Balchem's Sales Growth Hits Three-Quarter High, Nutrition Margins Widen
Balchem posted 11.2% net sales growth in the second quarter, its fastest pace in three quarters, as its Animal Nutrition and Health segment's operating earnings jumped 48.7%.
Balchem (BCPC) reported second-quarter net sales of $284.0 million, up 11.2% from a year earlier and the fastest year-over-year growth rate of the last three quarters, ahead of 8.1% growth in the first quarter of 2026 and 9.8% in the fourth quarter of 2025. The specialty ingredients maker has now added $20.4 million in sequential sales over two quarters, climbing from $263.6 million in the fourth quarter of 2025 to $270.7 million in the first quarter and $284.0 million in the second.
GAAP net earnings rose 16.6% to $44.6 million, also the strongest growth rate of the past three quarters, compared with 8.7% growth in the first quarter and 16.8% in the fourth quarter of 2025. Adjusted EBITDA grew 12.6% to $77.9 million, roughly matching the 12.1% growth reported in the first quarter and extending an acceleration from the 8.1% pace of the fourth quarter. Gross margin came in at 36.5% of sales, up 10 basis points from a year earlier and within the band Balchem has held over the past three quarters, including 37.3% in the first quarter of 2026 and 35.6% in the fourth quarter of 2025.
The Animal Nutrition and Health segment drove much of the earnings gain. Segment sales rose 15.0% to $64.5 million, while earnings from operations climbed 48.7% to $5.2 million from $3.5 million, indicating operating leverage well beyond the segment's revenue growth. The Specialty Products segment showed a similar pattern, with earnings from operations up 14.4% to $12.9 million on sales growth of 8.9% to $40.5 million. Human Nutrition and Health, the company's largest segment, grew sales 10.0% to $176.9 million, a modest reacceleration from 8.3% growth in the first quarter of 2026 but still below the 14.3% pace posted in the third quarter of 2025.
Operating expenses rose $2.8 million to $44.5 million due to higher compensation costs, a driver not cited in either of the two prior quarterly releases. The effective tax rate rose to 22.8% from 21.9% a year earlier, reflecting lower tax benefits from stock-based compensation after a period of relatively stable rates. Interest expense fell to $1.9 million from $2.8 million, continuing a decline from $2.3 million in the first quarter of 2026, as outstanding borrowings and interest rates both eased.
On July 24, 2026, Balchem amended its revolving credit facility, raising borrowing capacity to $650 million from $550 million and extending its maturity to July 2031 from July 2027. Net debt held near $88.8 million to $88.9 million with a leverage ratio of 0.3 times, consistent with the first quarter of 2026 and the third quarter of 2025 despite activity on the revolver.
Free cash flow fell to $36.2 million from $40.7 million a year earlier, a reversal after free cash flow had grown to $50.7 million in the third quarter of 2025 and $51.2 million in the fourth quarter. Cash and cash equivalents dropped to $63.2 million at June 30, 2026, from $74.6 million at the end of 2025, a decline of $11.4 million tied to $44.5 million in share buybacks and $30.8 million in dividends paid over the six-month period.
Balchem repurchased $28.8 million of shares in the quarter and $114 million over the trailing twelve months, an increase in buyback activity from prior quarters, when the company's earnings releases did not break out repurchase figures.