge due to the ongoing geopolitical environment impacting some supply lanes.

Early deflationary trends shifted to an inflationary pattern during the year in several categories that we source.

We continue to put measures in place to ensure a sustainable supply chain capable of supporting current demands and the future growth of our business.

Intellectual Property

We currently hold over 130 patents and over 400 trademarks in the United States and overseas.

We currently hold over 150 patents and over 400 registered trademarks in the United States and overseas.

We also use know-how, trade secrets, formulae, and manufacturing techniques that assist in maintaining competitive positions of certain of our products.

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During the years ended December 31, 2024, 2023 and 2022, we incurred research and development expenses of approximately $16,793, $15,049, and $12,191, respectively, on Company-sponsored research and development for new products, improvements to existing products, and manufacturing processes.

We have historically funded our research and development programs with

funds available from current operations with the intent of recovering those costs from profits derived from future sales of products resulting from, or enhanced by, the research and development effort.

We have historically funded our research and development programs with funds available from current operations with the intent of recovering those costs from profits derived from future sales of products resulting from, or enhanced by, the research and development effort.

We prioritize our product development activities in an effort to allocate resources to those product candidates that, we believe, have the greatest commercial potential.

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We continue to invest in projects across all production facilities and capital expenditures were approximately $35,148, $37,274, and $49,086 for 2024, 2023 and 2022, respectively.

In 2023, we invested $20,720 on projects expected to provide favorable returns on investment, including expanded capacity in key product lines in the HNH segment.

In 2024, we invested $17,202 on projects expected to provide favorable returns on investment, including expanded capacity in key product lines in the HNH segment and equipment upgrades to improve process reliability and support our business growth.

In addition, we invested $7,200 for environmental, health, safety, and security upgrades to our facilities.

In 2023, we invested $20,720 on projects expected to provide favorable returns on investment, including expanded capacity in key product lines in the HNH segment.

In addition, we invested $6,020 for environmental, health, safety, and security upgrades to our facilities and $3,024 in automation projects that improved quality and efficiency of our operations.

In addition, we invested $6,900 for environmental, health, safety, and security upgrades to our facilities.

In 2022, we invested $29,759 on projects expected to provide favorable returns on investment, including expanded capacity in key product lines in the HNH segment.

In addition, we invested $3,138 for environmental, health, safety, and security upgrades to our facilities, $2,330 in automation projects that improved quality and efficiency of our operations, and $2,222 in research and development projects.

In addition, we invested $6,020 for environmental, health, safety, and security upgrades to our facilities and $3,024 in automation projects that improved the quality and efficiency of our operations.

Capital expenditures are projected to range from $40,000 to $45,000 for 2025, including our continued efforts to invest in energy and water saving projects, while exploring additional renewable energy opportunities in support of the company's sustainability efforts.

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As part of the registration review process, the EPA assesses a wide variety of studies to determine the likelihood of risk to human health and the environment from exposure associated with use of the product.

We hold EPA registrations permitting us to sell ethylene oxide as a medical device sterilant and spice fumigant and propylene oxide as a fumigant of nuts and spices.

In April 2008, the EPA issued a RED (“Re-registration Eligibility Decision”) for ethylene oxide which permitted the continued use of ethylene oxide “to sterilize medical or laboratory equipment, pharmaceuticals, and aseptic packaging, or to reduce microbial load on musical instruments, cosmetics, whole and ground spices and other seasoning materials and artifacts, archival material or library objects”.

In 2013, the EPA initiated a new registration review of ethylene oxide, in line with and as part of the registration review scheduled for a large number of other pesticides.

We hold EPA registrations permitting us to sell ethylene oxide (“EtO”) to others as a medical device sterilant and spice fumigant and propylene oxide as a fumigant of nuts and spices.

In April 2008, the EPA issued a RED (“Re-registration Eligibility Decision”) for EtO which permitted the continued use of EtO “to sterilize medical or laboratory equipment, pharmaceuticals, and aseptic packaging, or to reduce microbial load on musical instruments, cosmetics, whole and ground spices and other seasoning materials and artifacts, archival material or library objects”.

In 2013, the EPA initiated a new registration review of EtO, in line with and as part of the registration review scheduled for a large number of other pesticides.

When the Final Work Plan was issued in March 2014, the EPA anticipated that this registration review process would take approximately seven years.

In December 2016, the EPA issued its Integrated Risk Information System (“IRIS”) assessment of ethylene oxide (the "IRIS Assessment"), another aspect of the EPA’s safety review of ethylene oxide.

In December 2016, the EPA issued its Integrated Risk Information System (“IRIS”) assessment of EtO (the "IRIS Assessment"), another aspect of the EPA’s safety review of EtO.

In November 2020, the EPA issued a Draft Human Health Risk Assessment for Ethylene Oxide (“Draft HHRA”).

In this Draft HHRA, the EPA presented multiple perspectives on risk extrapolation, including the IRIS Assessment.

