Frank Fitzpatrick – CFO, Treasurer and Assistant Secretary Dino Rossi – Chairman, President and CEO

Tim Ramey – DA Davidson Mike Rosenthal – Piper Jaffray Daniel Rizzo – Sidoti and Company Andrew O’Conor – BMO Management

Thank you. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the period ending June 30, 2013.

My name is Frank Fitzpatrick, Chief Financial Officer and hosting this call with me is Dino Rossi, our Chairman, President and CEO. Following the advice of our counsel, auditors and the SEC, at this time.

I would like to read our forward-looking statements. This release does contain or likely will contain forward-looking statements, which reflects Balchem’s expectation or beliefs concerning future events that involves risks and uncertainties.

We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and our various factors could cause results to differ materially from our expectations, including risks and factors identified in Balchem’s Form 10-K. Forward-looking statements are qualified, in their entirety by this cautionary statement.

The financial information that is referenced in this meeting was disclosed this morning in our quarterly press release at 9:30 AM Eastern Time. I will now turn the call over to Dino Rossi, our Chairman, President and CEO.

Thanks, Frank. Good morning ladies and gentlemen and welcome to our conference call.

We are pleased to report record quarterly net earnings of $11.6 million on consolidated net sales of $83.3 million achieving a new record for the quarter ended June 30. These second quarter sales of $83.3 million were approximately 5.4% greater than the $79 million result of the prior year comparable quarter.

In the quarter, ARC Specialty Products segment generated record second quarter sales of $13.2 million, a 6.1% improvement over the prior year quarter. This result was due to increased sales of both packaged ethylene oxide and propylene oxide in the quarter.

Animal Nutrition & Health sales of $58 million, was up 5.8% over the prior year comparable quarter. Sales of choline, choline derivatives and other products for industrial applications had a very strong quarter, up approximately $5 million from the comparative year quarter, despite the disruption to production in sales in June due to the declaration of force majeure by a key supplier.

Sales of choline for monograstric animals, poultry and swine were down approximately 3.5% largely due to the force majeure issued. The ANH Specialty Ingredients largely targeted to the ruminant animal markets, realized in approximately 8.6% sales declined from the prior year comparable quarter.

These comparative results in the sector were adversely impacted the previously amount suspension of sales of AminoShure-L, 52% lysine, which were realized in Q2 of 2012. Sales of non-AminoShure products were up 11.4% in the quarter, led principally by strong volume growth of NitroShure.

Food, Pharma & Nutrition sales at $12.1 million were up 3.1% led by strength in VitaShure products and so the encapsulated products sold into the international food market. Earnings from operation of $16.6 million, improved 12.1% over the prior year quarter, equaling 19.9% of sales.

As previously noted, consolidated net income closed the quarter at $11.6 million, up from $10 million in the prior year quarter. This quarterly net income translated into diluted net earnings per share of $0.38 as compared to $0.33 we posted in the comparable quarter of 2012, an increase of 15.2%.

Looking between the top and bottom line, you will see that our consolidated gross profit of $24.9 million increased to 29.9% of sales in the quarter. This increase as a percent of sales from the prior year quarter reflects improved planned efficiencies resulting from strong sales volume and a favorable product mix.

Raw material increases did however unfavorably affect our Food, Pharma & Nutrition and choline products again this quarter. As mentioned in previous conference calls, we continue to monitor raw material prices which seek to adjust prices timely, within contractual guidelines as our businesses are likely to remain affected by these types of fluctuations going forward.

At the consolidated operating expense level, you will note a $510,000 increase, totaling $8.3 million for the quarter, which equaled 9.9% of sales versus the prior year metric of 9.8% of sales. This quarterly expense is comparable to the Q1 level, sequentially.

This level of spending represents certain increases in staffing along with increased expenses relating to recruiting, relocation and certain marketing programs, which are investments in the future growth to the company. We continue to leverage off of our existing SG&A infrastructure and exercise tight control over all controllable operating expenses.

Overall, we are generally pleased with our earnings from operations for the quarter, especially considering the challenging economic environment in the North American and European markets. In addition to the production issue we experienced, due to the involvement [ph] shortage of raw materials.

Consolidated earnings from operations remained strong and finished at 19.9% of sales or $16.6 million for the quarter, up approximately $1.8 million or 12% over the prior year quarter and from a 18.8% of sales level in Q2 2012. Our effective income tax rate for the second quarters of 2013 and 2012 were 30.6% and 32.7% respectively.

This decrease in the effective tax rate is primarily attributable to the timing of certain tax credits and deductions. Our annualized effective income tax rate for all of 2013 is currently estimated to be approximately 31.75%.

