Balchem Corporation (NASDAQ:BCPC) Q4 2022 Earnings Call Transcript

And so, we really do feel like, we should be able to grow that business at double-digits and deliver an all-around strong year for Specialty Products. I guess the other point to note is that, we have yet to really see it play out. we are encouraged with all the rain that California has gotten over the year. We hope it ends up not being too much rain for the planting season. But I think generally the Ag parameter is favorable at this point in time in the western part of the U.S. And so that should also create a bit of a tailwind for that business. So I’ll hand it over to Martin for the tax question.

Martin Bengtsson: Yes. Ram, on the tax rate, I think right planning rate is closer to 23% as opposed to the 21% that we achieved in 2022. I mean, our rates fluctuate a little bit. We were at that 23% range, if you go back here in 2021 and we were able to drive some unique items here in the year and they are hard to predict and hard to forecast. And if we look at it today, I think we will be close to the ’23 than the ’21. So not a new baseline from my perspective.

Operator: Thank you. Our next question has come from the line of Mitra Ramgopal with Sidoti. Please proceed with your question.

Mitra Ramgopal: Yes, thanks. Good morning and thanks for taking the questions. First, I might have missed if you mentioned it in terms of the revenue growth you saw, how much of it was volume driven versus price?

Martin Bengtsson: Yes. The growth has been primarily price driven, more than volume driven. So primarily price.

Mitra Ramgopal: Okay. Thanks.

Martin Bengtsson: And I will say, Mitra, just to add a little bit of color to that, I think that’s clear in Q4. And just to go back to my earlier comment around kind of a year of two halves. In the first half of the year, it was primarily volume driven, that subsided somewhat in the second half and became mostly price driven as we raise prices and started recovering those costs from inflation. So overall, we saw volume growth in the year, but certainly, the second half of the year was more priced.

Mitra Ramgopal: Okay. Thanks. And looking at the Bergstrom and Kappa acquisitions, I know it’s still early days. But in terms of your expectations for 2023 and being able to realize costs and even revenue synergies to drive growth going forward? If you can maybe help us in terms of how you are thinking about those acquisitions in ’23?

Martin Bengtsson: Yes, maybe I’ll take a stab at that and Martin, you can chime in for any additional color. So we are two quarters into the Kappa acquisition and let’s say a quarter into the Bergstrom acquisition. And overall, we are pleased with how the integration processes are going. Essentially, both companies have been integrated from a commercial perspective. So we have our sales organization, their sales organization combined in a single organizational structure, and the cross training efforts are well underway, to some extent done in some areas. So feel good about the coming together of the organizations. We have also fully integrated the functional organizations as well, and feel like that’s going very well and also pleased that both companies are already on our ERP platform Microsoft Dynamics, 365.