While acknowledging the necessity of maintaining the critical uses of ethylene oxide, based on the range of unit risk provided in this qualitative assessment, the EPA stated that there should be further mitigation measures implemented.

While acknowledging the necessity of maintaining the critical uses of EtO, based on the range of unit risk provided in this qualitative assessment, the EPA stated that there should be further mitigation measures implemented.

In April 2023, the EPA released a Proposed Interim Decision and Draft Human Health Risk Assessment addendum which included certain proposed mitigation measures.

We believe that the EPA intends to reregister ethylene oxide for the sterilization of medical or laboratory equipment, pharmaceuticals, aseptic packaging, and the reduction of microbes on spices/seasonings, with the proposed mitigation measures potentially impacting such users, including our customers.

The product, when used as a sterilant for certain medical devices, has no known equally effective substitute.

In January 2025, the EPA issued its Interim Decision (“ID”) whereby EtO was re-registered for the sterilization of medical devices and the reduction of microbes on certain spices/seasonings.

The ID provides for a phase-out period for the use of EtO on certain spices, and it discontinues minor applications, such as use on musical instruments, cosmetics, and archival and library materials.

The ID also includes mitigation and monitoring measures impacting product users, including our customers, with phased compliance deadlines ranging from several months to ten years.

Further, the ID contemplates that EPA will gather annual worker exposure data from EtO users, including our customers.

The ID may be subject to further review, including additional stakeholder input.

EtO, when used as a sterilant for certain medical devices, has no known equally effective substitute.

In October 2019, the U.S.

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A Final Work Plan was issued in March 2014, and the EPA anticipated that this review process would take approximately seven years.

In October 2020, the EPA issued both the Proposed Interim

Decision and Draft Risk Assessment for propylene oxide.

In October 2020, the EPA issued both the Proposed Interim Decision and Draft Risk Assessment for propylene oxide.

In July 2021, the EPA issued the Interim Decision.

Based on these documents, the use of propylene oxide to treat nuts and spices will continue to be permitted with minimal changes to the current approved usage.

We submitted those changes and expect the EPA to review and approve them in the coming months during 2024.

We submitted required changes to the product label, and expect the EPA to review and approve them during 2025.

Our facility in Verona, Missouri facility, while held by a prior owner, Syntex Agribusiness, Inc.

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

In connection with normal operations at our plant facilities, we are required to maintain environmental and other permits, including those relating to the use of ethylene oxide.

In connection with normal operations at our plant facilities, we are required to maintain environmental and other permits, including those relating to the use of EtO.

From time to time, our manufacturing sites may be subject to inspections by the EPA and other agencies.

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For a further discussion of our potential environmental liabilities, see Note 16, Commitments and Contingencies, to our Consolidated Financial Statements.

We believe we are in compliance in all material respects with applicable laws and regulations that have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.

We believe we are in compliance in all material respects with applicable laws and regulations that have been enacted or adopted relating to human health, safety and the environment.

Such compliance includes the maintenance of required permits under air pollution regulations and compliance with requirements of the Occupational Safety and Health Administration.

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Our employees are our most valued asset and fundamental to our success.

We believe that our global team of talented and dedicated employees embody our Core Values and align with our vision of making the world a healthier place.

As of December 31, 2024, we employed approximately 1,361 full-time employees worldwide, with approximately 17% covered by collective bargaining agreements.

We are seeing some modest improvement in most relevant labor markets and we believe that we have been successful in attracting skilled and experienced personnel in a competitive environment and that our human capital resources are adequate to perform all business functions.

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

We are seeing some improvement in the labor market and feel our team has been successful in attracting and retaining skilled and experienced employees in a competitive landscape.

Additionally, we continue to enhance and leverage our existing technological capabilities to further optimize productivity and performance, and explore new solutions to drive efficiencies.

We believe that our best performance is achieved when our teams reflect a variety of diverse backgrounds, experiences and perspectives.

Fostering a culture of belonging is an important element of Balchem's Human Resources strategy.

We continue to explore strategies to help ensure we have a fully engaged workforce and that we are able to attract the best and brightest from the broad workforce landscape.

Health and Safety

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Our recordable injury rate, which is defined as recordable injuries per 200,000 hours worked, was 0.57, 1.39, and 1.17 in 2024, 2023, and 2022, respectively.

The injuries were primarily the result of manual material handling and cultural/behavioral factors that influence outcome.

We are adjusting our 2024 environmental, health, safety, and security management system to include an even greater emphasis on hazard identification/correction and cultural/behavioral aspects of personal safety.

In addition, we continually upgrade our facilities to reduce health and safety risks and establish procedures with appropriate personnel protection for the safety of our employees.

Diversity and Inclusion

We recognize that our best performance is achieved when our teams are diverse, and accordingly, diversity and inclusion are important elements of Balchem's Human Resources strategy.

We strive to promote inclusion through the implementation of inclusive leadership training across the Company and are committed to increasing representation of minorities throughout the organization.