Net income of $11.6 million equated to $0.38 per diluted common share, which is a 15.2% improvement over the comparative prior year quarter. These results generated approximately $19.2 million of EBITDA in the quarter which translates in to $0.62 per diluted share and when including our non-cash stock-based compensation charge, we generated $20.1 million of EBITDA in the quarter equaling approximately $0.65 per share or 24% of sales.

Our balance sheet continues to strengthen and our cash flow remained strong, as we closed out the quarter with $171 million of cash. We spent $5.2 million of capital for the six months ended June 30 which includes payments relating to the new manufacturing facility in Virginia.

Capital expenditures for all 2013 are expected to be approximately $10.5 million. As you can see we continue to aggressively manage all areas of working capital, driving strong cash flow, improving cash earnings and generating quality organic results from our core businesses.

In an effort to detail our consolidated results better for our shareholders, I’m now going to ask Frank Fitzpatrick to discuss the ARC Specialty Products and the Food, Pharma & Nutrition segments.

Thanks, Dino. The ARC Specialty Products segment posted a record quarterly sales of approximately $13.2 million or a 6.1% increase over the prior year comparable quarter.

This increase in sales was derived principally from increased volumes of propylene oxide particularly for the synthesis and nutmeat fumigation applications. Sales of 100% Ethylene oxide for medical device sterilization were also up in the quarter.

Our quarterly business earnings increased 8.9% to a record of $5.3 million versus the prior year comparable quarter. This increase was largely a direct correlation to the improved sales volume of propylene oxide products.

Modest price increases to offset rising raw material costs, also contributed to the improved sales quarter-over-quarter. During the quarter, we did realize additional increases in the cost of certain petrochemical commodities.

We continue to monitor raw material price volatility closely and seek to implement price adjustments within contractual guidelines. For the quarter, the Food, Pharma and Nutrition segment realized sales of $12.1 million, up approximately 3.1% over the prior year comparable quarter.

Business segment earnings of $3.3 million were down approximately 3.5% from the prior year quarter largely due to raw material cost increases within the various sectors of this segment. Particular strength in the international encapsulate sales were realized ingredients for baking, prepared food and confection market.

As in the past, results for this segment continue to reflect a rollercoaster effect of pipeline fills, inventory level management and customer marketing initiatives. Our growth drivers do, however remain intact for this sector as food sales both domestic and international remained strong in the early part of Q2 2013.

On that note, we also realized strong double-digit growth in sales of our VitaShure products for nutritional enhancements, as we continue to work with the large sports nutrition company on the introduction of sustained release amino acid products. Sales were strong in Q2 and are expected to grow throughout 2013.

In the quarter, we realized a modest decline in sales of our human choline products for nutritional enhancement, although we did realize 5% growth on a sequential basis. Here we continue to focus on building consumer awareness of the benefits of choline, positioning choline with nutritional and pharmaceutical companies as an essential ingredient with excellent therapeutic benefits for all ages.

We continue to effectively utilize the structure-function claims awarded to Balchem by EFSA in Europe and are excited with the growing number of projects in the pipeline targeting choline inclusion. Our pharmaceutical delivery development efforts continue.

As previously reported, the licensee of our technology being used for treating autism concluded a Phase III clinical trial, and has conducted a successful free new drug application meeting with the U.S. Food and Drug Administration and we will begin filing this new drug application.

We are working them in support of their NDA filing. In the near-term this sector remains a net expense to the business segment.

I will now turn the call over to Dino for him to discuss the animal nutrition and health segment.

Thanks, Frank. In the animal nutrition and health segment we realized sales of $57.9 million, an increase of $3.2 million or 5.8% as compared to the prior year comparable quarter; ANH ruminant product sales realized an 8.6% decline from the prior year comparable quarter.

As mentioned in this morning’s press release, our quarterly result in this sector of ANH were actually much stronger than the 8.6% decline suggest, as our comparative results were adversely impacted by the previously announced suspension of sales for AminoShure-L, a 52% Lysine which were realized in Q2, 2012. Sales of non-AminoShure products were actually up 11.4% in the quarter, led by continued growth of ReaShure and NitroShure as excellent product performance in dairy economics continue to support greater demand for our products.

With respect to the second quarter 2012 suspension of sales of our AminoShure-L 52% Lysine products, we are diligently working on improvements and we look to reintroduce this product into the dairy industry once improvements are completed in confirmed with industry experts. At this time, our work continues.

However we’re unable to get a precise estimate as to when this work will be completed. Dairy economics continue to support strong demand for our product, despite the increasing challenges of production, animal feed/ration, prices.

Milk prices are currently forecasted to remain strong, tighter worldwide milk supply along with expected moderation in feed prices are general, positive indicators that should support greater utilization of our product as herd managers look to continue to maximize results of production animals. Our global feed grade choline product sales were down 3.5% from the prior year comparable quarter as our sales were adversely impacted by the disruption to production and sales particularly in June, due to the declaration of force majeure by a key supplier.

Volume sold in these markets are strongly influenced by the various dynamics of our customer base, predominantly the poultry production industry, but also swine and aquaculture. North American choline volume sold tracked closely with broiler chick placements and egg sets.

The current USDA forecast for broiler meat production continues to forecast modest growth for 2013. However, continued improvement is dependent on more normal crop and grain growing condition resulting in steady or declining feed prices for broilers.

We constantly evaluate export choline sales opportunities for the poultry markets but again found Q1 to be somewhat challenging export market, when factoring in raw material cost increases and foreign competitor activities. In the coming quarters, we may like to be more aggressive in seeking to win additional businesses depending upon the then current costs and market conditions.

Sales of industrial grade products were very strong and sales were up 28.8% over the prior year quarter and sales into the North American fracking market improved 13.2% on a sequential basis particularly due to volume. Now to sales of industrial products were also adversely impacted by the previously mentioned disruption to production and sales in June.

We continue to see sales opportunities for choline and choline derivatives products for other industrial applications, but near term especially for gas fracking opportunities. We remain confident that these products will continue to show strength in 2013, driving steady to increasing levels of sales and profitability even at current rate deployment levels.

We continue to evaluate industrial opportunities with other core technology to determine how we may drive innovative solutions into this and other markets to derive the most positive value. Earnings from operations for this entire segment grew to $8.1 million as compared to $6.6 million in the prior year comparable quarter, principally a result of increased volumes sold.

While these earnings improved nicely, we were still unfavorably impacted by increases in certain raw materials during the quarter. These raw materials continue to be a concern and as mentioned earlier we are closely monitoring raw material price volatility and will seek to implement price adjustments within our contractual guidelines.

In profitability, ANH segment continues to be achieved with a constant reevaluation of global raw material cost, product reformulation, currency review and the ultimate ability to economically meet market needs from our various global facilities and transload sites. The opportunity to capitalize in this fashion has been a direct result of multi-plant, operational benchmarking, marketing strategies and the ability to leverage our operational cost of our business model.

With the bulk of the feed grade choline predominantly going to the poultry and swine markets, we remain very sensitive to the uncertain macroeconomic pressures on the large production animal integrators. Feed-rationing cost stabilized, however remain high in Q2 due to the well-publicized regionalized U.S.

draught situation and while retail poultry prices have modestly improved pressure on profitability for this global end market continues. As noted previously we continue to see a revenue of rollercoaster effect quarter-to-quarter within the various products or market sectors.

This quarter was no different, and we remained committed to organic growth as we look to continually expand our product offerings and move in to new geographies. We will continue to strengthen our global growth platform and are confident that more business can be generated based on the unique portfolio of products that we offer to markets we serve both domestic and abroad.

Our business continues to create good balance yielding profitable growth opportunities across the value chain through the various market challenges of any single segment or product line. We remain focused on helping our customers generate reinvestment level of returns, while maintaining our own operating discipline.

Overall we continue to build the financial strength of the company, managing the working capital base aggressively and yielding improved financial results to be a quality supplier to the markets we serve. Near-term we remain focused on implementing operational and logistic improvements, new product development and new product introductions.

We also continue to explore alliances, acquisitions and/or joint ventures to continue build and leverage upon our strategic marketing direction, technology and strong human asset base. This now concludes the formal portion of the conference.

At this point, I will open the conference call for questions.

Good morning. Could you give a little bit more color, if possible on the force majeure issue, I think you said in the release said it had been resolved in a matter of week, what was the – what precipitated the force majeure was that an equipment failure on the part of supplier or something out of their control or price or?

Well, I think in the petrochemical industry you’ll find the schedule maintenance turnaround and this happened on the hills of one of those, so we had planned absolute for an outage for one of those suppliers and we tend to pick raw material supplier from our alternatives in whenever those situation happens, but the reality is, they did not, while they started to bring the plant up online and they ran into issues, they had to take it back down and it took them, the better part of probably two and half three weeks to get that resolved. And in the meantime, another supplier had already scheduled a turnaround and had taken their facility down.

So what we found is that, while we had a good plan, we thought when all of a sudden in a series these guys take their plants down. It left us a little bit behind the April [ph], so while we scramble to get additional product.