In 2023, our total workforce consisted of 74% male and 26% female among all employees and 47% male and 53%

female when excluding supply chain and operations functions.

In 2022, our total workforce consisted of 75% male and 25% female among all employees and 50% male and 50% female when excluding supply chain and operations functions.

With the support of our Board of Directors, we continue to explore additional diversity and inclusion initiatives.

In 2024, we further refined our environmental, health, safety, and security management system to place greater emphasis on hazard identification and correction.

We enhanced our emphasis on near-miss reporting and improved communication across various locations, enabling us to address the root causes of incidents, and we have reallocated Environmental, Health, and Safety (EHS) resources to enable a more rapid response to safety enhancements.

We continue to improve our working conditions and our work practices where safety is impacted.

Training and Well-Being Programs

We strive to develop employee skills and knowledge, which includes training for job-specific technical knowledge, regulatory requirements, and company policies, through our internal learning and development platform.

The topics of trainings include the Company's Code of Conduct, anti-harassment and discrimination, foreign corrupt practices, antitrust, cyber security, and various other compliance subjects.

Our sponsored employee continuing learning program offers a broad base of assistance for employees, including learning and development courses.

We also deployed unconscious bias and inclusive leadership training to our management team.

Employees have access to healthy lifestyle discounts through our Wellness Center, as well as debt, legal, and financial counseling.

Leadership programs, peak performance training and multiple online services and courses enable our employees to choose their own learning paths and work towards achieving their goals for education, finances, and overall well-being.

Our vision is to create a culture of learning and development of our employees to foster an environment of continuous learning.

We are committed to the professional development of our workforce, investing in training programs designed to enhance employee skills and create career paths for advancement.

All employees are expected to complete necessary compliance training and have access to numerous online trainings for both personal and professional development.

We continue to have our existing and emerging leaders participate in formal leadership development training.

Through our Employee Assistance Program and healthcare benefit provider, our employees have access to resources to help support positive mental health, emotional well-being, and healthy lifestyles.

Additionally, employees have access to resources which can provide aid with financial and legal issues, as well as support in handling elder care challenges.

Performance Review, Compensation and Benefits

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Balchem also provides financial support for health and wellness programs such as online financial wellness content, sponsored weight loss programs and subsidized gym memberships.

We also provide generous time off and leave benefits, which are important to help ensure employees can enjoy a healthy balance between work and family time.

We also provide generous time off and leave benefits, which are important to help ensure employees can maintain a healthy work/life balance.

For the years ended December 31, 2024 and 2023, our turnover rate was 9% and 11%, respectively, for salaried employees with an average length of service of over 9 years for both years.

For the years ended December 31, 2024 and 2023, our turnover rate was 21% and 29%, respectively, for hourly employees with an average length of service of about 7 years for both years.

We are continuing to improve employee retention with effective employment engagement efforts, a productive performance review process, and competitive compensation.

We are continuing to improve employee retention with effective employment engagement efforts with frequent town hall meetings, a tool to promote peer to peer recognition, and various rewards and recognition programs.

Sustainability

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We are committed to reducing our greenhouse gas emissions by implementing new technologies, improving operational efficiencies, and expanding green energy usages.

In addition, we are committed to reducing our global water use by reducing and recycling water usage and investing new technologies to improve water efficiency.

For more information on our approach to sustainability management, refer to our 2022 Sustainability Report, which is available on our website at https://balchem.com/our-company/corporate-social-responsibility/sustainability.

In addition, we are committed to reducing our global water use by recycling water and investing new technologies to improve water efficiency.

For more information on our approach to sustainability management, refer to our website at https://balchem.com/responsibility/sustainability.

The information contained on, or that may be accessed through, the Company’s website is not incorporated by reference into, and is not part of, this Annual Report on Form 10-K.

In December 2023, Balchem was named on Newsweek's 2024 list of America's Most Responsible Companies and has earned a ranking amongst this prestigious list of companies for the fourth consecutive year.

This prestigious list, compiled by Newsweek in partnership with Statista Inc., recognizes the most responsible companies in the U.S.

across a variety of industries, and is based on their assessment of publicly available corporate responsibility data.

We are pleased to be recognized by Newsweek and Statista for our leadership in corporate responsibility.

Available Information

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Our telephone number is (845) 326-5600 and our Internet website address is www.balchem.com.

We make available through our website, free of charge, our Annual Reports on Form 10-

K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to such reports, as soon as reasonably practicable after they have been electronically filed with the Securities and Exchange Commission (the "SEC").

Such reports are available via a link from the Investor Relations page on our website to a list of our reports on the SEC’s EDGAR website.

We make available through our website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to such reports, as soon as reasonably practicable after they have been electronically filed with the Securities and Exchange Commission (the "SEC").

Such reports are available via a link from the Investors page on our website to a list of our reports on the SEC’s EDGAR website.

The address of the SEC's website is www.sec.gov.

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-K

Item 1. Business