There’s a little bit of a ripple effect that happens, when these guys start to go down and they kind of do this in sequence if you will a lot of same contractors they use to do a lot of their petrochemical work and they’ll go through kind of one job to the next, to the next. So these guys are queued up and so when there is a bit of out there, significant interruption unplanned if you will, actually a lot of people and not just us to scramble (inaudible).

So we did we certainly were not successful coming in up the with all the product that we needed to kind of keep everything, I’m going to say steady state. So we did find that, in fact we had to take our Verona, Missouri operation down for probably almost three weeks in June and we did run our Louisiana operations, but certainly at a slower rate for solid two weeks in June.

So it was really confined to the month of June and with that, I would say that we worked a lot with our customers. Inventory levels, I’m going to say normal operating levels for them were drawn down pretty dramatically in that window.

So that’s where is a little bit of reading kind of between the lines here, they did seriously pull down the inventory levels and we pulled inventory out of our system as well to keep customers to apply and I would say, the customer really did work well with us, but certainly took the edge off the sales in that window.

Next, I got to assume. If somewhat of sales push into the 2Q, is there would be a desire on the part of your customers to rebuild those inventories, what else is that your fair statement?

You said in the Q2?

I mean, I’m sorry in the Q3. Yes.

No, you’re right and certainly that’s our objective as well to get those inventory levels restored with those customers and just with our normal. I’m going to say inventory pipeline as well, so we are running strong in July for sure and near term.

I’m not sure exactly, when we are going to slowdown.

And if you could just took a step back and you discussed to think on the fourth quarter call, the plant that exploded in China, but just the overall supply demand characteristics which looked to be much improved in ‘13 versus ‘12 for choline product [ph] I mean, – do you – can you just give us a sense of how that looks today to you?

Well, I think overall the demand for the product does continue to be quite strong and I think that even the issue with the Chinese producer while real, we didn’t – I’d say momentarily almost we saw a little bit of a hiccup there on their production and their pricing, but to be honest conversations with other Chinese producers here in (inaudible) have fully conveyed that it wasn’t much of an interruption to them. I hear lot of excess capacity in the Chinese production world.

So other guys stepped in till that void [ph], which was interesting because that I would say was we probably didn’t believe there was that much excess there, but clearly they have stepped up and sold that (inaudible). So the plant that exploded has not been rebuilt, so that state continues if you will, but our view here going forward is that choline business should remain strong and pretty robust on a go forward basis.

I’d say, our view is that the on the animal feed side and particularly poultry again North America flat plus 2% and we are seeing very, very solid business out of European market from our Verona operation. It’s certainly the fracking side of this continues to remain quite strong.

And Dino, just on a different note, I’ve proved to be fairly bad at reading what I thought was your body language in terms of M&A opportunities. Last couple of quarters, you sounded like you had a sense of urgency in your voice and like something might have been closed and cash continues to build, is there any I know you can’t tell us specifics but again with regarded to landscape there.

Yes, well clearly I would say that we have a, I would say follow their couple maybe three targets in sights and one that we thought was closed quite honestly in between here has fallen off the table. So park that one inside, it was an opportunity in Europe.

We pretty much agreed not to agree, if you will on price and what not so, we’ve pulled back on that. In the meantime, we are working on another one here in the states more aggressively as I’m going to say, the due diligence process is continue to work.

So certainly our expectation is that, we will get a deal done, but I – for a long time ago, they’re never done until they’re done. So with that said on, can we still do that and whether it’s a natural acquisition or joint venture opportunity both that were studying real hard two different transactions.

It’s on – they both are on some front burners [ph] with us.

Thanks much.

Good morning, just a quick clarification on the force majeure. I don’t mean to go into that, in too much detail but it sounded like from your answer to the previous question that, you thought that benefited, there might a net benefit in 3Q even though the situation was resolved in July, is that an accurate characterization?

Yes it is, certainly as we sit here, we know we’ve continue to run very strong here in July now that, supply chain if you will is been restored and certainly our expectation is that those run rates are going to continue here strongly in Q3.

Okay that helps and then I guess, what we’ve been hearing from some channel contacts on the poultry and ruminant animal side likely remain subdued, somewhat at least on the producer side until after August, is that sort of consistent with your views? And well the year-over-year comparables likely remain challenged on pricing for choline even though sequentially things are and starting to improve through 3Q?

I think, so our view is that, near term we think that the poultry market is going to continue to run at the rate, that we talked about which is relatively flat here in North America. I think on the dairy side that’s one where we feel probably a little bit more bullish, if you will about, the fact to that market continues to be a good state from an economic standpoint.

So we feel pretty good with, that will do well. I think when you reference the compared, AminoShure-L, 52% was not there last year.

So when did the compare this year, through Q3 you’re going to start to get more of apples-to-apples look. So that’s going to be a slight probably change in the model look if you will, but certainly we expect to see percentage improvements there partly because of I mean, what was used as an explaining in the last two quarters, which I think is real, is not no longer there going forward.

Okay, that’s helpful and forgive my ignorance on the pharmaceutical side of things. This is not my really my (inaudible), but if terms like successful Phase III trial, the filing going forward.

It sounds like that’s all kind of progressing as you laid out in the past, that is there anything moving maybe quicker or more slowly or is it about what you expected?

I think it’s, I would say based on conversations with the third-party who is the marketing entity here. I would say it’s moving as they’ve said it would and from our personal standpoint, is this thing might get going a little slow, the answer is probably yes.

I too not, I’m not going to profess to be a pharmaceutical expert, but it does seem rather typical kind of timeline to get into these products.

All right, thanks guys. Well, congrats.

Thank you.

Hi guys, there. I’m sorry, I missed it.

Can you just – I missed the part where you said about the thing with the pharmaceutical filing in your original comments? Can you just repeat that please?

Well, I think in our original comments basically it’s said that things are on track. I mean, she has had a meeting with the FDA that was a successful meeting giving additional to some degree guidance if you will, but that was I think positive.

So I would say generally on track with, what the FDA is looking for and just things that will go into the filing if you will. She’s going to initiate a role in filing if you will, first if you continue to add data and that’s the plan and to that end, we continue to support that.

And do you know, has she stated that role in process yet, has she started filing NDA or is that coming shortly?

I think the filing is coming shortly, I so to answer straight up, I don’t think that particular filing has been done, but I think it’s pretty close, at least to start it.

Okay and then with AminoShure-L, I know you guys are working on maybe getting that back to market, is there any update on when that all occur is it something that it should happen by the end of the year?

Well, I’d like to say yes Dan. It’s clearly it’s taken us longer than I think any of us started, we are going to come back with new product there.

We made the improvements. I’d say that we are not yet there and but when we get there, we are probably going to call trials, that will last anywhere from three to six months.

So having a product by the end of the year, I think I’d say low probability but maybe Q1.

Okay, all right. Thank you guys.

Good morning. You talked about other industrial applications choline, could you go into that a little?

Honestly Tony, I’m probably not going to get into a lot of details there. There’s some things that we are working in that were under CVA [ph] right now and some of them.

We are not – our idea to be honest with you, they’ve been brought by the party. So we are working with them.

Well they truly translate into any significant volume of business. I don’t know for sure, I like the markets those are targeted to, I think there is upside opportunity there and so in the meantime.

We’ll just going to continue to work with them, but clearly using choline as a key model tool in a product that we’re not going to bring to market.

Great, is the Virginia plant up at capacity now or I mean is it or fully how active was it, fully in the second quarter?

No, I mean it’s running well, but we are not sold out. So yes, but anyway it is running well.

Okay, thanks. Great quarter.

Thank you.

Thanks, Dino and Frank. Congratulations on your progress.

I may missed this earlier in the call, I dialed, I’m little bit late but what are the companies near-term priorities for its cash and cash flow and I was wondering if you could stab at quantifying that to state year-end ‘13? Thanks, so much.

Well, I think clearly the real priority for us right now is really too little bit earlier our desire to do some acquisitions and some joint venture partnering and so to some degree I would say, we are keeping the potter dry if you will to be able to execute on that, certainly even with that said order magnitude. You maybe did a transaction larger than turn our cash position.

That kind of what’s upfront here. Really talk about our CapEx, we are looking at $10.5 million for the year so not a big deal from that standpoint, but clearly we are looking to add on to the revenue and profitability of the business through acquisition and that’s what’s right upfront right now.

All right sure and then excluding the potential for an acquisition. Can you make an estimate about what year end ‘13 balance sheet would like, where we are today?

You mean, cash?

Sure, cash and debt.

Yes, I think I mean I (inaudible) right now, unless there’s an acquisition, no debt. You know I think, it’s fair to say, we’ll probably be around maybe $190 million in cash or better.

Or better.

All right, sure. Thanks very much.

Thank you.

Thank you and I just want to thank everybody for joining the call today. again I think it is almost kind of one of our typical quarters, maybe a little bit more unfavorable because of the outage on raw materials but I’d like to think that we did a lot of good things to continue to see the goodness throughout relationships with the customers to all and that and certainly did very well positioning here for the future.

Organic growth will remain on track if you will and certainly within an expectation of getting some transactions done. So with that, I’ll close up the call and say thanks again for tuning in and we look forward to talking to you in the next quarter.

Thanks.